Monday, August 02, 2010

Research In Motion Needs Some Buzz

By Eric Jackson
RealMoney Contributor

8/2/2010 5:21 PM EDT
Click here for more stories by Eric Jackson

Research In Motion (RIMM - commentary - Trade Now) will make an announcement in New York tomorrow, along with AT&T (T - commentary - Trade Now).

The companies could potentially make three product-related announcements at the event:

  1. They could unveil a new version of the standard BlackBerry (improving on the 9700) using a new operating system which is supposed to enable the BlackBerry to surf the Web and toggle between applications better than Apple's (AAPL -commentary - Trade Now) iOS andGoogle's (GOOG - commentary - Trade Now) Android.
  2. They could provide details about the rumored Slider device from Research In Motion, which is supposed to combine a large touch-screen device like the iPhone's with the tactile Research In Motion keyboard that slides out at the bottom for email.
  3. They could provide details about the November launch of the "BlackPad" - Research In Motion's entry into the tablet market.

Research In Motion is under enormous pressure to deliver buzz and excitement at the event. Last quarter's earnings were disappointing for investors -- overseas revenue was up because U.S. revenue was down. Investors are concerned that the company has hit an inflection point and that future growth will be much more tepid than what the company delivered from 2005 through 2008.

In the last earnings call at the end of June, Co-CEO Jim Balsillie seemed very confident that the company had exciting new devices on tap that would sell like hotcakes once they were introduced to the market. We will start to see if his optimism was justified or if it was more delusion.

If you review any of the top Web sites for the major wireless carriers, it's clear that BlackBerries are no longer the major draw. They are typically far down the list -- sometimes even after lower-end devices from LG and Samsung. Prices for BlackBerries are much lower than what you see for the high-demand devices, and this should continue to affect Research In Motion's margins in the current quarter.

It's amazing how quickly the mobile landscape can change. How many of us took HTC seriously even eight months ago as a major player in the space, as opposed to regarding it as a second-tier alternative? Yet, now, it's got two very hot devices, the Incredible and the Evo, that are making major revenue contributions to Verizon Wireless and Sprint Nextel (S - commentary - Trade Now) respectively.

And two years ago, Motorola (MOT - commentary - Trade Now) was floundering, supporting multiple operating devices and trying to replace its multi-year hit phone, the Razr. The newly installed co-CEO, Sanjay Jha, made a major bet on the Android operating system, which looked risky at the time but now appears to be starting to pay dividends.


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