Another Turnaround Attempt by Research In Motion
Research In Motion (NAS: RIMM) is doing all it can to reverse its dwindling fortunes. In a recent move, the company announced the release of its BlackBerry Mobile Fusion software, which would allow enterprise customers to manage devices running on rival operating systems (read: Google's Android and Apple's iOS) as well.
And now, in what may be a desperate attempt to arrest declining U.S. sales, the company is planning to expand into the Middle East by opening a set of dedicated BlackBerry flagship stores.
But the big question is: Will such a move, which seems to be mimicking bigger rival Apple's (NAS: AAPL) strategy of opening dedicated stores, really help the company revive its sagging fortunes? Let's take a closer look...
Dark times for BlackBerry
RIM is having a hard time, to say the very least. The company's recently released fourth-quarter results reveal a net loss of $125 million as compared to a net profit of $934 million in the comparable quarter last year.
In fact, according to research firm International Data Corporation, RIM's smartphone shipments in the fourth quarter of 2011 plunged 11% from the comparable year-ago period. This is in stark contrast to Apple's phenomenal 128% growth in smartphone shipments over the same period.
The emerging Berry aspect
Despite these negative factors, RIM seems to be doing pretty well in overseas markets. Revenue from emerging markets such as the Middle East, Indonesia, South Africa, and Venezuela rose consistently and accounted for a good $2.8 billion in revenue for the fourth quarter.
IDC data also reveals that RIM managed to more than double its shipments to the Middle Eastern and African markets to 2.29 million units in the fourth quarter. But what should be even more encouraging for the company is that Apple's iPhone shipments in these regions accounted for just one-fourth of that figure during that period. This would perhaps explain why the company is thinking of opening up a flagship 1,500-square -foot store in Dubai and other stores in markets such as Qatar, Kuwait, and Saudi Arabia.
But that's not all. RIM may also consider opening stores in Africa, in places such as Kenya and Nigeria. Moreover, about 4,000 stores are also planned in Indonesia in another expansionary move.
The Foolish bottom line
With around 68% of its revenues coming from outside the United States, Canada, and the U.K., RIM's expansionary moves in the emerging markets should turn out to be a smart one. But then again, we have to remember that innovation is the need of the hour in the kind of market in which the company operates. That's why the successful release of the BlackBerry 10 operating system later this year will prove to be crucial to RIM's future prospects. Until then, opening more stores to push outdated products may just be a temporary boost to sales.
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Don't forget to stay up to speed with the latest on RIM by adding it to your free watchlist.
At the time this article was published Keki Fatakia does not hold shares in any of the companies mentioned in this article. The Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares of Apple. Motley Fool newsletter services have recommended creating a bull call spread position in Apple. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.