Research In Motion Ltd (BBRY) Is Poised to Rebound: Apple Inc. (AAPL), Nokia Corporation (NOK)

Page 1 of 2

Last Wednesday, Research In Motion Ltd (NASDAQ:BBRY), formerly known as Research In Motion, unveiled its new generation of phones, which feature the new BB10 operating system. Observers did not seem particularly impressed. My Foolish colleague Anders Bylund wrote, “I expected the new line of BlackBerry 10 phones to be masterpieces of truly modern hardware with some unexpected wrinkles thrown in for good measure. But what we got looks a lot like Samsung’s finest handset from last year.” The apparent letdown halted BlackBerry’s recent rally in its tracks. Shares slid from a 52-week high at $18.32 on Jan. 24 to less than $13 on Jan. 31.

While Blackberry’s new Z10 and Q10 smartphones are not revolutionary, they are still very solid entries in the market. The browsing experience is leaps and bounds better than on previous BlackBerry phones. Moreover, BB10 provides a differentiated experience through software features such as the “BlackBerry Hub” (a unified page for messages, emails, texts, social media updates, etc.) and “Blackberry Balance” (a feature to separate work and personal data and apps).

Research in Motion Ltd. (BBRY)These upgrades should be sufficient to keep BlackBerry loyalists within the fold. Moreover, the initial data suggest that a good number of early adopters are impressed by the new OS and are switching from iPhone and Android. If BlackBerry can continue to attract interest from even a small portion of iPhone and Android users (and that’s a big if), shares could double in the next year.

BlackBerry’s fall
Much of the recent pessimism surrounding BlackBerry is the result of an understandable “show-me” attitude among investors. The company was the clear smartphone leader five years ago, but failed to react to Apple Inc. (NASDAQ:AAPL)‘s entry into the market with the iPhone. As the iPhone and phones running Google Inc (NASDAQ:GOOG)‘s Android OS vastly expanded the smartphone market, BlackBerry missed out on the growth opportunity. Most notably, in the past four quarters, the total number of BlackBerry users has grown by only 6%.

Much has been made of BlackBerry’s market share losses during the past two years. However, those statistics should be taken with a grain of salt. BlackBerry has been trying to compete with an outdated OS (BB7), and it has been widely known for more than a year that a new QNX-based OS was on its way. As a result, current BlackBerry users have delayed their upgrades and potential “conquests” have been waiting for the new OS. The result is that BlackBerry sales dropped precipitously in 2012, even though the Blackberry user base actually grew slightly.

According to IDC, BlackBerry shipped 32.5 million smartphones in 2012, down 36.4% year over year. This resulted in the company’s market share contracting from 10.3% to 4.6%. However, BlackBerry’s market share is much stronger when measured by the number of subscribers. This better reflects the brand’s strength, as customers who have stuck with BlackBerry this long are likely to upgrade to the new BB10 phones.

The coming upgrade cycle
In the U.S., BlackBerry’s share of smartphone users was still 7.3% in November 2012, despite Apple’s massive iPhone sales last quarter. In the U.K., BlackBerry still has more than 8 million subscribers out of a total market of 35 million to 40 million, putting its market share around 20%. Lastly, as of August 2012, BlackBerry had even higher market share in its home market of Canada, at 27%. These three countries — BlackBerry’s largest markets — have accounted for 40%-50% of the company’s revenue in recent years.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

6 Ways to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

The 10 Most Controversial Songs Of All Time to Hit (and get Banned from) the Airwaves

The 20 Biggest IPOs in US History

The 10 Best Places to Visit in Mexico that Are Beautiful and Safe

7 Bad Habits that Age You Beyond Your Years

The 40 Best Fortune Cookie Sayings That Will Leave You Bemused, Befuddled, or Beguiled

10 Foods to Eat Before a Workout to Make Every Drop of Sweat Count

The 5 Best Documentaries On Netflix You Must See

The Most Heartwarming and Inspirational Story Of This Halloween Season, It Will Make You Cry and Jump For Joy

10 Best Party Songs of All Time to Bring the House Down With

5 New World Order Conspiracy Theories that Will Strangle the World

The 10 Highest Rated Movies of 2014

The 10 Largest Container Shipping Companies in the World

The 10 Largest Armies in the World: Who Should We Be Afraid Of?

Best Warren Buffett Quotes on Money You Need to Hear

The 10 Highest Suicide Rates by Profession

The 20 Most Underrated Movies of All Time

The 10 Fastest Growing Companies in America

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!