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BlackBerry and Competition

May 2nd, 2005 · No Comments

WSJ writes about Research In Motion’s BlackBerry’s success and the challenges it now faces:

Awakened by RIM’s achievement, tech giants and hungry upstarts are responding with an arsenal of gear aimed at cracking the BlackBerry’s stronghold. Consumer-electronics companies such as Nokia Corp., Motorola Inc. and Samsung Electronics Co. are rolling out competing e-mail devices. Meanwhile, rivals are providing network software designed to intercept or block the revenue RIM generates from handling wireless e-mail traffic.

RIM now faces a classic technology-industry problem: Young companies that launch popular products aren’t always the long-term winners. Netscape Corp.’s Web browser was superseded by a late alternative from Microsoft Corp. Google Inc.’s Internet-search service eclipsed early offerings by Yahoo Inc., and now Google itself faces intensifying counterattacks.

For RIM, which started life developing electronic signs for auto plants, the challenge is particularly acute. The still-nascent market is being attacked by a phalanx of competitors at multiple points along BlackBerry’s food chain. Companies are developing software that allows wireless e-mail to work on a series of rival hand-held devices. Others are creating networks to handle e-mail traffic in competition with BlackBerry.

Today, 100 wireless carriers sell BlackBerry hand-helds and service and 80 more will start this year. RIM’s 120,000-square-foot plant in Waterloo, which works round-the-clock, isn’t big enough. RIM recently agreed to take over the leather factory next door. For its fiscal year ended Feb. 26, 2005, RIM had net income of $213 million on revenue of $1.35 billion.

Meanwhile, a host of companies are pushing wireless e-mail networks as BlackBerry alternatives. For example, Good Technology Inc., Santa Clara, Calif., says it has signed up more than 5,000 organizations for its rival system, which runs with gadgets that compete with the BlackBerry.

The NYTimes writes about Microsoft’s plans:

With Windows-powered mobile devices lagging behind the Palms and BlackBerrys of the world, the Microsoft Corporation has brought an electrical engineer from China – a master of the strategy game Go – to put them back in the race.

He is Ya-Qin Zhang (pronounced yah-CHEEN jong), 39, an experienced computer systems researcher who helped start Microsoft’s Beijing research laboratory in 1999. He was tapped in January 2004 to come to Redmond, where Microsoft is based, to lead the turnaround of the Windows Mobile software business, which has hemorrhaged money for years.

Now the first results of Dr. Zhang’s efforts are scheduled to be unveiled at a conference May 9-10 in Las Vegas at which Microsoft plans to introduce the next version of its Windows Mobile software, code-named Magneto, with new productivity and multimedia features.

Industry speculation is that Microsoft has been fashioning the software as a ” RIM-killer,” a reference to Research In Motion, the Canadian company that dominates the corporate hand-held computing market with its BlackBerry.

The Feature adds:

It would appear that the proxy space — where products like RIM’s servers act as a go-between for corporate e-mail servers (generally Exchange) — is becoming commoditized, and separate vendors are focusing on different types of users and different geographic areas. Seven’s approach, for instance, is a white-label system operators can have embedded in phones that’s aimed at small companies and so-called prosumers. RIM’s got a lot of strength with larger companies, but perhaps not as much with individual users. But these different targets should provide business for both companies — and of course be a boon for operators.

The juggernaut, of course, is Microsoft. Its latest Windows Mobile release incorporates push e-mail, but the real money for the company is in middleware and servers, as its ActiveSync server licensing deals indicates, dictating its slightly more friendly approach. But what’s interesting is how device manufacturers are licensing as many of these different technologies as they can so as not to alienate any potential users; and how companies like RIM, once dependent on its own devices, are licensing the technology to them.

This results in a lot of control being in the carriers’ court, and will make a winner out of companies that get their backing. Operators around the world have been beating down RIM’s door, hoping to take advantage of the data-traffic and ARPU boost BlackBerrys deliver. Seven’s happiness to take a back-seat role also wins them favor, and an operator with offerings with RIM technology for corporate users and Seven for smaller users could be a winning combination.

Tags: Software

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