We just got a very nice report from RBC Capital regarding RIM's next mobile operating system, BlackBerry 10.
BB10 will officially launch January 30 at a big press event in New York, and RBC says it's increasingly optimistic about the platform's chances of success. It expects the new BlackBerry phone to cost $149 with a carrier contract. RBC predicts RIM will sell about 500,000 of them in the first quarter.
RBC predicts more BB10 devices will launch throughout the year, and RIM could sell as many as 10 million of them in 2013.
Here are some bullet points from RBC's report:
- Sentiment turns positive leading into BlackBerry 10 (BB10) launch. We’re re-calibrating our estimates ahead of RIM’s BB10 launch. Numerous carriers may promote the device, ensuring some initial unit success, and we expect an attractive subsidized price of $149. Pre-orders appear concentrated in Canada and the UK. We expect a larger screen model and mid-tier devices to follow the initial Touch and Qwerty devices. Normalized earnings are not likely until FY15. While sentiment on RIMM is positive at the moment, things can quickly reverse if sell-though data is not favorable or if returns are high. We estimate downside at $12 (tangible book).
- Upgrade of diehard installed base. Our forecast calls for RIM to ship 500k BB10 units in the Feb-quarter and 10M in CY13. Heavy subsidies and promotions may be required to sustain initially positive trends. Approximately 10–20M of RIM’s 79M installed base may upgrade to BB10 over time, although migration to low-cost Android is likely to continue. BB10, which does not entail mandatory service fees, will increase RIM’s mix of hardware revenue over time. Sustainable hardware margins have been elusive for many vendors.
- Starting at an opportune time. RIM will have 70k apps at launch, including many popular ones (Apple and Android near 800k). About 1,600 North America enterprises are testing BB10. Key differentiators include BBM video calling, enhanced voice recognition, BlackBerry Hub, and work/personal separation. Reviews of the browser remain favorable. Timing of the launch seems auspicious as Samsung will refresh its GS in April and Apple’s new device won’t arrive until June.
- Far too early to call a success. The true measure of success will be not just units, but also sustainable profitability, and competition is cut-throat with Windows convinced they will be the third mobile OS vendor. Heavy upfront spending may be required for the launch and we expect initially $500+ ASP and 10–15% gross margins on BB10 before volumes help margins.
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