Research In Motion: Don't Jump On The BB10 Bandwagon Yet

| About: BlackBerry Ltd. (BBRY)

The smartphone market is not in its formative stages anymore. Google's (NASDAQ:GOOG) Android and Apple's (NASDAQ:AAPL) iOS are the leading operating systems in this competitive market. Microsoft recently launched its Windows 8 and WP8 in a bid to create a universal eco-system which is consistent across various devices. The reception of WP8 and Windows 8 has been lukewarm so far. It remains to be seen if it can give Android a run for its money. If we analyze competition among operating systems, the only competitors for RIMM are Android and Windows based devices. This is because, the second largest smartphone operating system-iOS, is limited only to Apple based devices. Therefore, any new venture of Research in Motion (RIMM) would face challenges from Android and Windows 8.

Windows 8 is very new and still does not have a strong foothold in the smartphone industry. Therefore, Blackberry 10 has an opportunity to effectively target its niche market. The company has announced that it plans to release BB10 along with two devices on January 30th. The initial reviews for BB10 have been positive but it remains to be seen if it can carve out its place in a fiercely competitive market. There are profits to be made in the short run from the BB10 launch. Long term investors should wait for the numbers to come out for BB10 before taking a position.

BB10 Launch:

Research in Motion has announced to launch its highly anticipated Black Berry 10 platform on January 30th. The market was expecting the launch in June/July but the company delayed the launch, citing technical reasons for the delay. The stock moved up approximately 3% because the news gave investors more hope of a bounce back through BB10. According to the company, two devices carrying BB10 will be launched simultaneously in different countries. The company plans to launch the touch-based devices first. There is still not an agreement on the specific date for the launch. Analysts are expecting devices to be available in stores during late February or March.

Last week the company obtained a security approval for its devices and platforms. Blackberry was facing the threat of government agencies looking towards an alternative. This is a market which has been dominated by Research in Motion for a long time. The approval will remove any technical hurdles in the adoption of BB10 by this target market. According to the company, this approval will allow government agencies to use the new smartphones as soon as they are launched. According to Research in Motion, this was also the first time a BlackBerry product had obtained the Federal Information Processing Standard (FIPS) 140-2 certification ahead of its launch. Any product that collects, stores and transfers data requires an approval of FIPS before it can be used by any US government agency.


The future of RIMM is still uncertain. The new BB10 is user-friendly and there have been positive developments on the applications front. However, the high competition in this sector warrants that no long-term decision be made before initial sales figures come in. In the short run, investors can make money from the launch event because we believe the stock will see an upside as the launch date approaches. We are giving a hold rating for long-term investors until sales numbers for devices using BB10 are revealed.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Business relationship disclosure: The article has been written by Qineqt's Technology Analyst. Qineqt is not receiving compensation for it (other than from Seeking Alpha). Qineqt has no business relationship with any company whose stock is mentioned in this article.

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