Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) has been making waves in recent months with the announcement of a new line of smart phones. Optimism has begun to surround the company, and its stock, for the first time in years. One thing investors seem to be missing, and it’s a big one, is that the company will not be able to survive as a hardware firm.


A new report from National Bank Financial addresses this very issue. Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) has always garnered most of its revenue from services. Those service revenues are what’s keeping the company afloat right now. If they disappear the firm won’t have the cash to pursue a real position in the smart phone market.

According to the report, which was authored by analyst Kris Thompson, Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) needs to provide operating metrics for its services revenue to investors so that they might accurately judge the future of the company. The current model for the future of those streams is a mystery to investors right now and that’s a major problem for analysts.

The analyst, before the protests begin, says that he and his team are big fans of the Z10, but they don’t see it growing the company’s base. It’s effect will be to stem the tide of Blackberry users moving to competing models. The problem is applications, and that’s not an issue that can be solved over night.

Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) needs time to build its platform. If service revenues are going to be extinguished any time soon, the company will not have the money, or the time, to develop that ecosystem. It will be hard pressed to compete with the established ecosystems if that occurs.

The real problem is not that this is going to happen, it’s that nobody really knows because the company has not yet released models for its forward service revenue. Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) can not survive on hardware sales alone, not in 2013, not in 2014 and probably not in 2015. The company needs those revenues in order to oversee the development of its smart phone products.

The lack of real data on the services revenue model leaves a huge question mark on the company’s future. Blackberry loyalists can buy all they want, the company needs a wider base in order to survive. Without service revenue that base will not be obtained. Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) stock lost a huge chunk of its value in trading Wednesday, bu has still gained more than 15% for the year so far.