Three negative developments came in quick succession this week for Research In Motion Ltd., a company that is desperately battling to regain its momentum after a series of damaging missteps over the past year.
On Tuesday, RIM's shares dipped below $20 (U.S.) in U.S. trading for the first time since 2004, as global markets plummeted on European debt woes and a possible referendum in Greece.
The drop followed a report earlier in the week from Toronto-based VeritasInvestment Research, which predicted the Waterloo, Ont.-based company's market share would fall into the single digits and that the company's share price would follow into similar territory – a far cry from its past highs above $70.
Global market research firm Canalys released numbers on Tuesday that showed RIM's market share in United States, its largest and most profitable market, had actually done just that – collapsing to only 9 per cent from 24 per cent in third quarter of last year.
Veritas analyst Neeraj Monga says subscriber defections in the U.S. will continue, and that a single-digit market share could be mirrored in the share price within 12 months.
"Clearly, it's now single-digit market share in the United States – soon, I think it will be single-digit worldwide," said Mr. Monga, who slapped a "sell" rating on RIM stock.
In his report, Mr. Monga quotes the late Steve Jobs, Apple Inc.'s former chief executive officer, who launched a tirade against RIM on a financial earnings call last year. On that call, Mr. Jobs argued that RIM "must move beyond their area of strength and comfort into the unfamiliar territory of trying to become a software platform company. I think it's going to be a challenge for them."
Mr. Monga used the quote because he said it neatly summarizes RIM's predicament.
"They seem to miss every self-imposed deadline that they announce to the market … and almost every problem RIM discloses to the market involves software," Mr. Monga said. "It all suggests that they are finding it exceptionally difficult to transition."
Of course, RIM remains a profitable company with revenue of $4.2-billion (U.S.) and profit of $329-million in the last fiscal quarter ended Aug. 27, 2011. But though it has strong market share in many emerging markets around the world, such as Latin America, it has undeniable problems in high-value developed economies, where customers are more willing to pay for the latest device.
The iPhone and devices running Google Inc.'s Android operating system are obliterating RIM's share in markets around the world. Samsung Electronics Co. Ltd., which uses Android, is now the No. 1 smart phone in Asia-Pacific, Western Europe and even Latin America, which is one of RIM's strongest markets.
RIM is trying to claw back market share. The company released new BlackBerry devices running an updated operating system in August, and co-CEO Mike Lazaradis stressed this month the launch of the devices was the most successful in the company's history. RIM also announced a new, unified operating system for smart phones and tablets, called BBX, at a conference for software developers earlier this month, though there is no firm release date beyond 2012.
But despite strong sales of BlackBerry devices, Mr. Monga expects further damage to the company's share from the recent release and enormous success of Apple's newest iPhone 4s.