updated 03:20 pm EDT, Fri September 26, 2008
Needham on RIM vs Apple
Needham and Company contributed to a steep decline in Research in Motion's share price today by warning investors that the BlackBerry creator is likely going to perform below expectations in the near future. Analyst Craig Bisagna notes that while RIM is secure in its business sales, Needham sees the company's dismissive attitude towards competitors in a financial conference call Thursday as overly optimistic and unrealistic.
The iPhone 3G and the HTC-made T-Mobile G1 are likely to boost awareness of smartphones, Bisagna says, but are too directly pitted against the Curve, Pearl and other BlackBerries to avoid competition.
"We continue to believe that the company has its head in the sand," the researcher says on behalf of Needham. "It's delusional to think [Apple and HTC] won't cut into BlackBerry sales as well, especially in the consumer market."
Bisagna explains that RIM's recent success has largely relied on the limitations of its competitors rather than any particular strength. Most of the BlackBerry line's rise has been driven by home users and the Pearl in particular, but for most of this time has only had to compete against unsuccessful Windows Mobile hardware. RIM had the home-oriented smartphone market "pretty much to itself," he says.
The iPhone was only a non-threat through the absence of full-speed 3G access and a too-high pricing, according to the report. Both have since been taken care of, while the developer appeal of the T-Mobile G1 is also cited as a potential factor. The G1 is also priced inexpensively for its feature set at $179 on certain contracts.
Multiple new BlackBerries due for the fall, such as the Pearl Flip and the touchscreen Storm, are said to potentially help RIM but aren't guarantees that Apple, HTC, and others won't affect BlackBerry market share.
The conference call held by RIM followed a mixed but ultimately disappointing summer quarter report from the company, which saw earnings spike but phone shipments fall slightly short of targets set out by investment research groups. The quarter was the first in which RIM had to compete against the iPhone 3G but only saw limited competition as the Apple handset shipped midway through the three-month period.