Why Research In Motion Rocks
When the iPhone hit store shelves a week ago, Research In Motion (RIM) gained $6 billion in market capitalization and its stock price hit a three-year high. What? You'd think investors would shy away from any iPhone rival, instead betting with Steve Jobs and his super-device. But RIM, maker of BlackBerry handsets, has done shockingly well with a stellar first quarter and huge news of just-approved access to China's mobile phone market. The cell phone stalwart was clearly the high-end leader before the iPhone, but Apple and AT&T managed to sell upwards of 700,000 handsets the first weekend, setting a digital device record and reinforcing sky-high expectations. Dan Gallagher from MarketWatch offers an analyst's explanation of how RIM has kept up its momentum through the iPhone launch:
"Research In Motion's huge May quarter results and our recent checks suggest two things: 1) RIM's products are clearly separating from traditional competitors like Motorola, Palm and others; 2) carriers that are not selling the Apple iPhone, but want a killer product in the smart phone segment, will turn to RIM and its carrier-friendly business model for help," [JMP Securities analyst Samuel Wilson] wrote.An Ovum Research paper says RIM's easy-to-use software package also has a lot to do with their success, and a Bloomberg article quotes Blaine Carroll, an analyst at FTN Midwest Research, saying "'the BlackBerry is hitting the sweet spot of the market right now, which is the consumer." Nevertheless, RIM's long-term market share is undoubtedly threatened by Apple's new entrant. A few quarters into the future and we'll know if RIM can hold its ground.
(Image of RIM's BlackBerry Handset by Edans)