RIM Courts App Developers at DevCon by Showing Them the Money

February 13th, 2012 by Trefis Team
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Research In Motion

Research in Motion (NASDAQ:RIMM) continues to receive a lot of media attention since the leadership shakeup a few weeks back. The company announced the replacement of its co-Chief Executive Officers Jim Balsillie and Mike Lazaridis with Thorsten Heins as President and CEO (Read RIM’s Co-CEOs Hand Reins to Heins, Challenges Remain). At the DevCon Europe event hosted by RIM, the company’s executives mentioned that contrary to the popular belief, BlackBerry users have actually shown great amounts of interest in embracing smartphone apps. [1] This is an encouraging statement from the company at a time when it is facing challenges to compete with Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOG) in the smartphone and tablet market.

Our $16.50 price estimate for RIM stock is largely in line with the market price.

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See our complete analysis of RIM here

Apps business picking up for RIM

During the meeting, RIM mentioned that about 174 million apps are downloaded from BlackBerry’s App World every month. The executives also mentioned that the apps are quite profitable for developers and BlackBerry apps generate 40% more revenue than their Android counterparts. Additionally, about 13% BlackBerry developers have made more than $100,000, which is a higher percentage than iOS or Android. However, Apple is well ahead of its competitors in terms of number of apps downloads. We estimate that about 12 billion apps were downloaded from the Apple apps store in 2011.

Halo effect from apps

Apps play an important role in creating a halo effect around other more valuable businesses for a smartphone vendor. The abundance of apps and the seamless user interface is an important factor for a user while choosing a smartphone. RIM’s strategy to attract developers by showing them the profitability angle of apps business is the correct one, as developers play an important role in the development of the apps ecosystem and the success of a smartphone. The success of these efforts, however, remain to be seen.

Understand How a Company’s Products Impact its Stock Price at Trefis

Notes:
  1. RIM: BlackBerry apps are more profitable than Android apps, BGR, February 7th, 2012 [↩]