Research in Motion (RIMM) competes with Apple (AAPL) and Palm (PALM) in the corporate smartphone market where RIM has a significant presence. According to a February 2010 report from ChangeWave, RIM still dominates the enterprise mobile phone market with 69% share, while Apple and Palm come a distant second and third with market share of 27% and 6%, respectively.
We believe HP’s (HPQ) acquisition of Palm could have repercussions in the corporate smartphone market as HP leverages its strong corporate presence to promote Palm smartphones.
There could be a downside of 10% to the $75 Trefis price estimate for RIM’s stock if BlackBerry global mobile phone market share does not increase as much as we forecast, due to greater competition from HP after its acquisition of Palm.
HP Can Leverage Its Corporate Relationships to Widen Palm Distribution
HP, which leads the global PC market with around 20% share, has a vast presence in the corporate PC segment attributable to its strong business distribution channels.
HP has dedicated distribution channels for business clients and spends significant resources maintaining these relationships. HP also offers business customers network storage and server hardware, as well as managed services to help businesses reduce their total cost of ownership and maintenance of PC infrastructure.
Palm Already Offers Security Required by Corporate Customers
Palm’s WebOS mobile phone operating system already offers many of the crucial security features required by corporate customers making it easier for HP to sell Palm devices to its customer base. For example, Palm’s WebOS includes security features like:
- Secure Communication: Palm WebOS ensures data security of critical applications such as e-mail and browser over the Wi-fi network.
- Password Protection: The WebOS platform includes strong built-in password protection that keeps the device locked unless a valid password is entered.
- Remote Data Wipe: This allows the IT administrator to remotely wipe off all data on the device, in case of theft or loss.
Palm has around 6% share in the enterprise segment, which is significantly higher compared to its 1% share in the global smartphone market. Palm’s existing traction with corporate customers, combined with HP’s relationships and distribution can help Palm gain additional share.
Potential Impact on RIM’s Stock
We currently forecast that RIM will continue to increase its market share from less than 3% in 2009 to 8% by the end of Trefis forecast period.
You can modify our forecast for above to see how there could be a 10% downside to our $75 estimate for RIM’s stock if RIM’s mobile phone market share were to reach 7% instead of 8% as a result of HP’s acquisition of Palm.
For additional analysis and forecasts, here is our complete model for RIM’s stock.
Disclosure: No positions