Is 2013 The Year For RIM?

Yasir 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) has been one of the leaders in the mobile phones market with its BlackBerry smartphones. Even though Nokia and RIM were two of the biggest mobile giants, along with Apple (NASDAQ: AAPL), RIM has faced a major decline in recent years. With shares currently priced at $11.40, the comany has decided to make BB10 its future amid rising confidence. Both Nokia (NYSE: NOK) and RIM were knocked off from the top smartphone market, but it looks like both companies are getting back on the right track in 2013 with Nokia's successful Lumia line and with the upcoming BB10 smartphones. Here is a SWOT analysis of RIM and the things that RIM shareholders should watch for in 2013.

Strengths

RIM's BlackBerry service is one of its biggest strengths, along with its email service. The BlackBerry email servers are really secure, which is one of the reasons why some countries have banned BlackBerry services. Therefore, BB10 will probably be one of the best smartphones in terms of professional and business features. Additionally, RIM's hardware and software combination is another strength. Companies like Sony and Samsung rely on the Android OS, which can sometimes mean instability and inconsistency.

Similarly, Nokia is also relying on the Windows 8 operating system with their own hardware. RIM, like Apple, makes its own software to go with its hardware for better stability and reliability. Apple products have always been of superior quality, mainly because the hardware works well with Apple's own software. Battery life has been a strength of BlackBerry smartphones for a long time, and if RIM can maintain a decent battery life with its touchscreen smartphones, then it could be a major strength, as Android smartphones usually don't last long. Lastly, RIM has finally switched to full touch screens, and with all these features combined, BB10 Smartphones are likely to be in a strong position

Weaknesses 

One of the biggest weaknesses for RIM is the lack of apps support. This weakness alone can determine the success or failure of RIM. The iOS and Android app stores have nearly a million apps already, which are growing every day. Apps on the Windows mobile platform have also been growing, which is one of the reasons why Nokia is doing well at the moment. BB10, on the other hand, will have around 70000 apps on its release in late January. Consumers like apps and the variety available in the Apple Store and the Google Play Store, but RIM CEO Thorsten Heins doesn't think that this is the case. Heins recently said that most apps on other app stores are useless.  Heins aims to have around 400 useful apps after BB10's release and claimed that not all popular apps will be available on BB10, although substitutes will be present. One of the reasons for the failure of the BlackBerry Playbook was the lack of apps, but this time around RIM looks to get this right with both the number of apps and the availability of useful apps.

Another weakness is RIM's customer base. RIM has usually targets a niche market of corporate and government individuals who use BlackBerry smartphones. Although, RIM did get into the mass consumer market with several BlackBerry devices and millions of users still use BlackBerry smartphones as their personal devices. Also, teenagers have also been using BlackBerry smartphones because of its BlackBerry Messenger service, which is now being replaced by alternatives such as Whatsapp. RIM will introduce the video chat feature in the latest BB Messengers but we'll have to wait and see how that works out. 

Nokia, on the other hand, has targeted a mass audience with its different lines of mobile phones.  After RIM's Q4 results, Heins did say the BlackBerry's core strength is enterprise, but also claimed that "I want to be in the mass market and I want to participate." BlackBerry is definitely not a major player in the consumer market at the moment compared to Apple and Samsung, however, it can be after the release of BB10, as Heins is focusing on gaming and media on the new BB10 devices.

BlackBerry's U.S market share fell significantly, but it does have a decent foreign market share that is growing as countries like Indonesia are offering low $5 plans. Nigeria, South Africa and Mexico are all heavy contributors to RIM's revenue. Other countries such as Pakistan are also offering low contracts for the BB Messenger services. However, in terms of foreign market penetration, Apple and Android still dominate the worldwide smartphones industry. BlackBerry smartphones are still used around the world as personal devices without the BB services, and with the new and powerful BB10 touchscreen phones, sales might increase without the BlackBerry service contracts, similar to the newest Android smartphones

Opportunities

If RIM can survive with its BB10, then there are opportunities for it to grow and expand. Possibly, the best opportunity is to expand with BB10 tablets. Most smartphone manufacturers, including Apple, have invested in tablets. This has created a separate tablets industry with Apple and Android dominating it. RIM did come out with its first tablet, the BlackBerry Playbook, but it failed. The lack of app support was one of the reasons for the failure.

Even though the Playbook didn't do well, more than 2 million Playbook users were and are still impressed by the browser. Therefore, if BB10 can get the right number and type of apps, releasing a tablet would be a smart move. Both RIM and Nokia have not been big players in the tablets market, and we'll have to wait and see what both companies do.

Another opportunity for RIM is to target both high-end and low-end consumers. Apple's iPhone is only targeted to the people who can afford it, while there are a number of Android devices targeted towards different individuals with different budgets. There were rumors that RIM would be releasing 6 different smartphones in 2013, which would include budget-friendly smartphones as well. As RIM only has a niche market share, they will definitely target different types of consumers now in order to make inroads in the major markets. The switch from full QWERTY keyboards to full touchscreens makes this possible as consumers want touch screen devices. Previously, the target audience was very limited, but RIM does plan to satisfy every type of consumer with BB10. Nokia has done exceptionally well with targeting different types of consumers with their low-end Asha smartphones and high-end Windows smartphones.

Threats

RIM currently faces a lot of competition that was responsible for knocking the company out from the smartphone industry in the first place. Apple and Samsung are the main rivals of RIM, as they dominate the smartphone market. While RIM will announce BB10 in late January, who knows what Samsung and Apple might be releasing this year? In terms of Operating System, Android has to be the biggest threat, as it dominates over half of the market. Then there is Nokia, which has come on the right track after struggling for a long time right before the release of BB10. So, there is a lot of competition for RIM in 2013, especially with Windows 8 lurking.

In conclusion, we'll have to wait for Jan. 30 in order to see what happens. RIM has certainly taken steps in the right direction. It took some time, like Nokia, but 2013 might just be the year for RIM. Nokia made Windows 8 its future and it paid off. RIM has made BB10 its future and it looks like RIM will be heading in the right direction.


yasirrfc 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!

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