UPDATED 10:07 EDT / DECEMBER 17 2010

Pundits Predicting Death of RIM Forget to Count Foreign Markets

Anton Wahlman is reporting on The Street that Research In Motion, the Canadian developer of the Blackberry smartphone, continually gets prodded in the pundit media as failing at market. However, as this doesn’t actually appear to be the case worldwide, he accuses reports of polling only the US market and then extrapolating that incorrectly as global market attitude:

First, these pundits don’t realize that in most of the countries of RIM’s main competitor is not Apple or Android, it’s Nokia. The Finnish company has about one-third of the world unit market for mobile phones, even though its market share in the U.S. is very close to zero. This means that in many countries, Nokia constitutes close to 50% of the market.

The U.S. smartphone market is uniquely warped, as Motorola CEO Sanjay Jah rarely forgets to remind us. In the U.S., almost all high-end smartphones sell for $200, while there is a second tier around $100 and then others at zero, all with a two-year contract.

Considering that most smartphone monthly bills run about $100, or $2,400 for two years, the upfront price difference is peanuts. Who cares if it’s $200, $100 or zero upfront, when I’m really paying $2,400 after that?

As a result of this warped U.S. pricing, the market has tilted heavily in favor of the smartphones most expensive to manufacture, most notably the iPhone and high-end Androids. Why not get the best for only $200? This means RIM is more challenged in the U.S. market.

In countries such as Indonesia pricing angles itself in a totally different direction where carriers offer much smaller monthly costs, but phones aren’t being subsidized by companies to get customers onto expensive plans. The result tilts costs in favor of buying a Nokia or Blackberry phone at less than half the price of iPhone and high-end Androids. As a result, iPhone does extremely poorly in these markets while RIM and Nokia shine.

The result is that RIM does report a beat-and-raise quarter repeatedly, even though it faces fierce competition in the US market—a fact that Wahlman points out that must be confusing pundits reporting RIM’s likely demise. Even if Blackberry flounders in the US market, they’ll still have foreign markets to pad their bottom line and continue to supply them with money and leverage to stay in the game.


A message from John Furrier, co-founder of SiliconANGLE:

Your vote of support is important to us and it helps us keep the content FREE.

One click below supports our mission to provide free, deep, and relevant content.  

Join our community on YouTube

Join the community that includes more than 15,000 #CubeAlumni experts, including Amazon.com CEO Andy Jassy, Dell Technologies founder and CEO Michael Dell, Intel CEO Pat Gelsinger, and many more luminaries and experts.

“TheCUBE is an important partner to the industry. You guys really are a part of our events and we really appreciate you coming and I know people appreciate the content you create as well” – Andy Jassy

THANK YOU