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What BlackBerry 10 Really Means for RIM

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It is an important week for Research In Motion (Nasdaq: RIMM  ) , as the company's annual partner conference gets under way in Orlando, Fla. The Canadian mobile-phone maker is taking the opportunity to show off its new BlackBerry 10, which is due out later this year, and passing out thousands of prototypes to app developers attending the expo in the process. 

This is all part of the BlackBerry maker's plan to execute a turnaround as it struggles to keep up with Apple's (Nasdaq: AAPL  ) iOS and Google's (Nasdaq: GOOG  ) Android platforms. Offering free prototypes of its new smartphone was the first smart play we've seen from RIM in a long time, though I doubt the big reveal will be enough to save this dying company.

A network effect
The move gives developers a head start on building applications ahead of the BlackBerry 10 launch later this year. Still, RIM's fall from grace is as much due to its devices as it is about the lack of a media ecosystem to support its handsets. Apple has the App Store, while Google's dubbed its new marketplace Google Play -- and these rich ecosystems give the iPhone and Android devices a huge advantage in drawing in consumers over BlackBerry.

I doubt that RIM will ever fully recover even if it does everything right going forward. The company needs to take back market share from Apple and Google if it wants to have a fighting chance. However, for that to happen it needs the support of developers. The odds don't look good, according to research firm IDC, which revealed that just 16% of developers were "very interested" in creating apps for BlackBerry devices, compared with 79% for Android and 89% for the iPhone.

In a seemingly desperate attempt to reverse its market-share losses, RIM is not only giving away prototypes but also bribing developers with an app guarantee of sorts. The company is promising app makers a minimum of $10,000 for their creations. As reported by Mashable, if your app doesn't generate that much in sales, then RIM will cut you a check for the difference. Yikes.

It will be a major challenge for the majority of BlackBerry apps to rival sales on platforms like iOS and Android, because RIM has a much smaller customer base. Today, Apple and Google jointly command more than 80% of the smartphone market. At last check, there were upwards of 315 million devices running iOS around the world -- all of which redirect to Apple's App Store. Based on statistics provided by the Mac maker, that translates into an average download rate north of 45,000 per application available in the App Store.

Bad for business
The BlackBerry 10 will be one of RIM's first devices without a physical keyboard. Instead, the new smartphones will feature a touchscreen interface similar to rival Apple and Android products. One of the touted characteristics of this virtual keyboard is its ability to learn the key patterns you press to help make typing more accurate -- again, something my iPhone already does.

Poor timing of its new smartphone launch is another problem for RIM. The company will have to contend with the highly anticipated debut of a next-generation iPhone, Microsoft's (Nasdaq: MSFT  ) Windows 8, and new Samsung Galaxy phones.

It has taken RIM nearly three years to build out BlackBerry 10. Meanwhile, competitors took that time to deliver millions of competing devices. Even Nokia (NYSE: NOK  ) made a meaningful return to the U.S. mobile market last month with the release of its Lumia 900 smartphone. The launch showcased a strategic partnership with Microsoft, as the two companies attempt to corner the enterprise market. With Windows 8 showing up later this year, the new duo could hurt RIM by eating away at its business-customer base.

More of the same
I love a good turnaround story, but this is not it. Investors want to see RIM return to its innovative past, yet the company continues to disappoint. I appreciate RIM's push to make it back on top, but tying its hopes entirely to BlackBerry 10 is a case of too little, too late. It is going to take much more for RIM to get developers back into its bed.

While you'll want to wait for the BlackBerry 10 launch later this year before counting these guys out altogether, I'm surely not holding out hope for a recovery. Instead of putting yourself through the frustration of playing RIM, I invite you to discover one tech stock that's innovating its way to profits. Get instant access to the free report from The Motley Fool titled "The Only Stock You Need to Profit From the New Technology Revolution".

Fool contributor Tamara Rutter owns shares of Apple. Follow her on Twitter, where she uses the handle @TamaraRutter, for more Foolish insights and investing advice. The Motley Fool owns shares of Google, Microsoft, and Apple. Motley Fool newsletter services have recommended buying shares of Apple, Google, Nokia, and Microsoft and creating bull call spread positions in Apple and Microsoft. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Read/Post Comments (10) | Recommend This Article (5)

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 May 02, 2012, at 7:07 PM, prginww wrote:

    RIM is a classic example of a dead man walking.

    The first symptom of death is denial.

  • Report this Comment On May 02, 2012, at 7:41 PM, prginww wrote:

    Sorry, I just want to point out that you're wrong about the keyboard. BB10 phones will have both a physical and touch screen keyboard. RIM isn't abandoning the physical keyboard.

  • Report this Comment On May 03, 2012, at 12:21 AM, prginww wrote:

    I really don't think it should have been that hard for RIMM to innovate.

    I could do an hour of searching on google

    What I want in my next iphone or android or whatever!

    Just take the ideas of consumers and what they want and put it in there!

    These people that make the software and hardware for these phones are not stupid, they know how to do it, just gotta tell them what you want.

    How in the world did apple become such a king? They took a huge risk and tried out something new.

    To me RIMM is not trying anything new here

    I honestly don't think anyone would be mad at RIMM for trying something completely new and going for it. Even if it fails, point is you had the guts to put everything you have on the line.

    Stop being so conservative and just plain go for it!

    More than half of running a business is listening and tending to a customers needs!

    The CEO is not the boss at RIMM its the customers!

    Even if you don't like your boss, you better listen to them, else you may be headed out the door.

  • Report this Comment On May 03, 2012, at 12:47 AM, prginww wrote:

    I'm surprised at how confidently analysts are predicting the demise of a company that does not have any debt on its balance sheet. There used to be an era where things like that mattered when looking at a stock. RIM has seen some remarkable drops in profitability, but the company is now producing, after an extended retooling period, technology that surpasses much of what is out there. (Take a look at the html5 compatibility tests scores, for example, where the Playbook and BB10 browsers outperform not only every other mobile platform, but every desktop browser other than Chrome as well).

    RIM owns several technologies that have no parallel in security and reliability, and they own properties that extend beyond the smartphone market and into areas like the automotive industry and medical field.

    Given the speed of the mobile marketplace and the utter lack of loyalty that consumers in this space have demonstrated repeatedly, I think sentiments like "too little too late" have been overblown for this company. From what the company is producing now, they will come back if the mobile marketplace rewards performance and fail to do so if not.

    For RIM, the alternative to a comeback is to be bought out; liquidation is exceedingly unlikely for this company, so what investors should ask is what the price of the stock is likely to be in a buyout situation. Once you are close to that price, the risk to your capital is managed. Unfortunately, the author of this article chose to fixate on how sexy a prototype phone seems rather than provide any sort of balance sheet review that could assist with that question. I'd wager she didn't even glance at a financial statement. Anyone building smartphones with such a sloppy approach would surely be out of business quickly.

  • Report this Comment On May 03, 2012, at 6:46 AM, prginww wrote:

    The keyboard is not dead. keys are larger. Swiping of the keyboard to finish a word is revolutionary. Revealing and moving of screens to view behind them is equally the same. All with one hand. THUMBS RULE!

    RIMM has made it clear who its customers are... successful people who need to get sh*t done. Why use two hands when one is enough.

  • Report this Comment On May 03, 2012, at 6:59 AM, prginww wrote:

    There's a lot of missing/error points here.

    1/ Positioning.

    It appears clearly that RIM isn't anyhow trying to raise #1 or even #2 global market position right now. They - as announced by Heins - focus on their core business : companies. Here is the biggest revenue source: devices combined with services and software : name it Balance.

    2/ Keyboard

    RIM is not abandoning physical keyboards. The developer alpha device is only that : an alpha device to test apps development. It also demonstrates RIM is - by far - leader on keyboard technologies, now with both physical and touch screens. Your iPhone keyboard is 10 years behind; if you want to compare just choose a real "opponent" like Swiftkey.

    3/ UI and OS performance

    What is announced here is a next-gen user experience, for the next decade. There's no equivalent running or announced; you'll find here (WebOs) and there (W8) some similarities ... but you'll never meet the "flow" (capabilities of apps to interact/display without the user even knowing he swaps between apps).

    So this is again one easy "haha, we-ifans beat RIM once and we'll always do". Better watch the Jedi.

  • Report this Comment On May 03, 2012, at 7:00 AM, prginww wrote:

    Sorry missed this : "[...] name it Mobile Fusion and Balance."

  • Report this Comment On May 03, 2012, at 8:24 AM, prginww wrote:

    I think the RIM fanboys are being way too harsh.

    The core of this article is as solid as the company is squooshy at this point. Remember the cult in Guyana where 60 people committed suicide on the orders of their guru?! ... Sadly, that's what RIM has been reduced to at this point - mostly "dead enders" sticking to their guns, when a rational business user would be thinking - "I may not gain that much productivity right now, but I'm sticking with a device with zero future, and that's not smart."

    I fault the author, however, for pointing out that RIM's real goal almost surely is avoiding irrelevance long enough and well enough to find a home in the "portfolio" of MSFT, AMZN, Samsung or a couple of other possibles.

    And my take is that they probably DID improve their chances on that front with the pretty sad excuse for a demo down in Florida.

    There's an article somewhere today that speaks to Samsung's hating to get mired in a commodity market - for those anywhere near me in age, think about how IBM wisely surrendered huge revenues (and meager profits) to the likes of Leading Edge.

    Imagine if a reasonably good - and no one of the fanboys mentioned multi-tasking! - OS is marketed by a deep-pocketed got-its-act-together company like Samsung.... while there still are 30-60 million people with the BB logo in their pocket!

    Again, I AGREE with the author that even this has become a longshot because of the terrible mistakes Mike & Jim made ... and the probably horrible morale up in Waterloo, together with a near-certain shortage of talent, especially at Sargeant and higher levels.

    I think my short position is the right one for a month or 2 ... or until RIMM flirts with 10. But if the "laser focus" is more than words, there's at least 50% upside here within the next 6 months. If nothing else, there's 50 million short shares, and if they covered under duress, it would be the short squeeze to end all short squeezes.

  • Report this Comment On May 03, 2012, at 9:22 AM, prginww wrote:

    since bb is none for keyboards how about a physical qwerty that are not buttons but more like touch keys when you touch a key it types the character and lights up without actually depressing the button this would be a revolutionary qwerty that I have not scene on the market but who knows maybe something like this doesn't exist or maybe no companies willing to take the risk to try something different from a standard touchscreen

  • Report this Comment On May 04, 2012, at 10:08 AM, prginww wrote:

    gotta love the logic in this article (or lack thereof):

    I don't like the slate, be it a developer slate, it's no good it bring nothing new. Apple and Samsung have better products. (slates, old).

    What, RIM will keep making physical keyboards? That suck, keyboards suck. SO RIM sucks, they will never recover, because I can't put two concepts together.

    I saw some, err, interesting titles on Reuters... "new OS fail to inspire", while in the text I find out that the tech gurus attending were quite upbeat, and the "uninspired" ones were... err, analysts. Did they bother with any tech detail, be it general? No, they quote "sentiment" among people that talk about stuff.

    It might be tricky to find great titles, however, crappy ones should be easy to avoid.

    RIM has a tough 4-6 months ahead, but boy, am I looking forward to the short squeeze...

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