What's Wrong With RIM?

Research In Motion (Nasdaq: RIMM  ) is fighting a losing battle.

While Apple (Nasdaq: AAPL  ) breaks sales records with its iPhone 4 and Google (Nasdaq: GOOG  ) sends Android armies to every corner of the network map, RIM's BlackBerry is just holding steady. Just like last quarter, RIM's first-quarter results were strong on earnings despite weak sales. Revenue jumped 24% year over year to $4.24 billion, and subscriber growth was at the low end of management guidance; still earnings grew at 41% to $1.38 per share. And of course, the stock fell 6% overnight.

BlackBerry is still the most popular brand in smartphones, despite the twin surges of Android and iPhone handsets. But those relative newcomers are beefing up their enterprise features, including remote-wipe security and full-fledged support for Microsoft (Nasdaq: MSFT  ) Exchange messaging. RIM is running out of unique selling points, to the point that co-CEO Jim Balsillie pointed to the tiered data plans of AT&T (NYSE: T  ) and others as a boon for his company: Encouraging less data usage fits the BlackBerry's low-bandwidth communications model, you see. That sounds like a warrior staunchly determined to defend his post to the death, rather than the more ambitious plans of a conqueror.

An upcoming slate of fresh BlackBerry handsets also looks unlikely to save the sinking ship; adding media features and a WebKit-based browser in the mold of Apple's Safari and Google's Chrome is a "me too" kind of move. RIM seems to be all out of true innovation.

You can only rest on your laurels until they wilt and start to smell, and the BlackBerry copse is going stale. Today's leader is destined for the scrap heap right alongside Palm (Nasdaq: PALM  ) unless those upcoming phones manage to shock and astound us all. As we've seen with Microsoft's market share numbers, the fall from mobile grace can come pretty dramatically if a company falls behind consumer tastes, and don't forget that most of RIM's recent growth comes from that fickle segment.

That's my two cents, but what do you think? Share your thoughts in the comments box below.

Fool contributor Anders Bylund owns shares in Google, but he holds no other position in any of the companies discussed here. Microsoft is a Motley Fool Inside Value recommendation. Google is a Motley Fool Rule Breakers selection. Apple is a Motley Fool Stock Advisor pick. Motley Fool Options has recommended a diagonal call position on Microsoft. Try any of our Foolish newsletters today, 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.


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  • Report this Comment On June 25, 2010, at 3:26 PM, BadCopNoDonuts wrote:

    I love my Blackberry, but I have to agree that they seem likely to continue losing market share. When it comes to growth stocks................. well, it's all about growth!

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