(NYSE:MOT) and Palm (NASDAQ:PALM).
In its recently announced FY Q4 2010 earnings, RIM indicated that it has benefited from increased BlackBerry promotional offers by telecom carriers (Verizon (VZ), AT&T (T)) as well as retailers (Best Buy (BBY), Radio Shack (RSH)). By promoting the BlackBerry, carriers like Verizon benefit over the long run due to the higher monthly data fees paid by BlackBerry subscribers compared to basic feature phone subscribers.
We estimate that there could be an upside of 10% to our $75 Trefis price estimate for RIM’s stock if the continued promotional offers from carriers and retailers help increase RIM’s market share more than we forecast.
RIM Market Share Expected to Increase
We believe that RIM’s worldwide mobile phone market share will increase from around 3% in 2009 to 8% by the end of Trefis forecast period.
US Carriers and Retailers Promoting the BlackBerry
US telecom carriers (Verizon, AT&T, Sprint (S)) and retailers (Best Buy, Radio Shack) have been heavily promoting the BlackBerry:
- Best Buy and Radio Shack featured the BlackBerry 8500 series for multiple carriers during their Valentine’s Day promotions, which led to RIM’s best ever Q1 2010 quarter at Radio Shack.
- Verizon, AT&T and Sprint gave promotional discounts on most of the BlackBerry Curve and Bold models during the holiday season and continued with it in Q1 2010.
- T-Mobile and Sprint’s subsidiary, Boost Mobile, have started offering prepaid services on BlackBerry models for the first time.
Promotions in International Markets Important As Well
In addition to the US market, international carriers and retailers have also been promoting the BlackBerry. RIM’s international revenue mix has increased from 37% of total revenues in 2008 to around 48% in 2009 and international promotions will have an increasingly important impact on RIM’s market share. Some recent international promotions include:
1. Orange “Pay as you go” offer has become popular
In the UK, Orange launched a BlackBerry “pay as you go” Christmas gift campaign for the first time. It is a prepaid smartphone offer that has resulted in huge sales of Curve 8520 and Bold 9700 models.
2. Increased association with UK Distributors and Retailers
RIM has started increasing its presence with distributors and retailers in Europe. During the last quarter, BlackBerry Curve became the best selling smartphone at Car Phone Warehouse and Phones for You. These are some of the largest mobile phone retailers in the UK.
10% Upside to RIM’s Stock if BlackBerry Market Share Increases at a Faster Rate
Although we forecast that BlackBerry market share will increase to around 8%, there could be an upside of $7 (10%) to the $75 Trefis Price estimate for RIM’s stock if the company’s market share increases at a faster rate to reach 9% by the end of Trefis' forecast period.
You can modify our forecast for BlackBerry mobile phone market share above to see how RIM’s stock will be impacted if it were to increase at a faster rate than what we forecast.
For additional analysis and forecasts, here is our complete model for RIM’s stock.
Disclosure: No positions.