With Research In Motion's (NASDAQ:BBRY) upgraded BB10 OS and a couple of new phones on the horizon, it isn't surprising that RIM shareholders are a bit giddy. With a share price that's more than doubled the past three months, RIM's given its long-suffering fans a lot to be excited about.
What should give RIM fans a real shot in the arm, however, goes beyond its stellar stock performance of late. With the much-anticipated release of its new OS still a week away, RIM isn't just running on momentum anymore. There's some substance behind its performance.
RIM is getting more interesting
When CEO Thorsten Heins announced that RIM's new BB10 OS will be here Jan. 30, the excitement was palpable. The only problem was that other than a whole bunch of beta testers, much of the good tidings surrounding BB10 is based on hope -- not an ideal basis for investing your hard-earned money. Sure, with more than 1,600 corporate entities playing with a pre-release version of the new BB10, along with more than 100 government agencies, the test sample is a big one. But it's just that: a test sample.
The reliance of RIM's improving stock price on acceptance of its new OS, even before the general public has had a chance to take it through the paces, has kept me cautiously optimistic toward RIM; unknown quantities always make me uncomfortable. But now there's a lot more for investors to hold on to, in addition to what has been positive feedback from the BB10 beta testers.
The recent upgrade of RIM by a Jefferies analyst, increasing RIM's target price to $19.50 a share from $13, is significant, in and of itself. What gives the upgrade substance, however, is the reason behind the change of heart: RIM is expected to make its new BlackBerry email available to Apple's (NASDAQ:AAPL) iPhone and Google's (NASDAQ:GOOGL) Android OS users.
As more and more businesses get comfortable with the "bring your phone to work" concept, there are opportunities for OS providers to benefit, beyond supplying the hardware. Even before BB10, many saw RIM's secure operating system as the commercial standard, and now Heins and team are exploring ways to use RIM's OS and secure email service across multiple devices? The possibilities for RIM are intriguing, to say the least.
And speaking of any and all mobile devices, RIM recently announced that Visa has blessed its BB10 wireless payment solution, Secure Element Manager. Though RIM will hardly be the only mobile payment provider around -- MasterCard and Google are testing a mobile payment solution, and Groupon introduced a low-cost alternative recently, not to mention a host of other players already in the market -- the payment service and Visa endorsement opens new doors for RIM.
But wait -- there's more
While the security of RIM's proprietary OS is well known, the flip side has been the lack of apps, and the ability of third-party IT developers to create them. But with thousands of new apps from other OS platforms already developed, BB10 smartphones could hit the shelves packed with more goodies than ever before.
Though not necessarily surprising, confirmation from domestic wireless carriers that they intend to carry the new BlackBerry 10 phones also provided a boost for RIM. And, strange as it sounds, good news from Nokia (NYSE:NOK) last week gave RIM aficionados more fuel for their fire. When Nokia CEO Stephen Elop announced sales of 4.4 million Windows 8 smartphones, it wasn't only Nokia shareholders who breathed a sigh of relief -- RIM fans were also feeling pretty good.
For much of the past year, RIM and Nokia have often been mentioned in the same breath. Both onetime highflying smartphone makers are undergoing major transitions; Nokia's going all in with its Windows 8 OS Lumia phones, and RIM is doing the same with BB10. For RIM shareholders, Nokia's sales news is confirmation that Apple and Google can be had. Google recently unseated Apple's iPads in December as the No. 1 seller of tablets in Japan, and if estimates are correct, Samsung will handily outsell iPhones in Q4 -- both demonstrating that Apple's iron-like grip on the mobile industry is slipping, leaving room for players such as RIM and Nokia.
Staunch RIM shareholders have long held on to the company's outstanding balance sheet and cutting-edge technology as reasons the company is worth more than its stock price. Then, when the introduction of BB10 was announced, RIM investors really went ballistic, starting an epic run on its stock price. I wasn't nearly as enamored. Why? Because investing in a stock based on conjecture -- which is what BB10 remains at this point -- leaves the door open for a big disappointment.
Then, RIM announces its email will be available on multiple devices, BB10 includes a secure wireless payment solution already rubber-stamped by Visa, IT geeks have developed thousands of new apps for its pending smartphones, and Nokia proves you don't need to be Apple or Google to succeed in the smartphone market. RIM has finally given investors something tangible to hold on to, and you'd better hold on tight: This thing is getting interesting.
Tim Brugger has no position in any stocks mentioned. The Motley Fool recommends Apple, Google, and Visa and owns shares of Apple, Google, and MasterCard. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.