Will Samsung’s Loss Translate to RIM’s Gains in Europe?

September 12th, 2011 by Trefis Team
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Trefis
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Research In Motion

The Dutch courts in The Hague recently issued a preliminary injunction against Samsung’s Galaxy S, Galaxy S II, and Ace smartphones that would ban the sale of the devices across almost all of Europe and will be effective after October 13 this year. [1] This is no doubt bad news for Samsung that could benefit competitors like Apple (NASDAQ:AAPL), HTC, Research in Motion (NASDAQ:RIMM) and Nokia (NYSE:NOK) in the European smartphone market.

Samsung has gained a huge presence in Europe

Over the past one year, Samsung has experienced rapid growth in the Western European smartphone market. According to a very recent report from IDC, Samsung’s market share increased from 4% in Q2 2010 to 22% in Q2 2011 in this market. Apple and HTC gained somewhat, while RIM and Nokia lost market share. [2]

RIM could benefit the most

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Samsung is almost certain to lose share in the Western Europe smartphone market once the injunction banning its smartphones starts. However, we believe RIM is positioned best to gain from this opportunity as it has recently introduced fresh set of smartphones based on BlackBerry 7 operating system. Apple’s iPhone 5 is slated to release in October while Nokia’s transition to Microsoft’s (NASDAQ:MSFT) Windows Phone 7 is expected to start by this year end hence giving RIM the lead in the smartphone market.

The recent BlackBerry 7 operating system release from RIM has received some positive reviews leading some brokerage firms to upgrade RIM’s stock (see Upgrade Gives RIM’s Stock Life, QNX Still the Key). We maintain $43 price estimate for RIM stock, which is about 40% above market price.

RIM’s market share could gain

RIM generates about 25% of smartphones sales from Western Europe, making it a crucial market for RIM. [3] If RIM gains market share at the expense of Samsung, its overall market share could be in for a positive surprise.

You can tweak the above chart to see the effect of market share increase on our price estimate for RIM stock.

See our complete analysis for RIM stock here

Notes:
  1. Samsung Galaxy smartphones banned in Europe by Apple patent complaint, Slashgear, August 24th, 2011 [↩]
  2. Western European smartphone market for Q2 2011, IDC, September 9th, 2011 [↩]
  3. Data derived by taking the IDC data for Q2 2011 on smartphones sales in Europe, and the total smartphones that RIM sold in the last quarter [↩]