Research in Motion (RIMM) has tumbled from its highs after it reported a 2Q miss last month. AmTech thinks the drop is a buying opportunity.
AmTech thinks RIMM can compete against Apple’s (AAPL) iPhone because of “superior connectivity.” Specifically, RIM’s Blackberries have a better user experience and are more addictive:
Always-on push connectivity is important for the user experience of IM. To date, a session-based experience has not shown the same sticky qualities and heavy usage as BlackBerry. We believe this is also true of social networks and will become so for many other applications. Facebook and many applications look great on iPhone and are much more functional than other competing platforms; but for many applications, RIMM’s push connectivity solution enables a better overall experience for mobile users.
AmTech also stresses that technology adoption is viral, and the player that can convince users that their product offers the superior user experience the fastest, often comes out ahead. For RIMM, their connectivity advantage and superior IM experience may convince the youth demographic, which is key to RIMM’s growth, to pick up Blackberries instead of iPhones. AmTech reiterates its Buy rating and keeps its price target at $205.
This is all fine, but note that a year ago, no was talking about ANY competition for RIMM–not explaining how it was still going to do fine despite the competition. RIM has two new, expensive things to worry about that it didn’t a year ago: it’s move deeper into the consumer market and it’s head to head competition with Apple. Yes, it will do fine. But it will also likely see both profit margins and stock multiple shrink.
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