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Can BlackBerry 10 Save RIM?

Research In Motion’s rapid decline from smartphone royalty to fighting for survival is well documented. But what’s not written yet is whether new CEO Thorsten Heins can turn the BlackBerry maker around.

The Blackberry Curve 8900
Source: blackberry.com
The Blackberry Curve 8900

In perhaps the most important moment of his three-month tenure at the helm, Heins opened the annual BlackBerry World conference in Orlando, Fla., on Tuesday.

He detailed plans for the new BlackBerry 10, the next generation of the platform expected to be released later this year on RIM’s mobile devices, and the way it helps companies.

“BlackBerry is all about success. BlackBerry creates their success. BlackBerry empowers their success," Heins told the crowd of about 5,000.

But he was also speaking to the more than 77 million BlackBerry users all over the world and the millions of former users who left for Apple’s iPhone and devices powered by Google’s Android mobile operating system.

But Wall Street did not seem impressed and shares of Research In Motion fell sharply after the address.

“RIM is caught between a rock and a hard place. They’re not being evolutionary enough,” Northern Securities Technology Analyst Sameet Kanade told CNBC’s Street Signs. He has a sell rating on stock with a price target of $7 a share.

Over the past year, shares of RIM have fallen about 70 percent as market share for the BlackBerry has sharply eroded.

Research In Motion now comes in fourth among the big smartphone makers, claiming only 6.7 percent market share, according to research firm IDC.

That’s down nearly 30 percent from the first quarter of a year ago.

MARKET SHARE

NAME Q1 MARKET SHARE CHANGE FROM 2011
Samsung 29.1% 267%
Apple 24.2% 88.7%
Nokia 8.2% (50.8%)
RIM 6.7% (29.7%)
Source: IDC Worldwide Mobile Phone Tracker May 1, 2012

RIM is not just competing for the hearts and minds of consumers, it’s also trying to win over developers.

Heins unveiled a prototype BB10 phone, with an onscreen keyboard that the company says will learn a user’s typing patterns over time. He stressed this is not the final device but that "it's critical that we get this into the hands of developers around the world” so they can begin to make apps for the new the platform.

While more than two billion apps have been downloaded from App World. according to numbers from the company’s applications store, courting developers may be a tough sell.

A recent survey by Appcelerator and IDC showed that only 16 percent of developers were "very interested" in making apps for BlackBerry, compared to 89 percent for iPhone and 79 percent for Android.

“There is no incentive for developers to create for RIM,” said Kanade. And with no launch date for the new device “it’s too much of a question mark, where Android and [Apple’s] iOS are sure things.”

On the more bullish side: Mark McKechnie, managing director and wireless analyst at Thinkequity. In a note to investors Tuesday, he maintained a "hold" rating on the stock.

But he increased his price target by a dollar to $13 a share pointing to what he sees as the first real strategic shift since Heins took over: “Mobile Fusion, RIM's open Mobile Device Management platform, will extend from simple management of Android and [Apple] iOS phones, to offer secure connectivity in a year's time.”

Last week, in CNBC’s first-ever “Stock Draft” (kind of like the National Football League Draft but with stocks), Josh Brown, vice president at Fusion Analytics, had the first pick and went with RIM.

“Look at the money that Facebook, Google, Samsung are paying in patents,” Brown said in defense of his selection. “They’re sitting on a gold mine, specifically security.”

McKechnie thinks the patents are worth at least $5 billion.

“The end game [for RIM] is somebody buys them for their patents, or a long shot that they get it right and open up the BlackBerry platform and turn into an enterprise software play,” he said.


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