Research In Motion Ltd.’s valuation reflects a “sentiment war” over its prospects, but its annual product showcase kicking off on Monday in Orlando should alleviate some concerns.
The BlackBerry maker has historically used its Wireless Enterprise Symposium (WES) to showcase its plans for growth, developments in carrier partnerships, and its latest products and solutions.
The event should draw plenty of attention as management its expected to address how it intends to regain top-line growth relative to Apple Inc. and other emerging handset and smartphone vendors. RIM is also expected to launch a new lower-priced BlackBerry aimed at consumers in emerging markets, a new faster browser that may include things like Flash support, and a new operating system (OS).
“As is clearly evident to BlackBerry users, the current web-browsing experience has significant shortcomings in terms of quality of experience, compared to the Apple iPhone or even new Smartphones introduced by HTC, Nokia, Motorola and Samsung,” Northern Securities said in a report. “This has been cited as one of the key reasons for limited penetration of the BlackBerry within the consumer segment, in addition to lack of a iTunes-type distribution platform.”
While some on the Street are concerned about competitive threats from Apple and Google Inc., momentum in North America and RIM’s enterprise business, RBC Capital Markets analyst Mike Abramsky thinks WES should produce improved sentiment.
He told clients that the event represents the “kick-off” to rising visibility for a number of new software, services, strategies and next-generation handsets RIM will launch in the second half of 2010. The analyst also thinks WES may help skeptical investors concede that RIM has a better chance than generally thought to narrow perceived competitive gaps and invigorate consumer uptake.
It may also further solidify RIM’s differentiated advantages versus Apple and Google. This, coupled with a “satisfying” browsing, user interface and application experience, may sustain market share, profitability and smartphone leadership.
Mr. Abramsky highlighted a variety of possible announcements RIM could make at WES. He assigned a 90% probability to a Webkit-based browser with iPhone-like speed, tabbed browsing and Flash support. A CDMA Bold 9650 handset announcement and launch timing was given a 75% chance, as was a 3G Pearl 9100, media/content partnership announcements and details on its China strategy.
Investors will be hungry for any commentary on the company’s success in China and other emerging markets as it may serve to offset the threat posed by a CDMA-based iPhone at Verizon Wireless. Northern Securities noted that Verizon Wireless and AT&T generate an estimated 40% of RIM’s total revenue and the launch of a CDMA-version of the iPhone is expected to erode RIM’s market share in the United States, which generated 58% of total revenue or US$8.6-billion in fiscal 2010.
The consumer market accounted for more than 50% of RIM’s current net subscriber additions each quarter during the past 12 months. Northern Securities believes this success is partly due to the company’s increased carrier partnerships in emerging markets and the European Union, as well as the introduction of lower-priced smartphones.
“With potential improvement in the web-browser to compete with consumer demand, we believe RIM can at least maintain its market share in the consumer market,” it said.
It also expects the enterprise refresh cycle during the second half of 2010 will bode well for RIM during 2010 and 2011 given its dominance in North America. “With Smartphone market share in key emerging markets like China and India up
for grabs, we believe it is too early to write off the potential success of the BlackBerry relative to the iPhone.”