Research In Motion Sticks to Its Strengths

If you follow sports, there's probably a player on one of your favorite teams who isn't necessarily bad, but who draws fire from fans and the media for his or her limitations. From a QB who's only accurate at close range, to a cleanup hitter who excels only at hitting the occasional home run,  there's no need for fans to come down hard on these players -- as long as they don't expect perfection.

Research In Motion (Nasdaq: RIMM  ) seems to face a similar problem these days. From the moment the company's Storm2 touchscreen phone was announced yesterday, in partnership Verizon (NYSE: VZ  ) Wireless and international carrier Vodafone (NYSE: VOD  ) , we've seen the expected chatter over whether RIM finally has a legitimate rival to Apple's (Nasdaq: AAPL  ) iPhone.

Most people, unsurprisingly, have said "no." In truth, it's hard to disagree with them. Not because the Storm2 appears to be a terrible phone, but simply because the iPhone has put itself in a league of its own. With a widely acclaimed user interface, iTunes integration, and an App Store that's bursting at the seams with compelling software, the iPhone's hard to beat.

Perhaps it's better to focus on what RIM does consistently well, rather than what's beyond its reach. Though RIM might not be another Apple, it's also not another Nokia (NYSE: NOK  ) . As yesterday's earnings release showed, the Finnish titan is bleeding smartphone market share because it lacks highly differentiated products. Nor is RIM another Palm (Nasdaq: PALM  ) ; the PDA pioneer does have an innovative smartphone platform, but ironically, it's now become an upstart in a market ruled by entrenched giants. And RIM's certainly not another Google (Nasdaq: GOOG  ) , a company that's playing catch-up in market share and differentiation alike.

Even without the iPhone, RIM can still claim millions of loyal customers, thanks to a platform that remains the gold standard for messaging and business productivity, seamlessly integrating the company's hardware, software, and Blackberry Internet Service. You might not hear much about Symbian or Android addicts, but you certainly hear about "CrackBerry" fiends. Throw in the growing number of apps that have been written for RIM's own operating system, and there's no need for the company to desperately remake itself in an attempt to keep up with Steve Jobs & Co.

The Storm2, an updated version of the much-hyped Storm smartphone released last year on Verizon's network, seems to reflect RIM's understanding of this fact. The original Storm, using a unique (some would say awkward) touchscreen that required users to physically push down on the screen and receive mechanical feedback, gave the impression of a company trying too hard to eclipse the iPhone's "wow" factor. The Storm2, on the other hand, takes a more natural approach, using electrical sensors to provide feedback; reviewers have been quick to praise this change. Meanwhile, RIM has also given the Storm2 some needed incremental upgrades. The new phone has Wi-Fi, multitouch functionality,and an improved web browser. Nothing really stunning here, just the kinds of improvements that you'd expect from a company that's become successful by paying close attention to what its customers do and don't want in their phones.

RIM is no Apple, and the iPhone's runaway success is bound to put some pressure on the company's growth rate in future years. The market seemed to be coming to terms with that truth when it gave RIM's shares a huge haircut following the company's last earnings release. But RIM's huge base of loyal customers isn't set to defect to Apple en masse. And with the Storm2, the company proves that it still has a knack for delivering the kinds of products these customers want.

Fool contributor Eric Jhonsa has no position in any of the companies mentioned. Google is a Motley Fool Rule Breakers pick. Apple is a Motley Fool Stock Advisor recommendation. Nokia is a Motley Fool Inside Value selection. Try any of our Foolish newsletters today, free for 30 days. The Motley Fool has a disclosure policy.


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  • Report this Comment On October 17, 2009, at 10:57 AM, JohnNTD32 wrote:

    What strength Rim has that is so unique? Handling emails? That is so yesterday. Rim's OS is so out of date and weak. The user interface is extremely ugly and unfriendly. The faithful users of Rim's phones will eventually learn that using blackberry is just an old and stupid habit that they have to get rid off in order to experience the new and exciting features of the new smart phones from Apple and Palm are offering.

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