Research in motion

Research In Motion Limited (NASDAQ:RIMM) (TSE:RIM) announced its progress towards launching the new BlackBerry 10 early next year, citing a milestone development from the point of view of carrier network relations. The company revealed that 50 network carriers were already in the process of testing the company’s BB10 platform before they will decide on using it in their networks.

The company chose to sit out the holiday season, opting for a solo launch early next year contrary to rivals, Apple Inc. (NASDAQ:AAPL), Google Inc (NASDAQ:GOOG)’s fully owned subsidiary  Motorola Mobility, and Nokia Corporation (NYSE:NOK),  who have armed themselves ready for the season.

However, the latest news from the Pentagon may yet strike a blow at RIM’s plans, following its announcement that it will now allow its department the use of smart devices from other players in the market. RIM has been the sole supplier of smart devices to the Pentagon. This means that the company faces the risk of losing a large majority of its customers from the department, which threatens its market share. It will be interesting to see how the customers welcome the news.

CORMARK Securities analysts, Richard Tse, CA, CFA and William Milne, Associate, have identified the power of product cycle as a major boost for Research In Motion Limited (NASDAQ:RIMM) (TSE:RIM), as it counts down the days to the launch of its new devices.

Research In Motion Limited (NASDAQ:RIMM) (TSE:RIM) may not be anything compared to the likes of Apple Inc. (NASDAQ:AAPL) or Samsung Electronics Co. Ltd, in terms of brand presence and likely impact of a new product launch. However, the important part is, as long as the new product is up there with the rest, then the trend is bound to be to similar.

Apple Inc. (NASDAQ:AAPL) logged over 2 million units in sales on its first day of preorders. Research In Motion Limited (NASDAQ:RIMM) (TSE:RIM) may not necessarily replicate that, but the anticipation in the market guarantees some marvelous uptake.

The analysts have demonstrated the impact of product cycles in the chart above, taking the example Palm’s Pre and WebOS launch in 2010, which triggered a rally of the company’s shares. The company later issued a weak guidance, prompting a decline in the stock price, but major management changes saw the stock shoot up again. The other major improvement is seen when AT&T Inc. (NYSE:T) announced that it would sell Palm devices, news that sent the stock price rising.

In general, this is an indication that whenever something new is in the pipeline, there is always a chance for a better outlook. However, challenges also come along with the launch, such as patent lawsuits, and faults in the device, a good example being Samsung Electronics Co. Ltd’s Galaxy S2 vs. Apple Inc. (NASDAQ:AAPL), with its iPhone devices, and the latter’s iPhone 5 with its Maps and camera reviews respectively.

CORMARK Securities analysts have maintained their Buy rating on the stock, and have a price target of $12 per share.