When Nokia Corporation (ADR) (NYSE:NOK) announced that it would be launching a Windows 7 phone, the news was largely greeted with pessimism. Some were calling it “another disaster.” But since then, its Lumia series has been accepted well, and is currently the fastest-growing smartphone range in the industry. Its market share may still be small, but its growth prospects suggest that Nokia’s turnaround is here. I think Research In Motion Ltd (NASDAQ:BBRY) is heading down the same road, but it has a few roadblocks ahead of it.
A great launch
In the world of electronics, consumers are always waiting for something new. Whether it’s an update or a new feature, the market is never satisfied. This unsatisfied group of individuals go after almost after every new major launch, considering that their wallets allow the product, whether it’s a 3D plasma TV or a mobile projector.
Nokia Corporation (ADR) (NYSE:NOK)’s Lumia series equipped with Microsoft Corporation (NASDAQ:MSFT) Windows 7.5 is the most recent example of that. Let’s admit it, Apple Inc. (NASDAQ:AAPL) makes great quality products but leaves a hole in the pocket. On the other hand, Samsung smartphones have excellent hardware specs at reasonable prices, but the company’s build-quality has a “plastic” feel to it. Leaving aside the OS differences, consumers are unsatisfied, mainly by these factors, and Nokia Corporation (ADR) (NYSE:NOK)’s Lumia is doing a great job of plugging the gap.
Research In Motion Ltd (NASDAQ:BBRY)’s Z10 also looks promising. It has been well received by the market, and reviewers have identified only a couple of negatives going against it. The Z10 is equipped with a beastly dual-core 1.5 GHz Krait processor with an Adreno 225 GPU. This, coupled with 70,000 apps in the market, gave it a good introduction. According to recent news, sales of BlackBerry handsets are stronger than expected and the product has outsold competitors at leading retail stores in the UK.
Sustained Growth
This is where it gets tricky. The main reason why the Lumia series took long to mature is because it had a poor app store. It was only in 2011 that the Windows app store consisted of over 70,000 apps. In 2012 alone, over 75,000 apps were added. Since Blackberry Z10 will have access to over 70,000 apps, I think it will have a head start.
Consumers want a platform that has ample apps, and developers desire for platforms that aren’t saturated and should pay well. It is because of this that Windows store saw a surge in its mobile apps. To grow rapidly, Research In Motion Ltd (NASDAQ:BBRY) has launched an app generator, which makes it pretty easy to develop apps even for developers with basic coding knowledge. This would certainly flood its app stores, as most beginning app developers would look to give it a try.
Weaknesses
Research In Motion Ltd (NASDAQ:BBRY)’s management told how its growth lies in emerging markets, including India (mainly) and China. Both of these countries have a combined population of over 2.55 billion people, with over 910 million active cell phones in India and over 1 billion active cell phones in China.
Smartphones, however, are still catching up in India. According to a recent report, India’s smartphones account for only 10% of the total number of cell phones as compared to 67% in China. With these statistics, introducing an $800-plus smartphone in largely middle-class populations is not smart. Like Nokia Corporation (ADR) (NYSE:NOK)’s Lumia 510 and 610, Research In Motion Ltd (NASDAQ:BBRY) should also introduce mid-range phones in order to take proper advantage of the emerging world.
Moreover its app store could also cause problems. As of now Microsoft, Apple, Google Inc (NASDAQ:GOOG) and Research In Motion Ltd (NASDAQ:BBRY) retain 30% of the app sales on their respective devices. Apple and Google can charge such high rates due to their extensive market share (21% and 57%, respectively.) Microsoft, despite having a minute market share, is growing at the fastest pace and is attracting lots of app developers. But since Blackberry’s OS10 has yet to attract large numbers of users, it should lower its revenue share in order retain its developers.
Wrap Up
That said, I think Research In Motion Ltd (NASDAQ:BBRY)’s OS 10 could finally bring it on track, but it needs to address some crucial issues first. Even if it introduces mid-range smartphones, it could maneuver a successful turnaround but investors should practice cautious investing.
The article A (Successful) Turnaround Story? originally appeared on Fool.com and is written by Piyush Arora.
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