I know most people didn’t pay that much attention to the unveiling of the BB10 — I doubt there were huge lines and small tent cities erected in anticipation of their product launch. Investors in Research In Motion Ltd (NASDAQ:BBRY), the company formerly known as Research in Motion, were paying attention, and were not happy when they found out that the U.S. release was going to be delayed until March.
Driving the stock price down sharply, this was a very strange reaction for those who have waited much longer than a month for BB10 to hit the market. Besides the delay, the global launch seems to be proceeding as planned. The first handset in the BB10 lineup has been very well received and has earned solid reviews. I find it hard to believe that even though BlackBerry is a Canadian company with most of its customers outside of North America a delay in their U.S. release is cause for a 20% decline in share price.
Worth the Wait
Thorsten Heins has done a phenomenal job of directing BlackBerry to this point and if a delay of a month was what the U.S. carriers needed to integrate the handset, it is well worth the wait for the company. They can afford absolutely no product malfunctions in the early going. Would investors prefer a rushed release to hit arbitrary deadlines or a quality release where the handsets are made available and functional worldwide? I would prefer to wait and to see the BlackBerry’s success in North America. I am not the only one as an analyst from Bernsteins upgraded the stock and the shares surged. This seems to be Mr. Market at his best — furious one day and elated the next.
Fool’s Gold
The standard pitch for the demise of BlackBerry is that even as they release their new BlackBerries they will not be able to catch up to the dominance of Apple Inc. (NASDAQ:AAPL) and Google Inc (NASDAQ:GOOG). Yet as investors drive down the price of Apple because they are worried of slowing device sales and potential iPhone fatigue, they say BlackBerry can no longer be relevant.
Apple, as we all know, is unable to access many of the large and growing third world markets because of the unsubsidized price of their handsets. This does not mean that the company will no longer succeed, but there are opportunities in the handset market. We have seen the quick ascension of HTC and Samsung utilizing the Android OS to quickly capture market share. Apple would be hard pressed to start reducing the price of their products and putting out more devices, as they could easily alienate their core customers who have been fanatical over the last 6 years.
Android Monopoly
Just as iPhone fatigue has begun to enter investors’ minds, the idea that a company must either produce its own OS or use Android has come under threat. BlackBerry has made it clear that they are open to potentially licensing their OS. With a client base of over 80 million customers and many more who have used a variation of the older BlackBerry OS’s, this could also be a lucrative profit center.
Google is ubiquitous in our lives today from their maps to search to emails. Google is not concerned with making money on their OS but using it as a doorway to connect users to their search portal. As we all know the mobile net is the future — with each generation of smartphone we can do more and more from our phones. Google has purchased Motorola and will make a strong push into handsets, but the BlackBerry brand is still considerably stronger than that of Motorola whose last hit phone was the Razr half a decade ago.
I believe that not only can BlackBerry compete with a much stronger handset than Google’s Motorola, it can also begin to erode the Android monopoly by licensing their OS.
The company has made a strong commitment to their handset line — even switching their stock ticker to reflect the BlackBerry name. They have an incredibly strong patent portfolio and a potentially licensable OS. They do not need a game changer as a phone for BB10 — just a cool, hip, me-too product for the North American market. They will continue to grow throughout the world and recapturing a smaller percentage of their old market share will help breathe new life into the stock.
BlackBerry definitely deserved the devaluation it received over the last couple years but it seems like they have truly righted the ship.
The article Don’t Believe the Hype, BlackBerry is Here to Stay originally appeared on Fool.com and is written by Moustafa El Zanaty.
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