Research In Motion's Stock Surge, And Why It's Not Here To Stay

| About: BlackBerry Ltd. (BBRY)

Research In Motion (RIMM) has been one of the most traded stocks on the NASDAQ for a while. Plagued by older technology and a general trend towards a different kind of smartphone, RIMM reported its first operating loss back in Q1 2012. It has not had positive operating income since. On January 14, 2013 the company's stock had appreciated 10.25% by the market's close. The surge in the stock's value was spurred on by the pending release of the Blackberry 10 line of smartphones, as well as speculation about the phone maker's ability to sell phones outside of the United States. While a wave of positive emotion about the company's upcoming product line may have pushed its stock higher, a closer evaluation of RIMM's offerings shows that it might be too late for the company.

The BlackBerry 10 lineup will finally offer up-to-par specifications. Indian technology blog "Tech2" was given a hands-on sneak peak on the hardware of the first Blackberry 10 device to be released. The hardware specifications of the BB10 "Alpha Dev B" are as follows:

  • Qualcomm Snapdragon MSM8960 Processor (the same processor is in a variety of high-end smartphones, such as the Samsung Galaxy S3 and the HTC Droid Incredible 4G LTE. The iPhone 5 has a 1.02 Ghz dual-core)
  • 356 PPI (pixels per inch) screen (compare to the iPhones 326)
  • 2 Gb RAM (the iPhone 5 has 1GB; many high-end Android phones boast 2)
  • 16 Gb Storage (Standard)

Evidently, the hardware that RIMM is putting in its newest line of phones will be up to par. Beefy hardware does not make a phone great, however.

The revolutionary success of the original iPhone was not because the phone could crunch massive amounts of data; it was because the phone was incredibly user-friendly and versatile, backed up by a massive library of apps. BlackBerry has long struggled adapting to the highly minimalistic designs of the now-dominant smartphones. While BlackBerry 10 software, upon inspection, looks eerily similar to the "apps grid" page-turning design now offered by iPhone and Android, it is too late on the scene. What Apple (NASDAQ:AAPL) has perfected and what Android has allowed to evolve is not going to be beat out by a company that just recently ousted its CEO; the UI will fall flat and will give users undesirable experiences. During Q4 2012, the Apple store and the Google Play store both offered roughly 700,000 apps. The new BlackBerry app world being unveiled with BlackBerry 10 will have a measly 105,000.

While BlackBerry has maintained a nearly constant subscriber base of 80 million, many are waiting on their next phone upgrade to get away from their BlackBerry. Apple will strategically cut the price on their iPhone 5 when BlackBerry releases their phones in order to not let them get more market share. As of Q3 2012, Android had 75% of the market share, and the Apple iPhone remains a pristine competitor. There is simply no more room in the market for BlackBerry; the competing firms are taking them on as they expand overseas, and RIMM's lack of working capital will bring about their demise.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.