Is RIM a Dying Breed? (NASDAQ:RIMM)

Has there ever been a really cool invention that seems to just fizzle out?  Or it gets run over by competition?  Well, Keith Woolcock believes that just may be the case for Research in Motion.  He discusses his thoughts on why Research In Motion Limited (USA) (NASDAQ:RIMM) may be losing ground.

(Keith Woocock) - Jim Balsillie, the founder and chief of Research in Motion (RIMM), is like the old maid in a pantomime. Poor Jim can’t see that the danger is behind him. His answers to analysts’ questions on the last conference call were a bit like eavesdropping on someone’s private psychodrama. The answers were tortured, obscure and only loosely connected to reality.

The ‘dramatic arc’ that RIM is following is now clear for all to see. It goes like this: in 2008, RIM achieved an average selling price of around $400; by the middle of last year, this had fallen to $356; and by the last quarter of 2009, it had fallen again to $311. Next stop will be closer to $305. Yet, as Best Buy (BBY) has just confirmed, the fourth quarter of last year was an exceptionally strong one for smart phones, Apple’s (AAPL) average selling price rose above $600. If you are a seller of smart phones, life has never been better.

So why did average selling price drop for RIM? Probably because RIM is following the same path beaten by Nokia (NOK) at the beginning of the last decade. Average selling prices will continue dropping because RIM’s product is becoming passé, just as Nokia’s did. The next step will be that RIM’s market share in the U.S. will drop as Apple picks up Verizon (VZ) and Google’s (GOOG) Android operating system gains momentum. As they say in the pantomime, it’s curtains.

More of Woolcock’s Story Here