BlackBerry May Not Tank, Says Analyst, Offering RIM a Boost
Research In Motion's BlackBerry 10 platform is impressing carriers more than was expected, Jefferies analyst Peter Misek told investors in a Nov. 20 research note, giving the mobile solutions maker a "20 percent to 30 percent probability for success" and writing that RIM may avoid a "worst-case scenario."
In a market in which RIM's smartphone shares have been devoured by Android-running smartphones and the Apple iPhone, Misek's comment passed for praise and sent RIM's stock prices climbing nearly 5 percent.
Misek added that Jefferies has been "surprised by the strongly positive initial feedback from carriers ... given BB10 is two years late and RIM's market share has plunged from 20 percent to 5 percent."
He added, "Our theory is that carriers see BB10 as one of their last chances to avoid being locked into a long-term smartphone OS duopoly."
Some will call Misek's theory overly pessimistic, as the carriers already have a number-three possibility in Microsoft, which with its partners has been working to secure a spot on the podium. With the Oct. 29 release of Windows Phone 8, their efforts may soon come to greater fruition.
Between the third quarters of 2011 and 2012, sales of Windows-running smartphones more than doubled, bumping Microsoft's market share from 1.5 percent to 2.4 percent. RIM's market share, meanwhile, fell from 11 percent to 5.3 percent, according to data from Gartner.
RIM CEO Thorsten Heins has told the press BB10 has a "clear shot" at the number-three spot, though Global Equities Research, in a September report, told clients that the dominance of Apple and Google is such that there "will not be any third spot left."
"Nokia, Microsoft and RIM," wrote analyst Trip Chowdry, "will struggle in the remaining 2 percent of the market."
Pessimistic or not, Misek's assessment is an improvement over the widely circulated opinion of Pacific Crest analyst James Faucette, who earlier this month told investors that his firm believes BlackBerry 10 "is likely to be DOA."
Misek's report made the media rounds as The Wall Street Journal reported that the National Transportation Safety Board (NTSB) is looking to transition from BlackBerry smartphones to iPhones, adding the agency to a growing list of defectors in industries that were once undisputed RIM territory.
But while the Department of Defense and government consulting firm Booz Allen Hamilton have cited users' demands for more modern phone options—understandable, given BB10's delays—the NTSB's defection more painfully criticizes RIM's key offering, its reliability.
The NTSB's BlackBerrys "have been failing both at inopportune times and at an unacceptable rate," the agency posted on the Federal Business Opportunities site last week, according to The Wall Street Journal.
The post continued, "The NTSB requires effective, reliable and stable communication capabilities to carry out its primary investigative mission and to ensure employee safety in remote locations."
In response to the report, Paul Lucier, RIM's vice president of global government solutions, said in a statement that government organizations have trusted the BlackBerry's reliability and security for more than a decade.
He added, "They can continue do so. BlackBerry remains the most reliable, secure and robust end-to-end mobile communications platform available. We have one million government customers in North America alone ... and more than 400,000 government customers worldwide upgraded their devices in the past year."
RIM finally announced Nov. 12 that it will launch BlackBerry 10 Jan. 30, ending months of speculation and rumors of a more likely March launch.
"In building BlackBerry 10, we set out to create a truly unique mobile computing experience that constantly adapts to your needs," RIM CEO Heins said in a Nov. 12 statement. "Our team has been working tirelessly to bring our customers innovative features combined with a best-in-class browser, a rich application ecosystem, and cutting-edge multimedia capabilities. All of this will be integrated into a user experience—the BlackBerry Flow—that is unlike any smartphone on the market today."
Lucier, in his statement, added that RIM is committed to the mobility needs of its government customers around the world and "will continue to meet these needs with BlackBerry 10."
Editor's Note: This article has been updated to include RIM's response.