"TORONTO ó Like Google in search engines and Hoover in vacuum cleaners, Research in Motion Ltd. has achieved the distinction of having its product turned into a verb.
Almost 3 million people around the world "BlackBerry" their friends and colleagues with messages using the Canadian company's distinctive hand-held device. The BlackBerry has transformed Research in Motion over the last six years from an obscure supplier of two-way pagers into the maker of one of the world's hottest products.
Research in Motion reported this month that it had signed up 470,000 subscribers in the quarter ended Feb. 29; it expects to add more than 500,000 over the next three months. The BlackBerry has recently made its debut in India, Brazil, Poland, South Africa and the eastern Caribbean.
Research in Motion's U.S.-traded shares on Nasdaq have rocketed from less than $10 in autumn 2002 to $71 after a 2-for-1 share split last year. The company has a market value of $14 billion, overtaking Nortel Networks, the troubled telecommunications equipment supplier, as Canada's technology superstar.
Not surprisingly, Research in Motion's success is attracting attention from some of the giants of the communications and software industries, and observers are wondering how long the upstart from Waterloo, Ontario, can sustain its phenomenal record.
One possible threat comes from the biggest technology company of them all. Microsoft plans this year to launch the latest version of its Windows Mobile software, which some are billing as a potential "BlackBerry killer." In particular, the Microsoft product is expected to emulate BlackBerry's "push" e-mail capability, in which new messages pop up automatically in the inbox.
Alex Slawsby, an analyst at research group International Data Corp., says that "simply having the device and the loyalty may not be the advantage that it once was."
The BlackBerry's original, and still most popular, use as an e-mail device was "the lowest hanging fruit," Slawsby notes. "Now people are starting to say: What else can you do for me?"
Research in Motion's epitaph has been written many times before as one aspiring rival after another ó Palm, Handspring, Danger and even such giants as Microsoft and Dell Computer ó has sought to muscle into its market.
The company last month agreed to pay $450 million to a U.S. patent-holding company to settle an infringement claim. The settlement pushed Research in Motion to a fourth-quarter loss of $2.6-million, compared with a $41.5-million profit a year earlier.
Still, the BlackBerry, whose name comes from the supposed resemblance of the miniature keyboard on its original device to the beads of the fruit, "remains the preeminent mobile messaging solution in the market today," says Jason Tsai, an analyst at ThinkEquity Partners, an investment bank.
The BlackBerry began life as a high-end gadget for Wall Street investment bankers, Washington politicians and corporate executives. Their employers not only covered the cost, but had the server technology required to link the device to a computer network.
More recently, Research in Motion has turned its attention to the "prosumer," or professional consumer retail market, which now makes up about one-fifth of its subscriber base.
With an eye on individual buyers, the company introduced Web-based software that eliminates the need to link a BlackBerry to a corporate server. The latest versions can be connected to e-mail and other applications at the time of purchase.
Research in Motion has vastly broadened its market by licensing almost 100 distributors, including many of the world's biggest mobile phone companies. It provided training for 600 phone company sales representatives in North America last quarter.
BlackBerry distributors include Vodafone, Verizon Wireless, Cingular Wireless and T-Mobile. RIM expects to sign up China Mobile Communications this year. To make the devices more affordable, many carriers offer BlackBerry contracts similar to those for mobile phones.
According to Tsai, "the carriers love BlackBerry not only for the higher average revenue per unit it generates, but for the strong margins, since it consumes very little bandwidth."
There is widespread agreement that the market for corporate and retail wireless communication has vast potential. Less certain is what it holds in store for the BlackBerry.
Investment bank Bear Stearns cautioned in a recent report that the growing interest of big software and mobile phone makers could "change the economics of wireless 'push' e-mail from virtual monopolistic pricing to market-driven pricing".
"The threat could come from Microsoft, if it gets this right," says Andrew Seybold, president of Felton, Calif.-based consulting firm Outlook 4Mobility.
Another question is whether Research in Motion's success will ultimately jeopardize its independence. Co-Chief Executive Jim Balsillie and founders Mike Lazaridis and Doug Fregin own only about 16% of the company stock in total.
Brant Thompson, analyst at Goldman Sachs, singles out Nokia and Motorola as possible predators.
Slawsby notes that "there are many different companies with designs on being an alternative to RIM." In his view, the BlackBerry's biggest advantage is intangible. For the time being, he says, none of its rivals possesses "that buzz-creating element that the public loves." http://www.latimes.com/business/la-f...ck=1&cset=true