Apple makes tens of billions of dollars per year in profits, and a big percentage of this comes from the iPhone. New iPhone launches still have people lining up around the block at Apple Inc. (NASDAQ:AAPL) stores to buy the new devices, and many Apple users are extremely loyal. Apple unveiled an update to its iOS operating system recently, introducing a cleaner interface as well as a slew of new features. Apple’s app store has now had over 50 billion downloads of over 900,000 different apps.
Apple also makes the leading tablet, the iPad, which runs on the same iOS operating system. BlackBerry attempted a tablet with the BlackBerry playbook a few years ago, but the device failed miserably. Apple makes a bulk of the profit in the smart phone and tablet business even though it doesn’t ship most phones. This is because Apple Inc. (NASDAQ:AAPL) focuses on selling a premium product at a premium price, much like their Mac computers. This also means that Apple will at best be number two in terms of volume.
Number one is and most likely will remain Google Inc (NASDAQ:GOOG)’s Android. The proliferation of Android devices is a boon for Google, leading more users into its array of web services. With the leading email service in Gmail and the popular Google Docs and Google Drive, along with an app store with about as many apps as iOS, Google’s ecosystem is an attractive one. And with Google pushing its services on the enterprise market, with a recent partnership with HP, this threatens Research In Motion Ltd (NASDAQ:BBRY)’s core market. If a company uses Google services it’s likely to also use Android phones.
BlackBerry is vying for the number three spot, but it faces stiff competition from Microsoft Corporation (NASDAQ:MSFT). Windows Phone 8 has been gaining market share, becoming the number three OS in the first quarter of this year, and the well reviewed Nokia Lumia phones bode well for the OS’s future. This is not Microsoft Corporation (NASDAQ:MSFT)’s first phone OS but it is the first one that has a chance of seeing success.
Here’s an interesting graphic regarding the planned enterprise deployment of mobile apps:
While BlackBerry has more apps deployed currently, enterprise deployment over the next 12 months for Windows Phone, and indeed every other mobile OS, outpaces BlackBerry considerably. It seems that the world has moved on from BlackBerry, and it will be difficult for the company to regain its ground.
The bottom line
Neither the short or long case for Research In Motion Ltd (NASDAQ:BBRY) is all that attractive. The balance sheet is strong, and even a hint of profitability could send the stock soaring. If BlackBerry were riddled with debt it’d be a different story, but that’s not the case. On the other hand, the long case is essentially betting that BlackBerry can become the number four or possibly the number three mobile OS, leading to at best marginal profitability. There is really no chance that BlackBerry returns to its previous dominance. So the long case doesn’t seem like all that lucrative of a turnaround story.
Some stocks should just be avoided. You don’t have to be long or short. You can be neither. And that’s the best course of action with BlackBerry.
The article Avoid This Stock, Long or Short originally appeared on Fool.com and is written by Timothy Green.
Timothy Green owns shares of Microsoft. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple, Google, and Microsoft. Timothy is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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