The people have spoken, and Research in Motion’s ballyhooed BlackBerry Torch smartphone is officially…not an instant hit. RIM (RIMM) only sold 150,000 Torches during the first weekend after the phone’s August 12 launch. By contrast, Apple (NASDAQ:AAPL) moved 1.7 million iPhone 4 units during the first three days after its launch in late June.
RIM competes mainly with Apple, Motorola (MOT) and Nokia (NYSE:NOK) in the mobile phone market. The company had high hopes for the Torch, which is the first BlackBerry equipped with both a physical keyboard and a touch screen interface, and the first smartphone to run BlackBerry’s new OS6 operating system.
However, it does not appear that these new features are enough to make the Torch stand out in an increasingly crowded smartphone market. RIM can’t afford to release many more phones like this one. There could be a significant downside to our $72 stock price estimate for RIM if the company’s share of the smartphone market grows more slowly than we expect during the Trefis forecast period. Our analysis follows below.
RIM’s Market Share
We currently expect RIM’s share of the global mobile phone market to grow from around 2.7% in 2009 to about 8% by the end of the Trefis forecast period. We expect RIM’s unit sales to increase from 34 million in 2009 to 147 million by 2016.You can drag the trend-line in the chart below to create your own mobile phone market share forecast for RIM and see how it impacts the company’s stock price.
RIM’s stock price is highly sensitive to changes in the company’s mobile phone market share. As a result, unsuccessful phones like the Torch can destroy a great deal of shareholder value. There could be a downside of 30% to the $72 Trefis price estimate for RIM’s stock if RIM is only able to sell 100 million BlackBerries by 2016 (equivalent to a 5.4% market share) rather than the 147 million that we currently forecast.
Disclosure: No position