How Brand and Aspirational Value Can Work Wonders For This Stock
Subhadeep is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
As one-time smartphone giant Research in Motion (NASDAQ: BBRY) gears up for the BB10 launch on Jan. 30, everyone, including the management, is well aware that this is a ‘make-or-break’ situation for the company. While the expectation of a turnaround is causing the share prices to move higher, many also fear that the initial optimism might be short-lived, thanks to an already-delayed operating system launch and the overwhelming presence of peers Apple (NASDAQ: AAPL) and Samsung, not to mention other fallen giant Nokia (NYSE: NOK). After all, most people seem to be asking – how much more new features can RIM add that are not already there in an iPhone or a Galaxy SIII? Probably not much more, if you ask me.
But, if tech-friendly investors can take some time off from reading endless speculations about what the the BB10 specs might be, perhaps they can concentrate on how RIM might have a substantial ‘specific market segment’ that would want to lay its hands on a ‘new-look iPhone-like’ Blackberry. Add to it even a small bit of novelty, which the BB10 OS is sure to offer, and investors can afford a smile. This suddenly seems to be the right time to jump into the company.
Let’s face it, the latest and best Samsung line of smartphones (I’m talking about stuff like the Galaxy SIII and the Note 2 here) often prove to be pretty expensive for an entire segment of people with mid-level yet rising incomes in emerging nations such as India, China, and even the entire African continent. And we’re not even talking about the pricier iPhone here, which is so expensive that buying it remains wishful thinking for some. This is the segment that offers the greatest potential for RIM.
My reasoning is simple – possessing a new look, a BB10-powered Blackberry smartphone is sure to be a far greater boost to a consumer’s status than settling for a lower-end Samsung phone or a cheap but lesser-known brand. RIM just has to get the pricing and the promotion right, and the rest of the job will be done by consumer aspirations and its perceived brand value. And if you’re thinking about the ‘service fee’ issue, sometimes one has to sacrifice something to get a lot more. At the moment, RIM simply needs to secure market share and sell more phones. While it’s true that Apple is working out a way to grab such customers, as its latest policy of offering installment payments for Chinese web-based buyers has revealed, cost-conscious consumers may soon realize that ultimately they will be spending way too much money. After all, Apple will not be reducing prices of their premium phones, because that’s also tied to their own brand image.
Nokia, on the other hand, has lower-priced offerings that are selling really well in emerging nations. Its ‘Asha’ range of low-end phones clocked impressive sales of around 9.3 million units in its latest fourth quarter, a significant increase over 6.5 million Asha units that customers purchased in the prior quarter. But then, RIM should not have any cause for worry as its BB10 phones are hardly going to be placed in that price range. And if you go for slightly pricey stuff, Nokia’s problems about the Windows 8 acceptability in its higher-end Lumia range will continue to be a major hindrance.
There’s also something else that should boost RIM’s fortunes in emerging nations. The enterprise segment, which has been the one RIM has always banked upon, may come to its rescue in these emerging markets. That’s because the ‘bring your own device to work’ concept has not yet caught on majorly in these regions yet, and a Blackberry remains the preferred workplace device in the higher echelons of the corporate world. The new generation BB10 devices should find acceptability in this segment too, and the company’s famous security features should come in handy.
As you may have noticed by now, this blog steers clear of developed markets in North America and Europe. But if you're thinking that's a big mistake, let’s not forget the fact that even Apple is looking at China (an emerging nation) as its biggest market in the future. Everyone’s concentrating on emerging nations these days, as they know where the money’s going to come from in the next few years. RIM will go all out to build up on its long-standing relations with carriers in these countries and sell as many BB10 units as possible in the next few months. After all, an 80 million-strong subscriber base is not to be looked down upon. Mr. Heins, we’ll keep a close watch on what you’ve got to show us. Until then, fool on!
subhadeeptech has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. 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!