RIM Is Betting Big on Car Companies

Not long after Microsoft (Nasdaq: MSFT  ) tied up with Toyota (NYSE: TM  ) for a foray into automotive dashboards, BlackBerry maker Research In Motion (Nasdaq: RIMM  ) decided to take its newest technology to the asphalt. RIM announced plans to use recently acquired QNX Software Systems' operating system in cars. Given RIM's recent struggles, how much will this move help the ailing company?

Open roads
Dashboard computing has been the buzz-phrase in the automotive industry of late. The Toyota-Microsoft venture is putting dashboard telematics in some of Toyota's new models such as the RAV4 EV and the plug-in Prius. With Microsoft's Azure cloud platform, the cars can now "talk" to each other and share information regarding power usage and other in-car information.

Toyota also teamed up with salesforce.com (NYSE: CRM  ) to create a social network for Toyota drivers called Toyota Friend. With all this connectivity happening right inside your vehicle, it is probably only a matter of time before other computing and automotive companies start coming to the fore with in-car technology.

Detour
For RIM, it looks like a good move because the smartphone market has started to look increasingly hostile. With Apple mobile devices and tablet PCs and Android-powered phones and tablets taking markets by storm, RIM must consider alternative strategies.

Given flagging sales on the retail side, I wouldn't be surprised if RIM's ultimate aim is to put the Playbook directly into car dashboards (and therefore increase its sales) and equip it with features such as the ability to launch Playbook apps, read emails, and connect to other mobile devices in order to play music. Despite some engineering challenges, QNX could help make this a reality.

RIM's arsenal
RIM bought QNX from Harman International (NYSE: HAR  ) in 2010. QNX has already been facilitating in-car technology, having supplied entertainment and control systems for carmakers such as GM. QNX has partnered with tech companies including Google and IBM (NYSE: IBM  ) to build its products.

While neither QNX nor RIM has actually come up with the list of carmakers who will make use of their services, it is obvious that they are not alone in the battlefield for these "smartcars." Microsoft and Ford (NYSE: F  ) came together to create Sync, which allows the driver to make phone calls, monitor the vehicle's condition, and change songs on the car stereo -- all from one in-car console. GM has heavily promoted its in-house OnStar telematic system, which allows the user to go online while driving. There is a big future in the business.

Lately, we all know that RIM has not really been in a good shape from a financial performance standpoint. Nevertheless, the company remains optimistic regarding its future. The company recently announced that it still sees full-year 2011 earnings per share of $7.50. But unless these new initiatives take hold faster than expected, that could be just a distant dream as BlackBerry users continue to shift preference toward other smartphones in the market.

Fool's take
Research firm Frost & Sullivan estimates that 8.7 million U.S. vehicles can connect to the Internet, compared to government statistics showing 137 million passenger cars on the road in 2008. If you do the math, you can clearly see that Internet-savvy vehicles aren't really the popular kind ... yet. But that will change. RIM may be finding a new path toward long-term success. Fools should pay attention.

Arunava De does not own shares of the companies mentioned in this article. The Motley Fool owns shares of IBM, Microsoft, and Ford. Motley Fool newsletter services have recommended buying shares of Ford, salesforce.com, and Microsoft, and creating a diagonal call position in Microsoft. A separate service has recommended shorting salesforce.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On June 14, 2011, at 4:55 PM, etgh wrote:

    Huh ? "Lately, we all know that RIM has not really been in a good shape from a financial performance standpoint"

    How's is that factual, given they're just coming off a string of recored quarters ? Yes, they have reduce their quarterly guidance by less than a dollar, not exactly financial Armageddon you write about.

    I think what you really meant to say was; "lately, we reflexively need to bash RIM as we have accepted the delusion that they are not in really good shape from a financial performance standpoint"

  • Report this Comment On June 14, 2011, at 6:45 PM, Ipadhata4life wrote:

    By being "not in really good shape from a financial performance standpoint", They sure buy a lot of Company's. The delusion that people are living in will not hold long with Apple and Google. Google is about to drop Android cause of the Oracle Lawsuit, and in which case RIM will take on those Developers. From a Standpoint at Apple, Well all they can do is simply Copy and not innovate anymore... You saw what happen with Apple TV, Well... LOL! They will eventually try to follow RIM, and Fail. IOS can't possibly do what RIM and QNX can. Simple as that!

  • Report this Comment On June 14, 2011, at 8:43 PM, cbglobal wrote:

    Try discussing the higher end and other cars. You seem to have made an effort to only discuss the few cars that don't use it.

    QNX already runs on Acura, Porsche, Saab, BMW, Audi, Jaguar, Land Rover.

    It is also on Hyundai, Chrysler, GM, Renault, Samsung,

    It is also what runs the GM OnStar system. Ever wonder how you can talk to the OnStar rep? Why QNX.

    At CES in Vegas and Blackberry World they had a Jaguar with a Playbook tablet in place of the NAV system.

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