Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Globe Investor

Inside the Market

Up-to-the-minute insights
on developing market news

Entry archive:

(Paul Sakuma)
(Paul Sakuma)

Has RIM lost its competitive edge? Part II Add to ...

Earlier this week, colleague Simon Avery wrote about Bernstein & Co.'s negative take on Research In Motion Ltd. The gist of it? RIM is still coasting on its technological breakthroughs of yesteryear, some of which don't really apply today now that bandwidth is far less scarce.

Now, Chris Umiastowski, an analyst at TD Newcrest, has taken on the challenge of defending RIM with a research note that reaffirms his belief that RIM is an "action list buy." He estimates the shares should surge nearly 50 per cent over next 12 months, to $110 (U.S.).

First, he tackles the criticism that the BlackBerry's email efficiency is out of place in an era when bandwidth is plentiful. The need for efficiencies, he believes, extends beyond email and into web browsing, Facebook, Twitter and data from BlackBerry applications.

"A recent study by Rysavy Research shows that RIM's browser can deliver the same page to a user with one third the bandwidth," Mr. Umiastowski said. "We think it makes sense to think of apps in the same way that we once thought about email. Sure, email may be a small fraction of total network usage, but we believe the advantage that RIM brought to email still exists in a world where bandwidth is dominated by web browsing and wireless apps."

As for the criticism that bandwidth efficiency no longer matters because it is essentially limitless, the analyst disagrees.

"Have users seen a dramatic increase in bandwidth as we've evolved from GSM to HSPA? Of course. But how often do you hear people say, 'I'm so impressed with how fast this wireless connection is'? It rarely happens. In our view, user demand keeps pace (if not exceeds the pace of) bandwidth growth in the network. Our expectations keep climbing."

Mr. Umiastowski agrees that RIM faces tougher competition now that Google's Android and Apple's iPhone are on the scene, and thriving. However, the smartphone market is growing fast, leaving plenty of room for all three big players to expand. "As long as RIM maintains its position as a top player," he said, "we believe it will capture mobile market share in the years to come."

For Globe Unlimited Subscribers

Business videos »

Most popular videos »


Most Popular Stories