Friday, May 4, 2012

RIM: Street’s Lackluster Response To DevCon

Shares of Research in Motion (RIMM) are down 51 cents, or 2%, at $22.70 as the company goes into day two of its “DevCon” developer event in San Franciso.

Yesterday RIM showed some impressive demos of the technology in its “QNX” operating system using the PlayBook tablet computer to run games and fluid user interface elements. Some were disappointed, however, by the lack of detail about future BlackBerry units running on what RIM is calling “BBX,” its new integrated software platform.

Tavis McCourt with Morgan Keegan today reiterates a Market Perform rating on RIM shares and a $37 price target, writing “DevCon was underwhelming in terms of tangible new products.” There was no timeline offered for the release of BBX, nor for phones running on it.

“RIM is clearly becoming much more developer friendly,” writes McCourt, noting that RIM has a new head of developers, Alec Saunders. “But judging by the mood of developers at the show, one wonders if it is too little too late (at least in the US).”

The show seemed more lightly attended than last year, although not an embarrassment by any means. Most of the developers, like last year, were primarily Blackberry only developers. However, whereas last year about 100% of the smartphones carried by these developers were Blackberries, we would estimate about 1/3rd were carrying iPhones this year (very little Android interestingly). The vast majority of developers we met were from Canada, Latin America, and just about everywhere except the Bay Area. It remains shocking how little developer support RIM has in what is arguably the application development capital of the world.

RBC Capital’s Mike Abramsky says there was little here for investors to chew on.

“RIM did not demo nor announce any new hardware (e.g. QNX smartphones or updated PlayBooks) or launch timings, or announce new content or apps (beyond what it has previously said) or demonstrate its Android App Player,” writes Abramsky. “Additionally, RIM did not provide details on the BlackBerry Video Store as media generally expected.”

He thinks there may be “higher profile announcements” later this year or early next, when QNX phones are expected to come out.

Abramsky maintains a Sector Perform rating on RIM shares.

Mike Walkley with Canaccord Genuity reiterates a Hold rating and a $28 price target.

He liked what he saw in the BBX demos, but he thinks the software still has to improve to be competitive with Apple’s (AAPL) iOS and Google’s (GOOG) Android software.

We were impressed with new BBX features including Adobe Air 3.0 support, BlackBerry Runtime (Android app support), and hardware acceleration capabilities with OpenGL and Open AL support. While we view these features as marked improvements versus BB OS and QNX, we believe BBX needs further improvement to compete against the developer environments of Android and iOS.

Like Abramsky and McCourt, he notes the lack of detail about timing of the BBX-based smartphones. When those phones ship, which he thinks will be “mid-2012,” they face “intensifying smartphone competition,” as Microsoft’s (MSFT) “Windows 7.5” OS battles for developer support as well.

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