Seeking Alpha
Research analyst, long/short equity, tech
Profile| Send Message|
( followers)  

Research in Motion (NASDAQ:RIMM) is growing its market share in the global mobile phone market on the heels of increased smartphone adoption, greater availability of high speed mobile networks, and increasing mobile phone demand from emerging markets.

Though rising competition due to increased pressure from Apple’s (NASDAQ:AAPL) iPhone and greater proliferation of devices using Google’s (NASDAQ:GOOG) Android system will challenge RIM’s BlackBerry device, we still see additional upside to our price estimate on rising market share gains.

We currently have a Trefis price estimate of around $72 for Research in Motion’s stock, which is about 30% above the current market price of around $55.

The Threat of Apple and Android

Rising competition could result in slower market share increases for BlackBerry. In a recent Trefis article, we explained how RIM’s market share lead over Apple has shrunk and that Apple will overtake RIM market share by early 2011.

In the most recent quarter, The LA Times, sourcing NPD research, stated that Google’s Android OS were 44% of all smartphones sold topping RIM’s 22% and Apple’s 23%. [1] It also mentioned that Apple’s iPhone surpassed RIM’s leading product, the BlackBerry Curve 8500, as the nation’s bestselling handset.

Steady Rise of Smartphones

The BlackBerry mobile phone market share has increased from 0.3% in 2004 to 2.7% in 2009. [2] The main factors for the rise include: 1) increasing smartphone penetration of the mobile phone market; 2) greater availability of high-speed wireless networks; 3) growing smartphone demand in emerging economies like India and China; and 4) a wide corporate following given Blackberry’s track record of security and reliability.

The average Trefis member forecast for BlackBerry mobile phone market share indicates an increase from 3.8% in 2010 to 8.1% by 2016, compared to our baseline estimates showing a rise from 3.7% in 2010 to 7.8%. This implies that members forecast 5% upside to Trefis estimates, which is already 30% ahead of the current market price.

You can drag the forecast trend-line in the below chart to express your own view.

Notes:

1. We’ve calculated BlackBerry Mobile Phone Market Share as: (Total BlackBerries Sold) / (Global Mobile Phone Units). RIM reports the number of total BlackBerry sold in its SEC filings. We have taken data on global mobile phone units sold from publicly released information by market research firm Gartner.

2. RIM’s BlackBerry and OS lose ground to iPhone and Android

Disclosure: No positions

Source: BlackBerry Benefits From Growing Smartphone Market