Top Tech Stock – Research In Motion hopes PlayBook will Boost Market Position
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    Top Tech Stock; Research In Motion rolls through Mixed Playbook Reviews

    Shares of Research In Motion Limited (NASDAQ:RIMM) shares today recovered the slight losses yesterday after the company got mediocre reviews on its tablet computer PlayBook, ahead of the scheduled launch on April 19. Reviewers consented that the tablet offers some advantages mainly to business customers, however it would fail to impress the mainstream clients and needs additional functionality to successfully compete against the iPad 2 or Android based tablets.

    Following mixed reviews, a number of analysts expressed concerns that the Playbook could experience a modest start, until the company would add the full functionality of Blackberry smartphones: that are a native e-mail, calendar, contact lists, etc. to the Playbook. Analysts now expect that their concerns would be alleviated with the launch of the second generation of Playbook, some time in Q3 or Q4 of calendar 2011.

    The stock took another beating on March 24, after the company’s outlook for fiscal 2012 missed the analyst consensus.  The lower-than-expected-results for upcoming quarters were seen by the market as an indicator that RIMM is not expecting stellar performance from upcoming release of the PlayBook. The above mentioned concerns combined with the recent pessimism of reviewers sent RIMM’ shares down to $53.92 on April 14, the lowest level since October 25, 2010.

    The recent decline in RIMM’s valuation has wearied away this year appreciation caused by an upgrade of the company’s rating following aggressive estimates of PlayBook sales. The recent reviews deny the opportunity for the Playbook to gain adoption beyond the current population of Blackberry users. Moreover, the successful launch of Apple Inc. (NASDAQ: AAPL)’s iPad 2, as well as the growth of Samsung Electronics Co.‘s Galaxy Tab sales is challenging significantly the market potential of PlayBook even among the Blackberry fans .

    Research In Motion revolutionized the mobile industry with the introduction of the BlackBerry solution in 1999. Today, BlackBerry products and services are used by millions of customers around the world to stay connected to the people and content that matter most throughout their day. As of end of February, the company has shipped approximately 145 million smartphones and has a subscriber base of more than 60 million.

    The company’s supremacy in the smartphone market was questioned initially by Apple’s iPhone and later by Google Inc.’s (NASDAQ: GOOG) Android platform. Both the iPhone and Android became increasingly popular and gained the market share form Blackberry. According to a recent report from Nielsen, Android is claiming 29% of the U.S. smartphone market for the last quarter of 2010, while Apple and Blackberry tied with 27% each. In addition, RIMM failed to introduce any smart phone over the last year that can gain the market share from iPhone or Android.

    While RIMM headed the smartphone market, it missed the tablet computer opportunity and now is trying to catch up. Competition in the mobile tablet category is poised to heat up even more, as Dell Inc. (NASDAQ: DELL) and Motorola Mobility Holdings Inc. (NYSE: MMI) have also launched tablets running Android. In addition, Hewlett-Packard Co. (NYSE: HPQ) is also planning a similar device.

    Research company IDC said that the overall tablet sales more than doubled to 10.1 million in the fourth quarter of 2010, from 4.5 million in the third quarter. The iPad’s share of those global sales dropped from 93% in the third quarter to 73% in the last quarter of 2010. The Samsung Galaxy Tab had about 17% of the market in the quarter.

    Even with the crowding tablets market, there is enough room for every player to find a niche. The research company Gartner predicted that sales of tablets could grow from 20 million in 2010 to 208 million in 2014. Moreover, over the long run the tablet computers could challenge and ultimately harm the personal computer market. As a result, the launch of the Playbook is aimed not only to immediately scale up revenue and earnings, but also to establish a footprint in a huge and skyrocketing market, further develop and innovate to earn a bigger “slice of this pie”.

    Considering the huge base of Blackberry fans, several undisputed advantages of the Playbook like the speed, security, Flash implementation as well as imminent product upgrades following client’s reviews, we regard RIMM with decent chances to gain a meaningful market in the tablet market. The upcoming weeks would be indicative of the scale of product adoption and upgrades to improve the competitiveness against the iPad and Android tablets.

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