The Best Case for Research In Motion (RIMM)? No-One Wants an Apple (AAPL) or Samsung Duopoly

Its not in the interest of the carriers to see Apple (AAPL) and Samsung (005930) triumph over Research In Motion (RIMM).

Dec 5, 2012 7:07:38 AM PST | 486 View(s) | No Comment(s) - Post a Comment Rating

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005930.KS
$1,492,000.00 -$5,000.00 -0.33%
AAPL
$442.93 $0.00 0.00%
BBRY
$14.98 $0.00 0.00%
NOK
$3.76 $0.00 0.00%

Last week, I outlined several reasons to still like Research In Motion (See What’s Still to Like About Research In Motion Limited (NASDAQ: RIMM)? Actually Plenty), but I also left out what might be the best reason for its continued survival: No-one wants a duopoly between Apple (NASDAQ: AAPL) and Samsung (KRX: 005930). I should say that the no-ones are actually the someones who matter because they are the carriers and they can save Research In Motion if they choose to.

So why might the carriers through Research In Motion a lifeline? Consider the fact that if the smartphone market ends up being dominated by Apple and Samsung, these two phone makers will be able to dictate both prices and release dates to carriers. Obviously, carriers aren’t going to like that. After all, who would you choose if push came to shove, your carrier or the smartphone model or brand that you prefer? That’s going to be an easy answer for most consumers because the carrier is just the service the phone runs on.

In my case, I almost bought a BlackBerry (but opted for a BlackBerry like knockoff that was a bit cheaper as I don’t use my phone that much) to replace my aging Samsung smartphone simply because the BlackBerry comes with a qwerty keyboard and my previous Samsung phone also had a keyboard. You see, I am part of that customer demographic that STRONGLY prefers a device with a keyboard rather than a touchscreen simply because that is what I am used to. So I don’t really care what carrier my phone runs on, but I do have loyalty to a certain type of phone (albeit I don’t really care about the brand).

As for Carriers, they would love to have a strong or at least viable alternative to Apple and Samsung that already has a considerable and loyal following. That’s probably not going to be Nokia Corporation (NYSE: NOK) and its Lumia 620. Sure, the Lumia 620 might be a great phone, but Nokia just announced the sale of its own headquarters to strengthen its weakening cash position.

On the other hand and despite all of Research In Motion’s problems, its BlackBerry is still be used by around 80 million users worldwide and it remains popular in emerging markets like SE Asia. Many of these customers are older and wealthier than the average iPhone or smartphone user in general and they have their employers paying the phone bill. In other words, Research In Motion has an enviable following.

Hence, the carriers could decide to throw Research In Motion a lifeline by allocating more of their marketing and subsidy budgets to see to it that BlackBerry can compete with the likes Apple and Samsung. After all, the carriers can still pull a few strings (allocate more subsidies etc.) so long as there is a viable third smartphone player. Without a strong third player though, the carriers will be placed in a difficult position.

Of course, the carriers alone cannot save Research In Motion as customers ultimately decide what smartphone they purchase based on the merits of the device, but don’t count out the fact that the carriers probably want to see the BlackBerry succeed or at least survive.

John Udovich is a paid contributor of the SmallCap Network. John Udovich's personal holdings should be disclosed above. You can also view SmallCap Network's complete disclaimer and disclosure.