Research In Motion (RIMM) shares have tumbled some 20% since the BlackBerry maker posted sub-par Q1 results and Q2 guidance late last month. The market’s main concerns: General economic crappiness and competition from the likes of Apple’s (AAPL) new iPhone 3G, which could get in the way of RIM’s meteoric growth.
RBC’s Mike Abramsky thinks the iPhone fear is overblown and that there’s enough room for both RIM and Apple in the fast-growing smartphone market, which he sees growing from around 100 million users now to 400 million in 2010. Specifically, he thinks RIM will take share from companies like Nokia (NOK), Motorola (MOT), Samsung, Microsoft (MSFT), HTC, etc.
Driving growth: New gadgets like the forthcoming 3G “Bold” and touchscreen “Thunder,” and international expansion. A few key points from Abramsky’s latest report:
- RIM has much better distribution: The iPhone is only available from AT&T (T) in the U.S., plus one exclusive carrier in the U.K., Germany, and France. More than 15 carriers sell BlackBerries in the U.S., all major carriers in U.K., Germany, and France, etc.
- RIM will get a bunch of bonus promotion: Non iPhone carriers like Verizon in the U.S. are “expected to aggressively promote BlackBerry as the only viable competitor to the iPhone.”
- Unlike the iPhone, which is tightly controlled by Apple, RIM lets carriers upsell ringtones, video, music, apps, games, etc., so carriers are likely to embrace and promote BlackBerries.
- Only 5% of iPhone (first generation) buyers were former BlackBerry users, while 32% upgraded from Motorola, 16% from Samsung, 13% from Nokia, etc.
Fair enough. We agree that there are several reasons someone might buy a BlackBerry over an iPhone — different shapes/sizes, prices, service packages, carriers, etc. — and that RIM is better positioned in the smartphone market than, say, Motorola. But we caution against assuming that Apple won’t be stealing would-be RIM buyers or existing BlackBerry customers.
For instance, the fact that only 5% of first-gen iPhone buyers were former BlackBerry users is no longer a valid point of defence. All iPhones and iPod touches — not just new ones — can now access corporate email, calendaring, security, etc. — they couldn’t before — and Apple’s enterprise presence can only go up. Meanwhile, RIM is increasingly focused on the consumer market, where Apple will be its biggest competitor. “Non-enterprise” customers accounted for 40% of RIM’s customer base during Q1 and 60% of its growth.
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