Research In Motion Ltd. (RIMM), the struggling smartphone manufacturer, will launch its first 4G BlabkBerry device Torch 9810 with AT&T (T) in August 21, 2011. Torch 9810, which will be run on BlackBerry 7.0 operating system, will have a full touch screen display and QWERTY keyboard. It will cost $49 for a 2-year contract.
4G venture is a desperate attempt by Research In Motion to streamline its struggling smartphone business, which was once considered as the most sought after mobile handset of the world. Research In Motion is facing severe problems from several fronts. The company is continuously delaying new products introduction, facing an ever increasing competitive landscape, a stagnant product portfolio, and an unfavorable product mix.
Research In Motion has failed to keep up with the next-generation market trend,which is rapidly changing in terms of technology, price, and data plan provided by the wireless carriers.Revenue, in the previous quarter, was way below the company’s own guidance. What was most concerning is an even disappointing financial outlook for the rest of fiscal 2012. The new EPS guidance for fiscal 2012 declined 25% from the company’s previous guidance.
Gross margin in the first quarter of fiscal 2012 was 43.9% compared with 45.4% in the year-ago quarter and 44.2% in the previous quarter. We believe the decline was primarily attributable to an unfavorable product mix toward low-end BlackBerry devices resulting in falling average selling price. BlackBerry is quickly losing its leadership position in the corporate segment. This segment was characterized as high-margin since business executives generally purchase pricier smartphones. Research In Motion is trying hard to cater extensively the retail consumer segment but failed to do so as its software remains uncompetitive with respect to application friendly features of Apple Inc.’s (AAPL) iOS and Google Inc.’s (GOOG) Android.
Nevertheless,still today, BlackBerry commands a strong brand value. By offering a convenient, reliable, and secure way of accessing e-mail in real time, Research In Motion has been able to successfully differentiate its BlackBerry products from other offerings in the communications market. Furthermore, international markets (outside the U.S. and Canada) may provide a new growth opportunity for the company. In this respect, a BlackBerry for super-fast 4G network may help Research In Motion to sail through a very difficult tide.
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