Daniel Wong

Daniel Wong
Contributor since: 2010
To everyone: Thanks for the comments. Definitely some interesting insights and perspectives.
Chris, you raise some excellent questions. I’d like to have some firm answers to these myself.
The only data I have on Windows Phone 7 says that its market share is miniscule -- sub 2% -- in both the U.S. and overall. In fact, based on Gartner reports, it appears that Microsoft’s global market share is falling. Microsoft’s roadmap, however, suggests that it will be a future competitive threat. Windows 8 and Office 15 are designed to unify PCs and tablets. And in my opinion, a tablet with native MS Office support is almost a guaranteed winner.
As for BlackBerry 7, the signs point to slowing sales. The spot checks analysts are performing support this. Then there’s also RIM’s expectation of lower Q4 shipments (relative to Q3), which we can only assume is partly reflective of BlackBerry 7 demand. This is not entirely surprising given the limited runway for OS 7; however this puts more pressure on RIM to deliver BBX on time and without compromise.
Overall, I agree the competition is quite scary for RIM. BBX success is far from guaranteed and meanwhile they’re getting squeezed on all sides by Android devices.
In general, I’d say RIM needs to find ways to leverage its competitive advantages: security and data-efficiency. Unfortunately, for the time being, security is only appreciated in the enterprise market, and data-efficiency is only important in emerging markets. RIM’s work with NFC, as daverggi mentions above, is important because it has the potential to make security relevant again; and this time for the greater consumer market.
In reply to this and others questioning a 12% market share --
I fully understand your concerns and I appreciate the discussion. The next year for RIM will really dictate its potential for the foreseeable future. Until then we can only speculate.
As suspected, the focus of my article is on analyzing current trends in the smartphone market with respect to RIM. My goal is to provide the reader with a feel for the scale of the market, and an understanding of the level of success BlackBerry needs to achieve to justify $30.
If it re-affirms your belief that RIM is worth under $30, that is not necessarily an unwanted outcome. Although, my belief is that RIM can still mount a turn-around. And as I have demonstrated, even without a full-fledged reversal -- or rather far from it -- RIM is worth at least $30. In my following articles, I will also reveal that a decline in average selling prices and a contraction in net margin are also baked into this price target.
Thank you for your comments. Just to be clear, the Microsoft trend line is hypothetical. I am not presenting anything here to substantiate that claim -- it's just a what-if scenario. What's important in the chart is the Blackberry line relative to total market size (i.e. sum of all lines).
Nicholas and Alex:
Thanks for the options trading strategies. I am just realizing their compatibility with value investing -- deep value stocks in a sense can compensate for the unlimited downside of (some) options trades.
That's a good point. On a per share basis, I have recalculated revenue growth per annum over the last decade to be approaching 6%. However, assuming a 6% sustained future earnings growth rate is overly optimistic, so a more reasonable interpretation instead would be that my estimate of intrinsic value incorporates a reduction of growth to 3.5%. Thank you very much for your feedback.