RIM's Stock is Factoring its Weak Outlook
Rim's stock is taking a beating but not because of earnings. Fundamentally the market is moving away from what made it a success. Here are 5 reasons the stock is toast.
RIM continues to face competitive pressures from Apple's (NASDAQ:AAPL) iOS, Google’s (NASDAQ:GOOG) Android and now Microsoft's (NASDAQ:MSFT) Windows Phone 7 operating system platform.
RIM's Hardware is a Commodity
RIM's innovative hardware created rabidly addicted fans. Remember the Crackberry? But nowadays you can get the same thing from tons of vendors. RIM hasn't kept ahead of the pack. This is precisely what happened, and the stock crashed more than 10% in after-hours trading on the Nasdaq immediately following its release of earnings.
RIM shipped around 13.2 million BlackBerry phones down from 14.9 million it sold in the previous quarter. Following earnings, Trefis now expects RIM's global mobile phone market to be more subdued in future.
Microsoft Giving Away Backend Special Sauce
Great hardware plus server software that IT guys loved was a winner. But Microsoft and others have commoditized the IT part too.
Trefis notes that mobile phone market share is the most sensitive driver to RIM's estimates. Using Trefis' modifiable charts, if RIM market share reaches 2% by in 5 years time, the implied stock price tanks.
Former Lock on Corporate Market is Slipping
Used to be IT guys wouldn't let you use anything but the corporate Blackberry. But these days they're realizing they need to support what end users want to use.
According to a recent report from Comscore, RIM's U.S. market share declined from around 30% in January 2011 to 26% in April 2011. ((comScore Reports April 2011 U.S. Mobile Subscriber Market Share, June 3rd 2011)) The main beneficiaries have been smartphones based on Google's (NASDAQ:GOOG) Android operating system and Apple's (NASDAQ:AAPL) iPhone.
Unified Messaging is Under Attack
RIM's third leg was clean, unified messaging. But Android, Apple, and Microsoft are making messaging a platform-play that spans beyond the phone and leverages areas where RIM has no offering, such as free web-based phone and video calls.
Only Room for Three
Given all these reasons, Google and Apple are killing RIM. If it was a delay in shipping or a temporary lag Rim might survive. But it's not. Rim has lost all of things that made it once great.
RIM once was a great mobile phone company but it's behind the times and its core competitive advantages are under siege. Its attempts at a playbook are a move in the right direction but will not move the needle.
