RIM (RIMM) has come up with a way to take market share from Apple (AAPL) and Palm (PALM) in the smart phone market. It is launching the BlackBerry 8520, a handset that will be available for $48 at Wal-Mart (WMT) and $129 from T-Mobile.
Investors have been very concerned that lower prices on some iPhones and the new Palm (PALM) Pre will lure away Blackberry users. The device is widely used among businesses, but new features from competitors make their latest products more “enterprise friendly”. A number of iPhone Apps are aimed at professionals.
RIM has begun to launch phones for the consumer market as its plans to extend its franchise. But, that market is crowded. Nokia (NOK), Samsung, and Sony Ericsson all have new smartphones and are trying to pick off customers from the current market share leaders. The premium prices that some of these handsets command mean premium margins. The global handset market has been shrinking in 2009 so the emphasis on profit per unit has gone up.
The only issue with a $48 Blackberry is how much money RIM can make on the product. The answer is probably not much.
Douglas A. McIntyre
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