Good Job, RIM. You’ve Lost the Consumer Market.
If “things can’t get worse in the foreseeable future” for Research in Motion, perhaps it’s because the company has finally reached its nadir and forfeited its chances to remain a serious competitor in the smartphone market.
That seems to be the opinion of Wunderlich Securities analyst Matthew Robison, who handed RIM an ugly downgrade this week, slashing his target price on the company’s shares to $46 from $76 and arguing that its long-in-the-tooth handset portfolio has cost it the consumer market.
“We no longer anticipate Research in Motion recovering to participate in the mainstream of smartphone industry growth,” he said. “Our long-term forecast anticipates a role supplying business-oriented devices, both mid-range and high end, as well as cloud-based services via the BlackBerry Network. We expect the consumer mix gained over the past two years to churn off, and that earnings will decline after 2013 and eventually grow again on demand that is largely associated with business users.”
In other words, RIM, which has been in the mobile handset market for over a decade, has lost the consumer market to rivals like Apple, which only entered the mobile handset market in 2007, and Google, which entered it a year later. Its primary market will remain in enterprise, though it may not be quite the stronghold that it has been in the past.
As for the company’s prognosis in the tablet market, that’s a bit better, though gains there have been slow going. “On the positive side, we believe the PlayBook continues to sell well relative to tablets other than the iPad, with minimal returns,” Robison said. “However, shipment rates have waned since initial volume from those that had been waiting for it. There is little indication that the PlayBook has registered with consumers outside the loyal BlackBerry installed base.”
An ironic turnabout for an analyst who six months ago was calling the PlayBook RIM’s “ace card.”
[Image Credit: The Joy of Tech]