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Is Research In Motion (Nasdaq: RIMM  ) losing its stranglehold on hordes of fanatically dedicated BlackBerry users? IT research firm Gartner seems to think so, as a senior analyst spills the beans on a pretty bleak outlook for RIM's market position. But it's not all bad news.

Gartner VP Ken Dulaney sees RIM's market share in the burgeoning smartphone segment shrinking over the years, moving from a 20% unit share today to a mere 12.8% at the end of 2012. The BlackBerry will be leapfrogged by the Apple (Nasdaq: AAPL  ) iPhone, Microsoft (Nasdaq: MSFT  ) Windows Mobile, and Google (Nasdaq: GOOG  ) Android platforms in three years, according to Gartner. And Nokia (NYSE: NOK  ) , the global market leader in smartphone sales, is expected to lose gobs of market share to the surging competition.

So that's the bad news: lower market shares for RIM and Nokia. Dang it!

Now for the good news: The market will expand so rapidly that the share losses might not be as painful as headline numbers might demonstrate. According to Gartner, RIM sold 7.7 million handsets in the smartphone class last quarter. By the fourth quarter of 2012, Gartner sees a staggering 65 million RIM smartphones in the hands of active users. The total smartphone market saw 41 million units sold last quarter. Accounting for upgraded old smartphones and whatnot, Gartner thinks we'll see 522 million smartphones in use by 2012.

That's a huge market, and we're nowhere near that market size today. Losing market share is never a positive, but even under dire predictions, RIM still looks like an explosive growth opportunity based on smartphone growth alone. Gartner believes even little Palm (Nasdaq: PALM  ) should sell some 10 million units of the Pre and its successors, for crying out loud. Palm hasn't released sales figures for the Pre, but it's generally believed that around half a million units were sold last quarter.

So, yeah, RIM might be losing its claims to uniqueness and unmatched features, but it will make up for that in volume. Analyst firm Robert W. Baird agrees with that thinking, moving RIM from "hold" to "buy" on a depressed valuation and upcoming catalysts like the Storm 2 handset.

Now, there's always a chance that both of these analysts misjudged this market's growth prospects, and as we've seen with the Palm Pre, there are no guarantees that the Storm 2 will be a hit. Still, according to Gartner, most market-loss share will come at the hands of the Android and Windows Mobile. These are capable competitors, but they're also more difficult to cash in on. Google and Microsoft don’t make nearly the kind of profit from their smartphone software as BlackBerry does with its enclosed system, which commands strong hardware margins. While RIM may have some competitive question marks going forward, it's still a pretty smart way to invest in heady smartphone growth.

So I might not agree with every point of Gartner's fine print, but I do agree with its conclusions: RIM has a lot of long-term growth ahead, and so does Nokia -- even while their market shares are shrinking.

The secret to making money in stocks is to find tomorrow's giants while everyone else is a skeptic. Fool contributor Anders Bylund owns shares in Google, but he holds no other position in any of the companies discussed here. Google is a Motley Fool Rule Breakers recommendation. Apple is a Motley Fool Stock Advisor selection. Microsoft and Nokia are Motley Fool Inside Value recommendations. Try any of our Foolish newsletter services free for 30 days. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.

Read/Post Comments (4) | Recommend This Article (7)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 13, 2009, at 1:37 PM, prginww wrote:

    The Blackberry is very well designed. Verizon kicks ass when it comes to reliability, customer support, and tech support. I have full confidence in RIMM, and intend to stick with them, investing-wise, certainly as long as Verizon is locked out of the I-phone market. As for the IPhone, I find it very annoying compared to my Blackberry.

  • Report this Comment On October 13, 2009, at 1:46 PM, prginww wrote:

    RIMM is going to lose 34% of its market share with Microsoft and Google leapfrogging them? Not likely. Unlike the other Smartphone players (sans PALM), smartphones are all RIMM does.

    Going forward its a two horse race IMO -- Apple and RIMM -- with Google or Microsoft a distant third.

    I do strongly agree with one thing -- the smartphone market will continue to grow for years to come. Better to invest in all three (four?) players.

  • Report this Comment On October 13, 2009, at 6:14 PM, prginww wrote:

    It would be interesting to learn how Gartner determines that RIM and Nokia will decline in market share while other platforms will gain share. Did they perform a large multi-country survey of RIM and Nokia users who suggested that they will discontinue such purchases? Knowing Gartner as I do, most likely this is merely speculation on the part of a few Gartner analysts without the benefit of any survey data. At best it is an extrapolation of recent quarterly sales trends.

  • Report this Comment On November 02, 2009, at 2:34 PM, prginww wrote:

    These are great cells to have, personally we like Blackberry and its apps, more functional for our uses, and easy to take apart if need be.

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