Research in Motion Jumps on This Surprising News
Though likely to be a short-lived bounce, Research in Motion (NASDAQ:RIMM) is trading up after announcing an unexpected increase in subscriber numbers on Tuesday. The pioneer and once-dominant smartphone maker has in recent years lost market share in North America to Apple (NASDAQ:AAPL) and Samsung, which produce more user-friendly, multipurpose phones, causing shares to lose 93 percent of their value in the 5 years since the first iPhone hit the market.
RIM has been struggling to stay relevant, even in the corporate world, where for a long time its BlackBerry was the only mobile device IT departments allowed past their gates. Its latest push comes in the form of BlackBerry 10 or BB10, a mobile operating system on which the company is staking its future. The new OS, and new phones running on the platform, were originally supposed to debut earlier this year, but RIM pushed back their launch until late 2012 and 2013, only further depressing its shares and stirring investor concern that BB10 would be too little, too late.
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But CEO Thorsten Heins is standing behind the new phones and features while giving a preview to BlackBerry developers at a gathering in California on Tuesday. “There is new energy and a new fighting spirit in this company,” said Heins as he listed new features including a new browser and ‘flow’ and ‘peek’ features that let users access important features without leaving an open application.
The company has already been getting some positive feedback on its new BB10 devices from those telecom carriers that were granted a sneak peek at the new smartphones, said Heins. “We are making believers out of our partners. We are making believers out of those who had previously written BlackBerry off,” Heins said.
Heins also said BlackBerry’s subscriber base had risen to 80 million in the quarter ended September 1, up from 78 million in the year-earlier quarter. The addition of subscribers surprised Wall Street — most analysts had expected RIM to begin losing subscribers for the first time in its history — causing shares to spike on Tuesday and in early trading Wednesday.
The news bodes well for RIM’s new smartphones, the releases of which will be staggered throughout the end of this year and early 2013. “BlackBerry 10 is our most important launch ever,” stressed Heins. It also bodes well for fiscal second-quarter earnings, which RIM announces on Thursday. An additional 2 million new users in the quarter could point to increased revenue, though that’s not certain, especially if gains were skewed toward lower-end devices, which remain popular in emerging markets where consumers are more price conscious. The average selling price for BlackBerry may have taken a hit.
For RIM’s new, higher-end BB10 devices to sell well in markets like the U.S. and Western Europe, they’ll have to do more than just undercut their competitors on pricing. That’s where apps come in. The company showed off its new Facebook (NASDAQ:FB) and FourSquare apps at Tuesday’s event, and continues to try to win over third-party developers to grow its app library. Right now, Apple’s iOS and Google’s (NASDAQ:GOOG) Android have a significant advantage in that department, but RIM’s conference attracted many app makers from emerging markets in Asia, a region in which BlackBerry phones are growing in popularity.
Now that BlackBerry no longer has a stranglehold on enterprise purchases, it needs to better compete with Apple and Android phones in terms of desirability — cool new features and apps are just the way to do that. Investors and analysts still aren’t as enthusiastic about BB10 as Thorsten Heins, but the next six months should determine RIM’s fate, for better or worse.
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