Research in Motion ( RIMM) traded above $70 in early May; now it's below $50. This article seeks to accurately assess RIM's competitive position.First, the pluses. As I see it, RIM has three primary pluses in the market today: First, the vast majority of the world's handheld computer users do so on a pre-paid basis, unlike in the U.S. RIM offers its products on a pre-paid basis in many countries, unlike Apple and Google/Android. As long as the large majority of the world's consumers cannot buy iPhone or Android, RIM should do pretty well against its main competitor: Nokia ( NOK). Once Google ( GOOG) and Apple ( AAPL) decide to attack this lion's share of the world-wide market, RIM becomes vulnerable.
On the downside, RIM has three main things to worry about: First, the operating system is far behind Apple and Google in terms of its fundamental elegance and capability. Just compare installing an app, and then view its richness, between these platforms. Installing an app on a BlackBerry often takes a long time and can be followed by all sorts of screens of approvals, agreements needed to be signed, after which it may crash and bring down the whole system. Sometimes it works, sometimes it doesn't. For those of us who use multiple competing products based on different operating systems, these competitive discrepancies are obvious. Does anyone at RIM walk around comparing its products with iPhone and Android all day long? In a company such as RIM, literally thousands of employees should be forced to do this constantly. Second, BlackBerries fail all the time, and they are a pain in the neck to restore. Half the time you need to do something, the device freezes or shows the horrific hour-glass for who-knows-how-long. This didn't use to be the case some 4-7 years ago, when most BlackBerries operated only the "core" apps such as email, but it has increasingly become a problem when consumers, despite the unfriendly app install process, start loading 30+ apps onto the devices. In this process, every BlackBerry owner knows how to reboot the device, because you end up doing it almost every day -- which brings me to the next point: It's probably a sign of an unhealthy operating system if it takes 5 minutes to reboot, when an iPhone or even a Windows 7 laptop takes only 45 seconds. Third, getting your BlackBerry to interact with the PC is a bureaucratic nightmare compared to an iPhone. The average consumer needs to run three separate processes: (1) Back-up, (2) Synchronize and (3) Media Sync (with iTunes). Due to its complexity and lack of intuition, most BlackBerry owners I know run only one of these three. In contrast, getting "everything" done between your iPhone and iTunes requires only pressing a single button, once, upon which all backup, synchronization and media management occurs. Same thing for restoring your device -- one button click for iTunes/iPhone, whereas you need to take a day off from work, or sacrifice a weekend, in order to get your BlackBerry back into its original state with all the numerous apps you have downloaded and configured.
Conclusion: The tech support costs for BlackBerry are astronomical. Over the last eight years, I for one have spent on average two hours per week troubleshooting my BlackBerry for any of dozens of reasons, amounting to a small European vacation every year. Perhaps this is justified in The Department of Defense with its gigantic IT department, but the average consumer runs for the hills into the arms of the iPhone very quickly. Bottom line: The sentiment surrounding RIM stock is as negative as I have ever seen it. This is part justified based on the problems resulting from the operating system and the various problems it causes. That said, RIM can thank the large pre-paid market consisting of people with no PC/browser experience, as well as its de-facto defense contractor status, for what will probably continue to be several prosperous quarters ahead. On balance, and in combination with the humble valuation and negative sentiment, this should prove for a strong rally in the stock as long as the new BlackBerry 6 operating system interface rolls out -- on time (by September), and assuming it's any good. The author is long RIMM, AAPL and GOOG, but short NOK and MSFT.