BlackBerry 10 is a major improvement on BB7 but not enough to take back share from Apple, say analysts with Jefferies. After BB10's debut, they expect Samsung to purchase RIM as a mobile OS fallback plan.
Research In Motion is counting on its delayed BlackBerry 10 platform to reinvigorate its brand
, increase smartphone sales and, in short, save the once-industry-leading company. Analysts with investment firm Jefferies, however, are now saying they don't expect BlackBerry 10 will live up to RIM's expectations.
After trying out RIM's Dev Alphaa mock smartphone RIM provided to developers so that they can try out the in-progress new platformthey believe the OS is unlikely to make a dent in Apple's iOS standings, especially as the company prepares the new iOS 6.
We see significant potential for [BlackBerry 10], and it certainly is a vast improvement over BB7, the analysts wrote in an Aug. 7 report. However, we believe it is highly unlikely that it will be an improvement over iOS 6 and about equal to Android 4.1. Therefore, we see little chance RIM can take share away from Apple with BB10.
RIM's period of strategic reviews is likely coming to an end soon, and the company is expected to offer an update during its Sept. 27 earnings call. The answer to a number of questions, says the report, is likely to be: Samsung.
The analystsequity analyst Peter Misek is the lead author of the reportbelieve Samsung walked away from earlier talks with RIM but is still considering a BlackBerry 10 licensing deal.
The Android-supporting device maker is on top of the world these days; it has surpassed long-time leader Nokia to become the world's top-shipping phone maker, outsold Apple in the smartphone market and established itself as Apple's main rival in the tablet space
. However, market watchers are well aware that all good things come to an end.
RIM, Nokia and Motorola provide stern warnings that any high-flying mobile phone company can crash in a two-year period, wrote the analysts, reiterating that that they see no near-term issues with Samsung but that its 2.5-year outlook is concerning.
Misek and colleagues explain:
Samsung has leveraged its scale, its vertical hardware integration and Google's Android OS to attain its current position, but the company recognizes the increasing importance of software and the danger in not owning their software.
In his inaugural speech last week, Samsung CEO Kwon Oh-Hyun said, 'A particular focus must be given to serving new customer experience and value by strengthening soft capabilities in software, user experience, design and solutions.'
RIM, meanwhile, has seen its market share plummet. According to Aug. 5 data from Canaccord Genuity, Apple sold 26 million phones during the second quarter, for a market share of 16.1 percent, down from its 2011 market share of 18.8 percent. The dip was attributed to not disinterest but strong anticipation of its next iPhone model. Samsung, meanwhile, shipped 50.5 million phones, bringing its market share up to 31.1 percent during the quarter, compared with its 2011 total of 19.3 percent and 2010 total of 8.3 percent. RIM shipped 7.8 million phones during the quarter, more than halving its market share to 4.8 percent during the quarter, compared with 10.7 percent for the whole of 2011.
The Jefferies analysts believe Samsung has six options for addressing its operating system concerns: It can do nothing and continue to rely on Android; develop its own version of Android; develop a very differentiated (if even possible) version of Android; develop its own OS in-house; license BlackBerry 10; or it can buy RIM.
The last of these, say the analysts, is the best of a lackluster list of option, as it would offer Samsung insurance should Microsoft and/or Google vertically integrate. Further, the BlackBerry 10 user interface has been well-received, and the platform would offer bandwidth consumption and security benefits over Android and Windows Phone.
Possible downsides, they add, are that Samsung doesn't do much acquiring and bungled its last effort, the browsing experience on the Playbook 2.0 is "subpar," and RIM hasn't had much a software culture.
Whatever happens, they add, it won't occur until after BlackBerry 10's launch in early 2013. RIM CEO Thorsten Heins, during an interview from the London Olympics, promised new smartphones in January
RIM, wrote the Jefferies analysts, will want to see how its new platform is received before it places a value on the company.
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