Analyzing RIMM’s Potential Resurgence

Blackberry (Photo credit: Ario Gaviore – Squall87)

I had a feeling that Research in Motion (Nasdaq: RIMM) was still trudging along, though a small part of me expected it to be looking for bankruptcy at a certain point. I never really took a look at the company. The iPhone was out before I was looking at companies as investments and not just as the makers of stuff I wanted. Apple‘s (Nasdaq: AAPL) famous iPhone is probably still a big impediment to RIMM’s ability to turn itself around. If you add Google‘s (Nasdaq: GOOG) android-based phones and the far less threatening Nokia (NYSE: NOK) phones, then it becomes a monumental task.

There are some formidable companies in RIMM’s way so do not bet too heavily on a turnaround. The first thing that suggests to me that I should play it careful is that I have no plans to get a RIMM phone. There is still some demand out there though, and if the company can produce something innovative it has a chance. It really is not true that a fantastic product is all you need. It might get through eventually and become a success, but you have to survive and keep up with new developments. Quality will eventually be noticed, but it is hard to stay in business when you are posting major losses.

Before delving into the new products RIMM is working on, I would rather just look at the company and its fundamental position. I do not think any new products will really make the difference right away, barring something miraculous. It will take a few models to start the change. A phone model is starting to become a ball and chain for me. Even if I wanted to switch to android, I think I am too used to iPhones and my apps to really want the change. Even technophiles do not like all that much change with exceptions when there is something really awesome. For example the jump to a touch screen was welcome, but the switch away from Google Maps on the iPhone. I know I was mad. I do not like change unless it rocks my world, and I may not be representative but every time there is some feature added, changed, or taken away the internet explodes.

RIMM has almost $3B in cash, and no debt. That gives it an opportunity to innovate its way back into the market, though I am not sure the choice of strategy is right. I have been reading about the new OS called BlackBerry 10. Ignoring specifics, I am not sure a new OS is the way to go. There are already two heavily entrenched in the market. Apple’s is for one line of phones and tablets, which is somewhat insane if you think about it. Android is all over the place on different models and I think Microsoft has one bouncing around on the Lumia.

I know back in the day the BlackBerry OS was a big deal, but for a company posting severe losses it seems better to sell phones. It is not like the company charges extra to be fitted with the BlackBerry system, though it will probable license the new OS out. Perhaps I am just a quitter, but is there a need for another OS? I feel like adopting Android might be the better choice, or maybe even Windows Phone. I know BlackBerry likes to have some strong security in its phones to appeal to the government and enterprise market, but I just do not see this as a good move. Unless the operating system really offers something unique and amazing it is a drag on the company to develop and support it. I know it is trying to develop its own app store, which could bring in revenue opportunities but I don’t know if it will be enough. The market segment it is targeting might not be as app hungry, though almost everybody buys some apps nowadays.

A new phone might be promising, and it might usher RIMM into the current age of mobile phones. However, recreating the brand will be hard. Also, convincing most investors that the stock is worth investing in will take time. That is more about psychology and the turnaround will probably be in full swing by the time the market at large takes off. There has only been leaked information regarding the new phone, as far as I can find. There is plenty of time, because the first phone will not make the company into a star. You will have time to judge the reception and sales of the new phone, and glimpse the future plans.