All the battle continues between the Blackberry and its competition. So what's ahead in smartphone sector? Can Research In Motion stay ahead of the rest? Or are there other competitors encroaching on its space? With me now is David Garrity. He is the director of research at Dinosaur Securities. David, thanks for joining us.
Thank you.
There has been pretty incredible run for RIM over the past years. So can they keep this momentum up or do they have to sort of pull back a little bit?
Well, Research In Motion is certainly in an very that advantageous position, given them one of the very strong in terms of the business market; but two, they are making very meaningful progress in terms of the consumer market. And I think for investors who really focus on here is that when you’re looking at the wireless service providers whether it's the Verizon Wireless or the AT&T's, typically these companies find that the smartphone customers have much higher daily usages that generally drives a much higher bill and obviously drives higher profit margins. And while people may be raising concerns in various places that, you know, consumers are becoming more strapped to the extent that these phones are being sold to subsidy and to the extent that there’re being greater profitability with them, expect the cell phone companies to heavily push this product.
Ah, do you expect that has been an issue when we were reaching into other markets. Ah, Apple’s doing with the IPhone, RIM certainly doing with the Blackberry where maybe those subsidies won't play such a big factor. Maybe these phones won't be subsidized. So can you bet on that in all the market?
Our view is that the subsidy is gonna be very significant and as we indicated earlier, the usage level's quite high, relative to other phones, for the wireless service providers. Now we see usage drives, billings drives, revenues in the standpoint of *** in a weaker economy. Obviously companies are interested in trying to find a way to maximize everything they can.
Ah.. when we talk about the steady use we are really focusing on corporate emails, something that RIM has nailed down. But Apple says "Hey, we are working on that software as well." So what happens if and when Apple does develop that software? What happens to RIM?
What happens to RIM is that you know RIM is going to have to consider what they're gonna do with their own proprietary standard. They assigned to make it open. So they can start to have the developers come in and add more on the way features. Certainly we saw that Apple, with the IPhone, G3, eh, 3G introduction, that they were making obviously very big play to talk with a number of independent software developers who are gonna be out there. And we also saw recently that Nokia, in buying in half of the software provider Symbian, for their phones are certainly gonna be making their product free. We also know that Google with Android. So we're moving into a situation here we're gonna find that the software standards are more open and trying to improve and to bring about creativity, trying to provide greater choice to the consumer. And Research In Motion will have to make that choice at some point of time. However, we would think that Research In Motion, given as strong as they are in the business market, doesn't necessarily have to make that choice immediately.
Now, right now, you know, finally some other competition out there beyond Apple. A lot of people say Microsoft has the technology to really push RIM out of the water if it will. Do you think that they have to look out for other competition and where else can they grow outside of the Blackberry or can they not?
Well, when you're looking into the global cell phone market and access to a billion and half units annually and you're still finding smart phones at a fairly low number that less than 10 percent. And given some of the attractions there in terms of price points and margins, yes, there is a lot of competition growing in this smart phone market. We would say that we respect the Microsoft. Microsoft has been trying to push Windows in terms of compact edition for quite some time and has had companies like Samsung supporting them in doing that. But we really haven't found Microsoft really successful in terms of providing something that the consumer really is as willing to pay up for as they are potentially at a Research In Motion product or an Apple product or perhaps a Palm product or, you know, even in some cases a Nokia product.
OK. Thank you so much. We'll see all, we'll see what happens there. Appreciate it. David Garrity, director of Research at Dinosaur Securities. Track RIM, track Apple and all the other tech-stocks in your portfolio right here on our site.
