The company behind the highly successful BlackBerry services is facing some fierce competition from the leading smartphone makers Apple (AAPL) and Samsung (SSNLF) and it has lost a significant chunk from its market share in the recent past. The market share of the company was less than 1% in 2007 and it grew to 3% in 2011. However, with the rising popularity of iOS and Android, users are switching towards the other platforms and BlackBerry services are being termed as obsolete. Amidst this shift, the company is losing its market share and according to market analysts, the company’s market share will soon be lower than 2%.
Although the company has delayed the launch of BlackBerry 10 devices twice already, the confirmation by the company regarding its latest platform entering the testing phase was accepted as a conclusive indication regarding the launch of the devices in the first quarter of next year. This information restored the confidence of the investors in the company and this resulted in a 15% rise in the stock prices.
As of Nov. 8, the stock price of the company was $9.06 which rose significantly from $7.57 on Oct. 26. The trend of the stock prices of the company has been moving upwards ever since and the optimistic prospects of the financial performance of the company are being reflected clearly in its market performance. Market experts believe that the company’s stock price will continue to rise till it hits the fair value of $12. According to the experts, the market price of the stock is being driven mainly by the popularity of its BlackBerry push email services and the rising anticipation regarding the latest platform to be released by the company.
Although the company officials and investors are optimistic regarding the prospective financial performance of the company, the fact that rising competition in the smartphone market will create hindrances for the company cannot be denied. Apple and Samsung will continue taking over the market share of the company, shrinking its market share to a much lower proportion. What is more detrimental for RIM’s market share is the entry of Microsoft (MSFT) in the smartphone market. Microsoft entered the market with a highly competitive operating system, Windows Phone 8. Some of the major cell phone makers, such as Nokia (NOK) and HTC, are releasing cell phones with Windows Phone 8. This new operating system is expected to cause a minor disruption in the market, which is not good news for RIM, a company that needs a stable market to make a mark with its latest platform.
The major factor that will help RIM survive in the highly competitive smartphone market is the loyalty of some of its subscribers. BlackBerry services were widely accepted among users, specifically business owners who found it necessary to access their email at all times. This acceptance has passed the test of time and despite the availability of similar features in iOS and Android, a large number of users find BlackBerry services more convenient to operate. The company has around 80 million subscribers all around the world. In the fierce competition, RIM will target its existing customer base to upgrade to BB10 initially.
The company has also shown that it understands the prerequisite for survival in this industry, i.e. innovation. The company has released its own tablets and advanced smartphones in response to the competition. With the advancements in the smartphone industry being demonstrated almost every other day, it is highly important to RIM to surprise its subscribers with innovation. This is also what the users are expecting from BB10. The success of the new platform depends upon how well it performs against the expectations of the users and how well it stands its ground against the competitors in the market.
After a close evaluation of the scenario regarding the trend of stock prices of RIM and the factors influencing them, it can be recommended that the investors should hold the shares of the company. This is because the share prices are expected to rise due to rising anticipation regarding the new BlackBerry 10 platform to be released by the company in the first quarter of 2013. Therefore, in my opinion, investors should hold their investments in the stocks of the company as their fair value is expected to rise to a higher point. That way, investors will be able to acquire a higher capital gain if they opt to sell the stocks when they are at their peak.