The likelihood of Research In Motion Limited (NASDAQ:RIMM) (TSE:RIM) recovering from its current plight is shrinking, according to new reports on the company’s progress. Since details of the company’s new operating system, BB10, the firm’s shares have gone through a small recovery.

Research In Motion Limited

Since that recovery began, I’ve covered the firm’s prospects from both sides. Analysts have predicted the company’s value is too low to attract buyers. On the other hand, there have been suggestions that the new operating system will bring the company back to its glory days and beyond.

The operating system has gained traction with many Internet commentators, if that is anything to go by. My articles on the company have garnered many responses unflattering to my ego. There are problems with the company’s current direction, those have been highlighted by recent reports.

Jeffries Research and Pacific Crest Securities have set the firm ratings of underperform and sell, respectively. Many of their reasons overlap, but the major criticism of Research In Motion Limited (NASDAQ:RIMM) (TSE:RIM) lies in the delayed release of the BB10 operating system.

According to both reports the Research In Motion Limited (NASDAQ:RIMM) (TSE:RIM) promise to release BB10 in Q1 2013 probably means either February or March. Though a January launch is not beyond the bonds of possibility, it is unlikely given current circumstances.

The first problem with a Spring 2013 launch is the lack of a holiday season payoff. Sales of Microsoft Corporation (NASDAQ:MSFT) Windows Phone 8 handsets are likely to do well, because of Christmas sales. RIM will not have that bolster.

The late launch leaves retailers holding stock of the company’s current phone models. Those are unlikely to sell, given the coming launch of a completely new operating system. Pacific Crest points out that several of the locations they scouted either no longer carried Blackberries, or did not have the handset on the shop floor.

That’s worrying for the company, and could lead to a large miss in the February earnings announcement next year. It is unlikely that BB10 will have launched by then, and sales of old models may have dropped by a huge margin. Tough times are likely for investors during the firm’s next two earnings announcements.

On the financial front, RIM is still hemorrhaging money. the company will have to increase its expenditures in the coming months, in order to market their new handsets, and cover the other costs associated with the launch. At this stage, that money could hit the company hard.

There are silver linings, but they are too risky to bet on. Jeffries predicts the growth of a third operating system in the smart phone world is likely. Research In Motion Limited (NASDAQ:RIMM) (TSE:RIM) is in a position to provide the world with that, but it will need to license BB10.

The analysts do not believe there will be any licensing deals with other handset manufacturers before the launch of BB10. This means the company will not be able to accelerate its growth quickly. Companies like Samsung are likely to wait until later in the system’s lifetime, when licensing terms might be more favorable.

Research In Motion Limited (NASDAQ:RIMM) is entering the smart phone market at a tough time, but it is also one full of opportunities. A second tier is being established, where RIM, Microsoft Corporation (NASDAQ:MSFT), and East Asian manufacturers, like Huawei, will battle for a place in the market. Some of the new systems will likely be successful, but it is unlikely all of them will find their feet.

BB 10 will release well after the launch of Microsoft Corporation (NASDAQ:MSFT) Windows Phone 8. There are already headwinds on that system, however. Critical reviews have not been universally positive. The real battle will take place in the application design world.

RIM announced a reward program for BB10 developers today. Any developer who manages to earn revenues of over $1,000 with in app payments on the platform, will be given $10,000 from the company.

This will of course be counted as another launch cost, but it will attract many smaller developers to the system. Small developers have come into their own in the software world, since the rise of mobile computing. Who was Rovio before Angry Birds?

Research In Motion Limited (NASDAQ:RIMM) (TSE:RIM) has many obstacles to cross in the coming months. The twelve month target placed on the company by Jeffries is $5, a pessimistic look at the company’s upcoming mobile platform. That’s a loss of more than a third on the current price of the firm’s shares.

Whether or not BB10 looks like a winner on a personal level, it is undeniable that selling it to the market will be difficult. In a world nearly saturated with iPhone and Android models, selling a new platform is a difficult prospect. BB10 might be able to rise to the challenge, but not without a fight.