What's Driving RIM's Strong Results?
From the "Obama effect" to a rebound in consumer confidence,Research in Motion is tapping into several trends besides the technology inherent in its products in order to drive its stronger-than-expected earnings performance.
That bodes well for the potential of RIM's future results, according to Peter Misek, global technology strategist at Canaccord Adams.
In an interview with CNBC, Misek cited four key reasons for RIM's growth: a rebound in consumer confidence, strong backing from carriers, its innovative use of the telecommunications network and the “Obama effect.”
“They’ve really benefited from a rebound in consumer spending that started in and around mid-February,” Misek said. “We saw it in Best Buy , we’ve seen it in RIM and we’ll see it in others. The consumers seem to have come back."
The Blackberry’s appeal has spread beyond the corporate consumer, according to Misek, and even teenagers are adopting the device because of its messaging abilities. This is helping to boost sales numbers. (To hear Misek's full interview watch the video to the left.)
Meanwhile, the telecom companies carrying the Blackberry are doing their best to get the product into consumers’ pockets because it is the most profitable device they can offer, he said.
Vodafone, Verizon and AT&T are all “heavily pushing, heavily marketing, heavily subsidizing this device,” he said.
RIM products are easy to maintain on telecom networks because it makes sparing use of network bandwidth, Misek explained.
“The device uses so little of the network, so you can have 10 to 20 Blackberries for every iPhone on the network,” he said. (Apple makes the iPhone.)
RIM uses a “shadow telecoms network,” which reduces the need for bandwidth and allows the user to access information with less of a drag effect, according to Misek.
Finally, RIM has a great spokesman in President Barack Obama. He lobbied to be allowed to use his Blackberry when he took office. Initially, the device was seen as a threat to his security.
“Obama is the biggest celebrity on the planet, he’s a massive Blackberry user and they’ve got the best free publicity I’ve seen any company ever get,” Misek pointed out.