This May Not Be the Time to Write Off Research In Motion

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The way I see it, the chief problem plaguing BlackBerry maker Research In Motion (Nasdaq: RIMM  ) seems to be the all-round pessimism surrounding the company.

And that's exactly why RIM should focus on providing existing and prospective users an experience showcasing the true flexibility and security that's a part of every BlackBerry product, rather than lowering prices in a desperate bid to hold its own against a slew of similar devices led by Apple's (Nasdaq: AAPL  ) iPad. The Playbook upgrade may just be the first step in that direction. But first, a peek into what went wrong.

Something's just not right
One thing is for sure: Had RIM introduced the "upgrades" right from the product launch, the Playbook might not have been so massively undermined. I mean, isn't built-in email the order of the day for the tablet market? And everyone knows the price that the company paid for it -- only about 150,000 Playbooks sold in the last reported quarter -- a joke compared to sales of around 15.4 million Apple iPads in that period. Reason enough for RIM to hold its head down, right? Wrong. And I'll give you three good reasons for it.

Security, Android, price -- a winning combo
What comes to my mind when I look at a BlackBerry product? A business device where data security reigns supreme. That, I believe, is primarily what keeps a whopping 75 million subscribers hooked on its products. So why not cash in on that?

As Fellow Fool Evan Niu rightly pointed out, RIM should focus all its energies on winning back the enterprise segment, which should ensure it stays ahead in the race. And government support in the form of Federal Information Processing Standard certification should go a long way in that direction. RIM needs to increasingly focus on product security to stop losing enterprise customers to Apple.

And then there is Google's (Nasdaq: GOOG  ) Android factor, something which RIM has recognized at last, as the upgraded version provides Android connectivity. With the company claiming more than 6 million daily downloads on its "App World" feature, the cross integration with Android should bring in more people within the BlackBerry circle of users.

And last but not least, in an effort to keep up with the competition and reduce its piling inventory, RIM was forced to slash prices of its Playbook, which should work out to its advantage, now that the tablet no longer falls in the "basic device" category. While some may argue that this undermines the product value, I feel that if RIM plays its price card well in emerging but cash-strapped markets, sales will ultimately pick up strongly.

Foolish last words
BlackBerry is in deep trouble at present; there's no doubt about that. But let's not forget that the Playbook has evolved into an affordable business device which is at par with, if not better than, others in the market. And with its foundations laid in the much-talked-about QNX-based operating system, this is one product which can still make a turnaround.

To stay updated on the latest developments about Research In Motion, just add it to your stock watchlist. It's free.

Fool contributor Subhadeep Ghose does not own shares of any of the companies mentioned in this article. The Motley Fool owns shares of Google and Apple. Motley Fool newsletter services have recommended buying shares of Apple and Google. Motley Fool newsletter services have recommended creating a bull call spread position in Apple. 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.


Read/Post Comments (6) | Recommend This Article (5)

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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 March 06, 2012, at 12:12 PM, DefunctAcct wrote:

    Investing requires careful, detail and in-depth research. This article fails miserably in these three categories.

    "chief problem plaguing BlackBerry maker ... seems to be the all-round pessimism surrounding the company."

    That is the root cause of RIM's "problem"? Recent actions by US ATF, Halliburton, NOAA, Standard Charter and possibly USAF to move away from BB do not count?

    How does ignoring reality on the ground help investors?

    "A business device where data security reigns supreme. That, I believe, is primarily what keeps a whopping 75 million subscribers hooked on its products"

    There are two giant holes in the above silly claim.

    "Supreme" is ill defined. On-line banking and financial managements have gone mainstream since 2000. Security in those areas have been addressed by banks, financial institutions and online businesses since 2000. Billions of transactions occur every day worldwide and NONE of that depends on RIM.

    RIM's security is only about handheld and there are now alternatives that provide sufficient security for most users. So this "supreme" claim is flaw.

    An Abram M1A Battle Tank is the "Supreme" vehicle but do you need one? Do I?

    The "75 million" all bought RIM devices for "supreme" security? At all cost? Or are they buying RIM devices because of fire sale? The buy-one-get-one free offerings?

    The writer acknowledged the danger of competing on "cheap sales" and yet ignore this impact on how RIM gained its "75 million" users. Investors need to know the profit margins, not just numbers.

    Taken as a whole, this article has more holes in its arguments than Swiss Cheese. Careful investors should look elsewhere instead of wasting time here.

    Cheers.

  • Report this Comment On March 06, 2012, at 5:47 PM, melegross wrote:

    Security is not the Playbooks strongest suit. So far, and as far as can bee seen for the future when the new phones finally comes out late this year, BB10, their new OS, cannot connect to the BES server.

    I repeat, it cannot connect to their BES Server. Is the BES server that gives the BB it's primary security protection in e-mail and messaging. Without the BES server, the Playbook is limited to a fairly primitive link to Exchange.

    While it now has a seperate partition for business data, does anyone really suppose that won't be hacked?

    Writers really should do some in depth research first.

  • Report this Comment On March 06, 2012, at 10:37 PM, BR14 wrote:

    How bizarre.

    It already does connect to the BES server, and if you bothered to do any research, you'd realise RIM's entire BES strategy is designed around supporting Playbook. Just check out BlackBerry Mobile Fusion.

    And a handful of US enterprises switching to Apple, no doubt because Apple is desperately courting enterprise, is hardly a sign of RIMs demise.

    On the contrary, Apples desperate efforts to win enterprise reveal the truth. Their stock like RIM's is vulnerable to precisely the kind of negative PR targeted at RIM in the past few years.

    The mobile device market is a minefield for stocks. The slightest weakness in a product launch can devastate the stock price, because in the main prices of the most fashionable tech companies are vastly over priced.

    RIM's day is done, and they'll never reach the heights they had a few years ago, but that doesn't mean they can't be a profitable mature company serving a reasonable segment of the mobile device market.

    There's nothing to see with RIM. Go look somewhere else.

  • Report this Comment On March 07, 2012, at 12:37 AM, forexnutca wrote:

    Judging by the negative comments, I'm skeptical in RIMS demise. Even if the entire NA population dropped RIM as a phone and tablet, the current share price discounts all problems and is in bargain territory for a company not experiencing cash burn and no debt. Give it a few years, and investors at current prices will be rewarded. The QNX micro kernal is far superior in terms of effeciency to all current OS kernals on the market.

  • Report this Comment On March 07, 2012, at 12:56 AM, DefunctAcct wrote:

    BR14:"And a handful of US enterprises switching to Apple, no doubt because Apple is desperately courting enterprise, is hardly a sign of RIMs demise"

    Reading error? The author proclaims that "bad press" is the "problem" as though RIM is simply experiencing bad press. He is obviously ignoring loss of businesses worldwide. Standard Charter is a bank in UK and there are other examples.

    Is this RIM's demise? Who knows? May be and may be not but that is NOT the point. The point is about how useful is this article in Motley Fool. In my opinion, this article is useless.

    BR14: "...And a handful of US enterprises switching to Apple, no doubt because Apple is desperately courting enterprise..."

    This reads like RIM PR wishful thinking again. Apple is "desperately courting" business users? Interesting. RIM Playbook was the first to receive security certification from US Feds and yet RIM Playbook went nowhere while iPads are now being used by the Feds.

    By the way, US ATF is a Federal Law Enforcement Agency and not a business.

    BR14: "...because in the main prices of the most fashionable tech companies are vastly over priced..."

    This is so hilarious, it reminds me of people who continue to proclaim iPad as toys right when Air Force pilots and Airline pilots are using them to fly missions and people all around the continental US.

    I guess iPads, iPhones and Android phones are all fashion statements then? All the way until RIM's boxy outdated design crashes and burns into ash?

    FOREXNUTCA:"...The QNX micro kernal is far superior in terms of effeciency to all current OS kernals..."

    I did a lot of OS work earlier in my career and this statement is neither here nor there. It depends on what you are referring to as "efficiency".

    Efficiency in terms of being small, lightweight and tightly customizable or efficiency in terms of being able to handle all sorts of general purpose tasks very well.

    QNX was developed for customization and that allows it to be lean and mean in targeting a specific set of problem sets. Unfortunately, that leanness is useless in the current smart phone world. Smart mobile devices are fast evolving into a relatively general purpose computing device requiring fairly mainstream general purpose computing solutions. RIM is finding itself having to build out the lean QNX to include all the general purpose capabilities already in iOS and Android.

    What efficiency are we talking about here?

    RIM Is not going to die yet but it is getting quite late. I had hoped that RIM would have adapted earlier and can remain a profitable niche player solving problems for a niche market. As it is, it is fast losing ground even in the niche area.

    We will know how RIM fairs in a year.

  • Report this Comment On March 07, 2012, at 2:27 AM, mariejoane wrote:

    Android Market does not allow Rim to download from it. If Rim needs to run any Android app, the developer of this Android app must explicitly convert this Android app into a Rim usable app. Who in their right mind would consider the humongous AND unprofitable effort to maintain a separate Rim version of a perfectly working fine native Android app?

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