Research In Motion and Nokia are two companies that have been struggling in the market for a while now, what with the rising dominance of Google and Apple in the realm of mobile handsets and smartphones. The two companies have, however, seen some success recently and there seems to be some potential for a turnaround performance although there is still sufficient reason to be skeptical and investors have a tough call to make regarding the two underdog companies.
One of the factors in Nokia’s favour, for example, is its ties with the Microsoft and the increasingly superior quality of its hardware. Nokia’s design and hardware is a breath of fresh air in a market dominated by similar looking slabs. The Lumia 920 has been well-received in the US and a special version has been picked up by carrier China Mobile (CHL) but, despite this, it’s always been clear to the industry that sheer numbers and objective data have a tendency to fail when trying to determine the success of a product in a highly subjective market.
RIM, on the other hand, once had a leading position in the industry and has still managed to stay afloat, despite its declining numbers. Even with RIM’s 22% hit in the recent trading session, it has seen some spikes in share value and has followed Nokia’s pattern to stay rising, despite the several hiccups on the way. The raw data and its established reputation in the industry suggests that RIM may not be out of the game just yet and investors still have a worthy reason to stay on.
There are some heavier factors against the two companies, however, and they continue to be major obstacles. One of them is the increasing strength of the Android ecosystem in the global market. While Microsoft can be expected to see some success once Windows 8 gains traction, it seems uncertain whether the same can be said for the performance of Windows Phone 8 in the market. Android holds a lot of weight in the market due to its established mindshare amongst consumers. Windows Phone 8 does have enough to compete but critics wonder if it’ll be enough to take over Android’s position in the competitive smartphone market.
To add to their woes, there is also supply and demand being the deciding factor in the commercial success of any device in the industry. Profit margins have been sinking and the balance between supply and demand has been at a steady decline for both companies. If Nokia’s low-end phones continue to outsell their higher-priced Lumia series, Nokia makes a much smaller profit than it’s comfortable with. The two companies may have similar trends but, between the two, there seems to be a lot more favouring Nokia than RIM. While investors can still make money from investing in either company, they need to also understand that they might not see substantial leaps in the long-term.
