Acquisitions and New OS Could Bolster RIM’s Market Share
Research in Motion (NASDAQ:RIMM) has made conscious efforts to improve its smartphone operating system over the past few years. It acquired Cellmania, QNX and Astonishing Tribe to improve BlackBerry’s software design and performance. [1] [2] [3] The moves should help keep RIM afloat in the increasingly competitive smartphone market that features big-name players like Apple (NASDAQ:AAPL), Nokia (NYSE:NOK) and Motorola Mobility (NYSE:MMI).
The most important of these recent acquisitions for RIM might be the QNX software that could ultimately replace the present BlackBerry operating system. QNX will be used for BlackBerry smartphones as well as the PlayBook tablet.
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Our price estimate for RIM, at $65.59, stands roughly 30% ahead of market price.
RIM’s Operating System Needs Improvement
A smartphone’s operating system and software now plays a critical role in shoppers’ decisions regarding which phone to purchase, and RIM needs to revamp its BlackBerry OS with new features in order to keep pace with the highly popular Apple iOS and Google (NASDAQ:GOOG) Android OS. The recent launch of new phones and software from competitors has created a headwind to RIM’s mobile phone market share growth. RIM’s market share stood at about 3% in 2010.
How RIM’s Operating System has Evolved
A few months back, RIM released BlackBerry OS version 6.0 in an effort to improve its smartphone features, but these features were not sufficiently compelling to customers and RIM seemed to just be playing catch-up with the competition (See “RIM Plays Catch-Up With New BlackBerry OS”).
However, during RIM’s recent earnings conference call, management mentioned that it plans to introduce BlackBerry OS 6.1 in 2011, and then QNX OS integrated with smartphones and tablets in 2012. [4] The new BlackBerry 6.1 will be packed with a variety of new features, and, coupled with a new lineup of BlackBerry phones, could draw new customers signups and facilitate RIM’s market share gains (see Can RIM Hit a Home Run with New BlackBerry Lineup?).
See our full analysis and $69.59 price estimate for RIM
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