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Old 08-10-2005, 04:28 PM   #1
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Default [2005-08-10] Blackberry Says They Have a New Load for August Release.

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Is RIM Ready to Rumble?
With the likes of Microsoft eyeing its turf, the outfit behind the ubiquitous BlackBerry knows it has a fight on its hands
Long have the would-be competitors to Research In Motion's popular BlackBerry wireless messaging device looked on in envy. None seem to have acquired quite the cachet of the little blue devices that hang from many an executive's belt, and certainly no would-be rivals have earned a nickname like the oft-repeated "Crackberry."

As smart handheld devices go, the BlackBerry is the king of the hill. A recent market survey by Gartner pegs the number of RIM's (RIMM ) BlackBerry units shipped in the second quarter at 840,000, out of a total market of 3.6 million devices. That's nearly double the 442,000 Treo smart phones that rival Palm (PALM ), RIM's closest competitor, says it shipped in the same period. RIM itself pegged its total subscriber base at 3.11 million.

TREO SWITCH? Eager to get in on RIM's action, rivals are readying a new attack on the BlackBerry. On July 25, Motorola (MOT ) announced its Moto Q, a thin phone evoking its popular RAZR model, but with a BlackBerry-like QWERTY keyboard. In May, Microsoft (MSFT ) updated its Windows Mobile platform to a new version, Windows Mobile 5, and the first devices running that software are expected in the fall (see BW Online, 7/14/05, "Motorola: Squeezing BlackBerry?").

Hardware manufacturers like Hewlett-Packard (HPQ ), Dell (DELL ) and others will accompany the software with a batch of new devices, many sporting their own BlackBerry-like keyboards. HP has on deck the iPaq 6700, and Dell might also be readying its first Axim handheld with a keyboard (see BW Online, 7/12/05, "For BlackBerry, a Crop of Rivals ").

Meanwhile, Palm is widely believed to be nearing the release of a new version of its Treo smart phone that will break with tradition by running Microsoft's Windows Mobile instead of the proprietary Palm OS. In fact, pictures of the device, allegedly dubbed the Treo 670, have recently circulated on gadget gossip sites.

NEW MODELS. Why do rivals believe they can knock RIM off the top of the heap? Despite its popularity, the BlackBerry has turned off many potential users because of the relatively limited amount of third-party software available to run on it. This is less of a problem for Palm's Treo 650, and Microsoft's Windows Mobile, both of which have a dedicated army of software developers creating thousands of applications.

"People always ask me when someone else is going to come out with a BlackBerry-like device," says Gartner analyst Todd Kort. "They like the BlackBerry device itself, but they don't like the fact that it's a relatively proprietary platform, and that there is not a great deal of software available."

Of course, RIM isn't standing still. It's working on a new BlackBerry model, pushing software licensing deals, and readying its devices to work with more high-end enterprise applications. Last year, it launched its 7100 series of smart phones, which look more like mobile phones but have a keyboard with two letters on each key. RIM CEO Jim Balsillie says the 7100 series has been a big success, but as yet the company hasn't broken out sales for that series.

"FULL SLATE." RIM's next move on the device front will be to refine the traditional BlackBerry with a gadget currently code-named "Electron." RIM has said little about it publicly, though Kort says it's going to be shaped more like a traditional BlackBerry device, but will have a better display. It's also rumored to be compatible with high-speed EDGE wireless data networks, which boast data throughput speeds as high as 135 kilobits per second, a little more than twice as fast as the GPRS link that BlackBerry devices use now.

Balsillie declined to comment on the rumored "Electron" device or any other forthcoming RIM device. "I will tell you that we have a full slate of new devices for the autumn time frame," he says.

But for Balsillie, the real battle will be over software, and the anti-BlackBerry factions are focusing new attention there as well. Alongside Windows Mobile 5, Microsoft will soon release a free upgrade to its Exchange server software, which runs the e-mail systems of thousands of companies, enabling a "push" e-mail function -- not unlike RIM's BlackBerry Enterprise Server.

BIG BASE. If it sounds like a classic case of Microsoft storming into a business that others pioneered, then you're not far from the mark. "Chapter One in wireless e-mail is about to close," says John Starkweather, Microsoft's product manager for mobile devices. "RIM was a pioneer in showing the business world that there's a return on investment that comes from extending e-mail. But the second chapter is about to open."

The way Microsoft sees it is simple, Starkweather says. The company reckons there are 20 million to 25 million people using some form of mobile e-mail, whether its via a BlackBerry, a Palm Treo, a Windows Mobile device, or even a laptop. However, there are between 130 million and 140 million people using corporate e-mail through Microsoft's Exchange server. Those numbers are "significant," Starkweather says, "so what we're doing is rolling push e-mail right into Exchange."

Balsillie says RIM saw this coming and is prepared. Through its BlackBerry Connect program it has licensing deals with wireless phone manufacturers like Motorola, Siemens (SIE ), Nokia (NOK ), Sony-Ericsson, and Taiwan's HTC -- the outfit behind many Windows Mobile devices sold under other brands. The plan Balsillie says, is to let millions of non-BlackBerry devices talk to the estimated 55,000 BlackBerry Enterprise Servers installed in corporations around the world. The BlackBerry software sits atop Microsoft's Exchange and IBM's (IBM ) Lotus programs, pushing e-mail messages and appointment lists to BlackBerry devices.

THIRD-PARTY DEVICES. In time, Balsillie says, RIM could make more money off its software licensing than device sales. That would represent a significant shift. For the year ended Feb. 26, RIM sold 2.5 million BlackBerry devices, for $934 million in revenue, or nearly 70% of overall sales, while software accounted for less than 10%.

But compare 2.5 million units per year to bigger wireless-device players like Nokia, which sold more than 60 million handsets in its most recent quarter. "At the end of the day we're a niche player in the wireless device business," Balsillie says. "If we get our applications running on enough third-party devices, pretty soon BlackBerry becomes the standard. That's a fine trade-off."

At least one major phone manufacturer agrees. While often cited as a potential BlackBerry-killer, Motorola's MOTO Q will support BlackBerry Connect, the second Motorola device to do so.

SLICKER SOFTWARE. And more BlackBerry-friendly devices are on the way from Motorola, says Mark Shockley, vice-president of its Seamless Mobility Devices group. "We think there is a great opportunity around messaging and we want our devices to be compatible with the leaders in the space," he says. But it will also support Microsoft Exchange, and even Good Technology's Goodlink software. "Our customers want choice, and our carriers want choice," he says.

An upgrade to RIM's software is coming too, says Balsillie, who adds that RIM will give BlackBerry users mobile access to enterprise applications from SAP (SAP ), IBM, and others. "Now our users will be able to get access to the customer-relations-management database or their SAP or their IBM Websphere system," Balsillie says. "This business is more about applications than anything else."

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