Research in Motion Comments on Blackberry Pearl Reception

Sep.29.06 | About: BlackBerry Ltd. (BBRY)

Research in Motion (RIMM) reported solid earnings and sharply higher guidance last night, sending the stock up almost 20% in after-hours trading. On the conference call, co-Chief Executive Jim Balsillie commented on market response to the new Blackberry Pearl and 8703e:

In September, the new BlackBerry Pearl was launched simultaneously in all T-Mobile channels in the United States, and the response to the product has been exceptional. Net subscriber account additions at T-Mobile in the weeks following the launch were significantly higher than we had been seeing prior to the Pearl launch. To support the launch, T-Mobile is offering attractive pricing of $199 and $19.99 per month, and also making Pearl available for sale as a phone only, without the requirements that users purchase a data plan.

T-Mobile is planning a number of marketing programs around the launch, including Pearl on the AOL Gold Rush reality show and running print ads in a number of leading lifestyle publications beginning in October. Product reviews and user feedback has been overwhelmingly positive, and we believe that we may have one of the most successful BlackBerry products ever on our hands.

Outside of the United States, Rogers in Canada plans to launch the Pearl shortly, as does O2 in the U.K., and T-Mobile in a number of European properties. In addition, our carrier partners around the world are all eager to move forward with launch plans for the Pearl, and our ISB partners are excited to be developing applications that take advantage of the combination of multimedia capabilities with the ease of use of the BlackBerry platform.

This month, we also introduced the BlackBerry 8703e for EVDO networks in both Sprint and Verizon. We believe there is strong demand for this product, particularly in the enterprise channel, and the integration of GPS capabilities into the device provide a multitude of opportunities for applications to take BlackBerry beyond e-mail.

Verizon is supporting the BlackBerry launch with programs such as free modem tethering trial and the launch of BES-in-a-Box promotion to target small businesses and a media campaign to support the 8703e.

In addition, the 7130e, which was launched last quarter, is also continuing to do very well in both Verizon and Sprint. As Dennis mentioned, we are seeing very strong sell-through of devices, driven in part by replacement sales to our existing customer base. This strong replacement cycle testifies to customer loyalty and satisfaction. BlackBerry customers who want a new device keep coming back to BlackBerry. This promises to be a strong revenue growth driver over time, as our subscriber account base gets larger and the volume of devices required simply to supply the existing base grows.