Research In Motion investors have been laughing all the way to the bank over the past several months.
Just when everyone who proclaimed that RIM was a great buy at $50 a share finally joined the chorus of folks singing that RIM was headed straight to zero, a handful of contrarians stepped in and placed “buy” orders below $10.
RIM’s exciting new product, BlackBerry 10, would be better than expected, these brave folks thought.
And, at least initially, they were right.
In the past few months, RIM’s stock has nearly doubled.
But does this mean that RIM will be a winner from here?
Now that BB10 launch day has finally arrived, will RIM suddenly begin to reclaim the ground it has lost in the smartphone wars?
Highly unlikely, at least in my opinion.
Nothing’s impossible, but RIM is now the third or fourth player in a market that has become a waltz of elephants (iPhone, Android, Microsoft). And even if BB10 puts RIM on par with the other top smartphones, this won’t likely induce enough folks to buy them to save the company.
Anyone who finds themselves excited by the possibility that an amazing new gadget will transfix the global smartphone market and save a once-dominant company should take a look at what happened the last time we were in this situation.
Way back in 2009, another once-dominant gadget company that had fallen on hard times, Palm, launched a device that some observers thought would save the company–the Palm Pre.
The Palm Pre got some great reviews.
The Palm Pre was designed by a genius who had been poached from Apple to resurrect the company.
The Palm Pre was expected (by some) to shake up the smartphone market and give Apple a run for its money.
As the chart below shows, here’s what happened after the Palm Pre came out.
And Palm stock did go up for a while, especially as early reviewers raved about the Pre.
Then the Palm Pre bombed.
Then Palm introduced another new gadget, the Pixi.
That bombed, too.
And then Palm stock basically went to zero. (Basically. The wreckage was eventually bought by a desperate HP, which vastly overpaid for it.)
So, careful, RIM enthusiasts!
Even if BB10 is a jaw-dropper, this might not save the company.
That’s what happened for the first year after the Pre launch.
Here’s what happened over the company’s history as a public company: