Effects on RIMs Market
Position"> While analysts said that the company was likely the victim of customers waiting for the patent suit to end before making their buying decisions, in light of the fact that the NTP case threatened to shut down RIMs wireless e-mail services, some experts said the legal brouhaha may well have a long-term effect on the companys market leading position. In a note to investors, analyst Andrew Neff of New York-based Bear Stearns, advised that the investment firm is lowering its stock rating on RIM from "peer perform" to "underperform" based on the companys subscriber growth estimates.While the analyst said that RIM is planning to expand its product lines to go after more consumers, he questioned whether that strategy would significantly buoy the wireless firms growth prospects, as much of its success to this point has been achieved with enterprise business customers. Neff said that the consumer market effort would also drive up RIMs operating costs. Rivals such as Good Technology, Microsoft and Nokia lag far behind RIM in the mobile e-mail market, said the analyst, but increased competition from those companies and wireless operators, who will look to undercut RIM on pricing, could also make it harder to dominate the sector. Andrew Lee, analyst with investment firm TD Securities, Toronto, said in similar a report that the entrance of Microsoft into the wireless e-mail market is causing some enterprise customers to hold off on buying RIMs BlackBerry devices, and the industry watcher said he expects that trend to continue. Other analysts observed that while the uncertainty surrounding the NTP suit may have hurt RIM in the short term, it may still be hard for rivals to steal business away from the segment leader. Neil Strother, analyst with NPD Group, Port Washington, N.Y., said that RIM might have been smarter to settle the case more quickly, but he doesnt see it damaging the firms prospects significantly. "They knew that the longer the NTP trial went, it created doubt in the marketplace and could aid rivals, and the wireless e-mail market may have changed somewhat, at least in terms of customers familiarizing themselves with alternatives," said Strother. Read more here about the effects of the RIM settlement in the enterprise from columnist Steven J. Vaughan-Nichols. "But the fact remains that theres nothing else on the market that integrates the device and the service as well as RIM BlackBerry, and that alone will continue to win them new sales." Strother said that in all likelihood, the market for wireless e-mail will grow at a fast-enough pace in 2006 to allow both RIM and its rivals to increase their subscriber accounts and device sales, but he believes that BlackBerry will remain tops in the sector. "Down the road there will likely be two or three dominant providers in the mobile e-mail space, but Id expect RIM to be one of those companies and likely the leading top-tier player," Strother said. Check out eWEEK.coms for the latest news, reviews and analysis on mobile and wireless computing.
"Despite the cessation of the litigation and absence of effective competition, our concern is that the wireless e-mail market could be saturating at current levels, requiring new products or marketing methods to jump-start growth," Neff wrote.