BlackBerry 10: Research In Motion’s Last Throw Of The Dice?

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

Research In Motion (NASDAQ: BBRY) is counting down the days to the launch of its new generation of BlackBerry smartphones, which go by the name BlackBerry 10. The Canadian-based smartphone maker's stock rose by 50% during the month of November, following its announcement of successful developments with regards to BB10 launch.

The company seems to be getting all sorts of bonuses from analysts. A majority of the analysts are expressing a significant level of confidence in the company's stock, which relies upon the success of BB10. Goldman Sachs analysts estimate a 30% chance of success, which is significantly material given the company's 2012 woes. Research In Motion does not rely on revenue from its BlackBerry smartphones alone.

In general, the company provides "platforms and solutions for access to information, including email, voice, instant messaging, short message service, Internet and Intranet-based browsing, and multimedia content through developing integrated hardware, software, and services." However, according to statistics, the BlackBerry unit is a major player in the company's overall performance. This is because of the way the unit's dismal performance impacted on the overall performance of the company's stock in 2012.

Research In Motion faces stiff competition from smartphone industry giants like Samsung Electronics Company, Apple (NASDAQ: AAPL), and Nokia (NYSE: NOK), among others. The company also faces an uphill task in the smartphone OS business, as it lags well behind Google (NASDAQ: GOOG)'s Android, as well as Apple's iOS. However, the BlackBerry smartphone still maintains its lead in the workplace, but continues to lose the grasp of the market share in the area as businesses embrace iPhones and other smartphones.

For instance, the department of Defense said in October that it would embrace the use of iPhones and Android smartphones. The department has been using BlackBerry smartphones since the introduction of the devices. This indicates that there is an encroachment of sorts in its stronghold business segment. Therefore, RIM will now battle it out with the likes of HTC Corporation, Google's Motorola Mobility, iPhones, and Samsung Smartphones, among others.

The Big Question: Is BB10 RIM's Last Throw of the Dice?

Research In Motion's BlackBerry platform is not only facing a challenge from the smartphone industry competitors, but also from App developers. In a recent survey, only 9% of developers were willing to develop BlackBerry apps. This is a worrying statistic as the company approaches its long awaited launch of BB10. Smartphones run on applications, and hence, RIM will need support from developers for it to stand a chance of competing with the two main ecosystems, the iOS and Android. The tech giant will need to invest well in order to boost its newly re-branded App store, the Blackberry World.

According to analysts, a decent performance by BB10 will likely return RIM to profitability. However, this is only a big "if." In fact, RIM's task is larger than what is being perceived. The company postponed the launch of the device to 2013, skipping out the busy festive season which would have otherwise given the company a good basis for judgment. Cyber Monday just reported more than $1.4 billion worth of online transactions, while Black Friday logged a historical $1 billion. So, did RIM miss an opportunity? Only time will tell.

The BB10 has been touted as the savior of the Canadian tech giant. According to the way the company is handling the launch, there is every reason that this could be true. Over the last two quarters, there have been reports linking the company with a possible sale of its smartphone BlackBerry unit, which is probably the only alternative if BB10 fails to pull the strings together.

The company engaged JPMorgan Chase and RBC Capital Markets in the early part of the year to assess possible buyout options. The company has also involved Goldman Sachs in strategizing for its future. Windows Phone 8 maker Microsoft (NASDAQ: MSFT) was one of the rumored potential buyers of the BlackBerry Unit, with Nokia and Samsung being linked as well. However, these options faded off, and now the company's stock is trading in double digits after it had dropped from mid teens to $6.22 per share in late September.

Bottom Line

Research In Motion is facing a make it or break it situation with its latest generation of BlackBerry phones. The company's future does indeed rely on how well its newest device will do come 2013. The company's previous devices performed underwhelmingly, especially BB7, as competition intensified. It is believed that BB10 will be a class act in the smartphones industry. My recommendation is that, that is the only option; otherwise, this might as well be RIM's last involvement in the smartphones business.

RIM closed at $11.89 on Thursday.

Nmaithya has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple,, Google, and Microsoft. Motley Fool newsletter services recommend Apple,, Google, and Microsoft. 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!

blog comments powered by Disqus