Can RIM Hit a Home Run with New BlackBerry Lineup?
Research in Motion’s (NASDAQ:RIMM) new lineup of BlackBerry smartphones will include new features like NFC technology, higher display resolution, RAM upgrades and HD video recording. The phones featured in a recent report include the BlackBerry Dakota (new BlackBerry Bold), Apollo (Curve), Monaco (Storm) and BlackBerry Torch 2. [1] Will the new features be enough to bolster RIM’s market share in the smartphone space, in which it competes with Apple (NASDAQ:AAPL), Nokia (NYSE:NOK) and Motorola Mobility (NYSE:MMI)? [2]
Our price estimate for Research in Motion stock stands at $68.92, roughly 12% above market price. We estimate that 52% of the company’s equity value is generated by BlackBerry phones.
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Can RIM Sell More than 60 Million Smartphones in 2011?
RIM sold around 48 million smartphones in 2010, and its mobile phone market share has slowly but steadily increased from 0.6% in 2006 to around 3% in 2010. We expect this trend to continue, with market share reaching close to 7% by the end of our forecast period.
RIM reportedly plans to use Near Field Communications (NFC) technology in its new BlackBerry lineup, enabling third-party developers to create mobile payment applications that allow owners to use their phones as digital wallets. NFC technology, however, has already been used in Google (NASDAQ:GOOG) Android’s latest version, Gingerbread, as introduced in the Nexus S phone (See Can Nexus S Boost Google?).
Other new features like higher display resolution, RAM upgrade and an improved camera should also spark interest.Still, it remains to be seen whether these features can actually induce new customers signups and facilitate RIM’s market share gain in the increasingly crowded mobile phone space.
To highlight RIM’s sensitivity to this metric, we estimate a 20% upside to our $68.92 price estimate if RIM can reach 5% mobile phone market share by the end of our forecast period (vs. our base 3.7% projection). We note that a 5% market share this year would imply around 80 million smartphones sold.
[trefis_forecast ticker=”RIMM” driver=”0315″]
Drag the trend line in the modifiable chart above to see the affect of various mobile phone market share scenarios on Research in Motion’s stock value.
You can see the complete $68.92 Trefis Price estimate for RIM stock here.
Notes:- Boy Genius Report: RIM’s 2011 BlackBerry Lineup, January 2011 [↩]
- According to Gartner, RIM’s smartphone market share declined from around 21% in Q3 2009 to 15% in Q3 2010. However, its share in mobile phone market slightly increased from 2.8% to 2.9% during the same period [↩]