An analyst at Gartner Research put out a note earlier this week saying that Research In Motion Ltd (NASDAQ:BBRY) will take less than 5% of worldwide smartphone market share by 2016. The company hasn’t has much good news lately, and this latest one certainly doesn’t help. But Research In Motion Ltd (NASDAQ:BBRY) is three years out from 2016, so let’s take a look at what’s currently going on with the company’s smartphone and see if the prediction is likely to come true.
A new direction
Research In Motion Ltd is betting that its new BB10 operating system can steal at least a little bit of Android and Apple Inc. (NASDAQ:AAPL) smartphone share in the consumer and enterprise spaces.
If they didn’t, they would have tethered their new Z10 phone and upcoming Q10 to the Android platform instead of building their own OS. It was a bold step for Research In Motion Ltd, considering that the iPhone and Android phones make up 87.8% of total global smartphone market share.
Source: VentureBeat.
When the BlackBerry Z10 initially launched in the U.K. and Canada, some early numbers were positive for the company. Sales in the U.K. were three times higher during the first week than previous BlackBerry model launches. More good news came from Canada where a large mobile phone retailer reported Z10 sales were outpacing iPhone 5 and Galaxy S III sales. Unfortunately for Research In Motion Ltd (NASDAQ:BBRY), those numbers are now waning.
Earlier this month, Pacific Crest analyst James Faucette said in a note, “Our checks indicate that as sell-through run-rates for the Z10 have declined meaningfully in the weeks following launch, we believe carriers and third-party retailers in the U.K. are already well above typically targeted inventory levels.” He went on to say, “Canadian carrier stores and retailers also appear to be rapidly approaching targeted levels, in our view.” Faucette pointed out that retailers in both regions are already discounting the phone and that sales in the May quarter are estimated to fall far below shipment numbers.
But analysts’ opinions vary and Paul Peterson at BlueFin research firm recently said about the Z10, “Our checks indicate that some suppliers are seeing 6-month order coverage that is several orders of magnitude larger than the previous 6 months, with some suppliers believing that they can get back to 2011 revenue levels if the present forecast levels hold up.”
Forecasting sales isn’t an exact science, and investors will have to wait for more concrete numbers to come out to see how the Z10 launch has done overseas. But one of the most important launch for Research In Motion Ltd (NASDAQ:BBRY) hasn’t even happened yet, and it’s likely to have a major impact on the company — for better or worse.
Visiting the old stomping ground
The Z10 will be available to the U.S. this Friday, which will be one of Research In Motion Ltd’s toughest countries to crack. A recent poll by Bite Interactive showed that although 47% of responders said they were interested in the Z10, only 13% would consider buying one and just 1% said they were going to buy one right when they launched. Those aren’t inspiring numbers for Research In Motion Ltd, but they shouldn’t come as a surprise to the company or investors. Let’s look at how Research In Motion Ltd currently stacks up against the other OS platforms in the U.S.:
Source: comScore.
After Android and iOS, the next most popular OS, according to comScore, is Research In Motion Ltd — but that doesn’t paint the entire picture. When it comes to actual smartphone market share, not just platform market share, Microsoft (NASDAQ:MSFT)‘s Windows Phone OS actually overtook Research In Motion Ltd (NASDAQ:BBRY) in Q4 2012, according to Strategy Analytics. With the launch of the Z10 looming in just a few days, it may be possible for Research In Motion Ltd reclaim the No. 3 spot, but fighting for third place isn’t a great place to be.
The big picture
Gartner research said this week that, “Although BB10 presents a modernized new platform based on touch technology, market conditions will make it extremely difficult for Research In Motion Ltd to rise above iOS, Android and Windows Phone 8 platforms.” Their statement seems spot on with the current smartphone market share numbers in the U.S., as well as polls from current Android and iPhone users.
The challenge for Research In Motion Ltd isn’t just creating a great phone and operating system — it’s making people want to buy it. Based on the stranglehold that Android and iOS have on the market and the rise of the Windows Phone platform, I don’t think Research In Motion Ltd (NASDAQ:BBRY) can pull it off. Even if Research In Motion Ltd could build its former enterprise base back up, it would still need to increase consumer-side demand for the product, which it simply isn’t doing.
The article Predictions for BlackBerry Don’t Look Good originally appeared on Fool.com.
Fool contributor Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Apple. It also owns shares of Microsoft.
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