World's Scariest Stocks: Research In Motion

What else is stewing in our cauldron of evil? Prepare yourself before proceeding to the rest of our world's scariest stocks.

Research In Motion (Nasdaq: RIMM  ) is the world's scariest stock, because it has no defense for Apple's (Nasdaq: AAPL  ) iPhone and its better platform for developers.

Here comes the knife ...
But don't take my word for it. Here's how the coders at Localytics, whose business is analytics for creators of software for mobile devices, describe the development process for the BlackBerry OS:

BlackBerry has maintained backwards compatibility, so old apps will run fine on newer hardware. Apps are built with only J2ME and a handful of libraries provided by RIM making it difficult to create a very rich application experience.

And here's how they describe the iPhone development experience:

iPhone is well rooted with its sleek UI builder and clear design guidelines. It is based on OSX, which means many developers will be familiar with it. 

To be fair, I'm taking only the first two sentences of both reviews.If you'd like to see each critique in full, go ahead, I'll wait. You'll find that while Localytics' coders concede that the iPhone has limitations, they argue that the OS is well-designed and developer-friendly.

For the most part, anyway. The iPhone differs from Android, BlackBerry, and even Microsoft's (Nasdaq: MSFT  ) Windows Mobile and Palm's (Nasdaq: PALM  ) webOS handsets in that it doesn't support background processing -- allowing only one active application at a time. This limitation explains why iPhoners can only receive Skype calls when the software is open on their screens.

But this appears to be a minor complaint. As battle-tested and backwards-compatible as the BlackBerry OS is, developers relish the richness of other platforms more. For example, there are only 916 games in RIM's BlackBerry App World, versus more than 16,000 in the App Store at last count.

Night of the overcaffeinated developers
If that sounds it bad, it is. Apple is courting developers at a pace not seen since a frighteningly enthusiastic Steve Ballmer exhorted coders years ago at a Windows developer conference.

The strategy appears to be working. A new survey from ChangeWave Research shows that RIM's 40% market share among consumers endured a 1% haircut from June to September. Apple's iPhone gained five percentage points over the same period. At a 30% share, it's now the No. 2 smartphone supplier here in North America. Palm was third, at 7%.

Where RIM really suffers in ChangeWave's survey is consumer sentiment. Of those who plan to buy a smartphone in the next 90 days, 36% plan to buy iPhones, versus 27% for the BlackBerry. 

But these are consumers. The BlackBerry is largely a business device, and in the enterprise, ChangeWave Director of Research Paul Carton expects Research In Motion to continue to perform well:

RIM is expected to have multiple device launches and will introduce new services in the coming months. Moreover it continues to outperform in its core corporate smart phone market. Thus, despite RIM's underperformance in the current consumer survey, longer term trends suggest that it is still well positioned for long term growth and will continue to remain one of the premier players in the rapidly expanding smart phone market.

Nowhere to hide, not even in Asia
The key phrase there: "one of." RIM no longer dominates a niche; smartphones are now as much for moms as they are business executives, and they're in demand worldwide.

Which -- surprise! -- is more bad news for the BlackBerry maker. More than 70% of Research In Motion's revenue originates in the United States and Canada. What's more, mobile software tracker Getjar estimates that RIM's various handsets account for just 0.35% of the Asian market.

Apple accounts for a tenth of RIM's total in Asia, but is gaining momentum even as Research In Motion is losing it. Consider China Mobile (NYSE: CHL  ) . RIM's primary smartphone partner for that country is negotiating with several vendors, and has a deal with Dell (Nasdaq: DELL  ) . The BlackBerry is anything but a priority.

You can't say the same about the iPhone, which is about to be carried by China Unicom and SK Telecom (NYSE: SKM  ) in Korea, and is apparently in talks with none other than China Mobile.

There's a reason for this, Fool. As great as the BlackBerry has been, the evidence we have suggests that it's still largely a deliverer of mobile email, and not much more. It isn't a platform on the same level as the iPhone, or the varying Android handsets that exist today. Until that changes -- and let's be honest, it may never change -- this is as scary a stock as you'll find in today's market.

Boo!

Warning: We've rounded up more scary stocks. Click if you dare.

Apple is a Stock Advisor selection. Dell and Microsoft are Inside Value picks. SK Telecom is a Global Gains recommendation. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Tim Beyers plans to treat his wife to a new iPhone soon. He had stock and options positions in Apple at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. The Fool's disclosure policy favors Kit Kat bars above all other Halloween treats.


Read/Post Comments (8) | Recommend This Article (16)

Comments from our Foolish Readers

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 30, 2009, at 12:26 PM, deanyc76 wrote:

    blackberry will be a leader in the next generation of mobile phones

  • Report this Comment On October 30, 2009, at 4:25 PM, spakklal wrote:

    The smartphone market (and ultra-mobile computing in general) is growing.

    RIM has a higher market share than Microsoft, and it's growing. Microsoft's is shrinking.

    RIM has a huge enterprise business with a high cost of switching, one that complements Microsoft's enterprise business. Microsoft should own that business.

    RIM's products are, in many respects, better than Microsoft's.

    But the best reason for Microsoft to buy RIM is that RIM has a better mobile business -- collecting revenue from BlackBerry device sales and service fees, instead of just software licensing fees.

    RIM, for instance, gets several hundred dollars in revenue for each BlackBerry sold, plus BlackBerry email/Web service fees. Microsoft, on the other hand, has stuck itself with a lousy business selling Windows Mobile operating system licenses for $8 to $15 per phone, according to research firm Strategy Analytics.

    So while analysts expect RIM to top $14 billion in revenue next fiscal year, Microsoft will be lucky to reach $400 million in Windows Mobile revenue (30 million Windows Mobile licenses at an average $12 a pop). That's couch change for Microsoft, whose revenues should top $60 billion this year.

    Sure, this would be a tricky deal to integrate, and there are a lot of big decisions to make. Microsoft will eventually have to pick one software platform -- Windows Mobile or BlackBerry -- and stick with it. It might have to abandon dozens of partners. It might blow up.

    But Apple (AAPL) and RIM have shown that owning both the hardware and software platforms make for better mobile products. And Microsoft has enough to lose -- to Apple, Google (GOOG), etc. -- to avoid being a weak player in what could be the next major platform war. Meanwhile, RIM has today what could take Microsoft many years to build -- a real, big, mobile business.

    Sentiment : Strong Buy

  • Report this Comment On October 30, 2009, at 6:28 PM, Forkitover wrote:

    The iPhone won't let you multi-task. It's really a toy for playing thousands of games they want to sell you. If you want a serious business phone, get a Blackberry.

  • Report this Comment On October 30, 2009, at 6:52 PM, TRYKtrading wrote:

    watch this stock when RIM brings out it's own iPhone killer using Android, something much better than the Crackberry.

    BOOM.

    to $100 and beyond in a month.

    BUY JAN60C.

  • Report this Comment On October 30, 2009, at 7:38 PM, BobbyKlobber wrote:

    The iPhone doesnt really target the same market as the CrackBerry. CrackBerry is primarily targetting business execs and salesmen. They want email and other business apps with a cell phone. Crackberry is perfect.

    iPhone is targetting ipod users who want a cell phone with neon bells and whistles. Not the same group of users although there might be some overlap.

    I will stick with my Crackberry as it does everything that I need it to without a hiccup. So will every other business person I know. In business people who go with an iphone are frowned on and then laughed at behind closed doors. Kind of the way most people look at Apple users.

    RIM will likely try to undercut the new smartphone market by giving the Crackberries away and relying on the user fees.commissions........until they come out with a Crackberry/Smartphone and then they wont need to.

    Like MS their business situation is changing but RIM is no GM.....they have the horsepower to meet the challenge and beat it.

  • Report this Comment On October 30, 2009, at 10:30 PM, tjsimone wrote:

    Why do people even compare the IPHONE to a Balckberry. 2 different markets completely. IPHONE is stealing more traditional cellular customers, than Blackberry customers, and in the most recent quarter RIMMM added 3.2 million customers, during a RECESSION.. Thats over 30K a day. I own neither, but am in tune with technology. Ever ask an IPHONE ( not the word phone ) about the actual phone on their device? Most grumble....ever ask a RIMM user about their phones...never a complaint...And all those smart people that were working for RIMM all left the Company the second the IPHONE came out, and went to work as farmers. These businesses are cylical, 6 months from now RIMM will have an "IPHONE" killer.

  • Report this Comment On October 31, 2009, at 8:26 PM, BMWTwisty wrote:

    The Blackberry is a nice email phone that does its job well. The iPhone is a hand-held computer that also performs quite well as a telephone (albeit with the constraints of AT&T). The iPhone user experience is what it - and Apple - is all about. That's why Apple is picking up market share in smart phones and computers hand over fist - and will continue to do so for quite a while. Apple won't become Microsoft but it will have a sizeable market - and accompanying profits. Apple is the company to fear and RIM knows it.

  • Report this Comment On November 01, 2009, at 2:35 AM, usefulaz wrote:

    rim could just start making android phones and make their enterprise software work on android

    minimal cost and they instantly have an iphone competitor that leverages their brand

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