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Why RIM needs Blackberry Storm to succeed.

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RIM is busy working on its highly anticipated launch of the Blackberry Storm next month. There are high expectations of this phone from not only Verizon Wireless and early adopters, but also from analysts. I would expect RIM has a lot riding on this too. Let’s take a look why:

– Expectations: RIM had indicated when it released the Q2 financial statements, that it expects Q3 revenue to be between $2.9-$3.1 billion. That was with the assumption that it would launch the Blackberry Bold early in the quarter and follow it up with the Blackberry Storm release. With delayed release of the Blackberry Bold, it has a lot of ground to make up in the last month to meet those expectations.

– Competition: Apple has been eating RIM’s lunch since it launched its iPhone 3G, as evidenced by the stellar performance at both Apple and AT&T (even with the high cost of iPhone). Also, Steve Jobs, CEO of Apple has clearly indicated that he has RIM in his crosshair. RIM has to respond to this challenge. With iPhone 3G, Apple has tried to move into RIM’s enterprise turf. RIM is countering that with its Blackberry Bold (when it launches) and is hoping to fight the battle on Apple’s prosumer turf with the launch of Blackberry Storm. In addition, Google’s Android and Microsoft’s Windows Mobile based touchscreen phones are also going to give RIM a headache.

– Economic Condition: Given the current economic climate, RIM has a lot to worry as enterprise customers, which make up almost 40% of its revenue, try to reduce spending. RIM is hoping that Blackberry Storm, Curve, Pearl and other prosumer targeted devices with touchscreen that it plans on releasing next year will help it offset the losses in the enterprise market.

– Investor Pressure: RIM management will be on short leash here given the economic jitters and constant bearish sentiment from the analysts. If the Blackberry Storm does not succeed, investors might push the co-CEOs out or worse look to sell it. The co-CEOs own 12% of the company and as such might not be easily pushed out, but they will have incredible pressure from institutional investors to change course. Also, the constant rumor of Microsoft being interested in buying RIM has to play a role in this. Note that when the rumor surfaced around October 13th, it was said that Microsoft had a standing offer to buy RIM at $50 a share. At that time, RIM’s stock price was at $61. Today, it is at $44. So, does that offer look good or what? However, I think it might be a smart move for Apple to make an offer. Steve Jobs wants to be successful in the enterprise market and if the iPhone starts losing its lustre, Apple will start looking like a one-trick pony, which I am sure Jobs and company will want to avoid. Also it would seriously challenge Microsoft in the mobile market. Though, from a cultural sense, I don’t know if RIM and Apple would be a good fit.

For all these reasons and more, RIM needs Blackberry Storm to succeed. It is doing everything it can to make it happen. Last few days has seen a flurry of activity including release of Blackberry Web Signals Technology and  Blackberry Application Store; Blackberry Developer Conference and subsequent courting of the developer community; and massive marketing with Verizon Wireless and Vodafone. Now, like the US electorate, all RIM can do is wait for November and let the market decide.

Written by dvdand

October 28, 2008 at 11:58 am

2 Responses

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  1. […] At that time, RIM’s stock price was at $61. Today, it is at $44. So, does that offer look good or what? However, I think it might be a smart move for Apple to make an offer. Steve Jobs wants to be successful in the enterprise market and …[Continue Reading] […]

  2. Sweet, I was looking for something along the lines of this. What would you say would be the most effective way of marketing online (apart from) emailing, because that’s a given.

    mass mailer

    May 17, 2010 at 12:46 pm

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