Rebound or Requiem? Who’s Threatening Research in Motion?

Matthew is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

If Research in Motion (NASDAQ: BBRY) is to ever return to its former glory of profitability and popularity the company must combat several looming threats.  As investors countdown to the company’s launch of the highly anticipated BlackBerry 10 device it’s important to take a step back and consider what the company is up against.  In this fifth part of a series entitled, “Rebound or Requiem? A SWOT Analysis of Research in Motion,” I’ll look at RIM’s greatest threats.

Threats

The expanding “bring your own device” trend, including the federal government.

Gone are the days when your employer handed you a new company BlackBerry to access your email on the go.  Now you hand your Apple (NASDAQ: AAPL) iPhone or Google (NASDAQ: GOOG) powered Android device over to the IT department and they set you up on the company’s network.  It’s a policy that can make a lot of sense.

I remember the days when my dad carried two cell phones on him wherever he went.  As a government employee he was always had his CrackBerry to send critical emails or make important calls.  If he wanted to call home he had to use his personal cell.  Now that he’s retired from government service he carries just one phone where he can get both work and personal emails. 

Government agencies and large employers spend vast sums of money to ensure employees were always connected.  Now, those employees buy their own phones and simply expense a portion of the bill.  It’s a trend that resonates with employees though IT departments are mixed as it creates an added level of complexity while also opening the company up to additional security risk.  Bottom line though is this trend appears to be the wave of the future.

A patent infringement lawsuit brought by Nokia (NYSE: NOK) that may suspend sales of BB10.

The Finnish tech giant is suing RIM in an effort to obtain higher licensing fees for patent that it owns.  A worst case scenario would be a sales injunction against RIM which would prevent the company from selling new phones including its highly anticipated BB10.  The technology in question relates to wireless local access network technology (WLAN) or WiFi.  While a settlement is more likely, this couldn’t come at a worse time for the company. 

Mobile technology IP is crucial and RIM does have an “industry leading intellectual property portfolio.”  However, access to the crucial IP that the company does not own is a huge threat.  Companies like Google are investing billions ($12.5 to be exact) to gain control of mobile technology related patents.  If RIM needs to pay up to access patents it could crimp the company’s profitability.    

Growing competition

It cannot be understated how competitive the mobile industry has become.  By looking at global smart phone shipments RIM ranks third behind Samsung and Apple.  The crowded space includes handset makers like Samsung, Nokia, HTC, LG and others like Microsoft and Google joining the fray on the OS side. 

It’s a field dominated by two clear winners, Android devices are the clear market share leader with 75 percent of units sold while Apple rakes in 71 percent of the industry’s operating profits. RIM's market share has been eroding over the years and the company must stop the bleeding.  Only time will tell if BB10 is the answer.

Foolish Bottom Line

Of these threats the one that concerns me the most is the rapid expansion of “bring your own device.”  Instead of providing employees with a company BlackBerry they can opt for the phone of their choice which is increasingly one powered by Google or Apple.  To combat this threat RIM must make phones that are secure, cool and increase productivity. 

That’s why there is a lot riding on the Jan. 30 launch of BB10.  If the phone is a hit with the company’s core customers then it has the chance to at least keep up with the competition.  Does that mean that RIM is a buy?  Click here to read the conclusion of this SWOT analysis of RIM.


latimerburned owns shares of Apple and has the following options: Apple. The Motley Fool owns shares of Apple and Google. Motley Fool newsletter services recommend Apple and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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