PRESSURE'S ON RIM Simon Avery – Globe and Mail Research In Motion Ltd. can breathe easier with that massive patent infringement suit behind it. But it can't relax.
Shares of the BlackBerry maker jumped more than 15 per cent Monday — the first day of trading since Friday evening when RIM averted a possible injunction on U.S. sales by writing a $612.5-million (U.S.) cheque — raising the market value of the Waterloo, Ont., company by $2-billion.
The market euphoria only tells part of the story, however. RIM's lengthy legal battle with NTP Inc. was a distraction that gave competitors an opening. RIM will now have to work hard to keep its lead in wireless data, analysts say.
“Tough times are ahead, tougher than the lawsuit case, strategically,” Ellen Daley, principal analyst with Forrester Research in Cambridge, Mass., said in an interview. “In the short term, sure we'll see a little bit of pent-up demand help RIM. But I think by the end of 2006, this is where RIM really has to focus on innovation, leaping ahead of this large cadre or posse that is coming up against them.”
RIM says its customers were loyal during months of brinkmanship that threatened to shut down BlackBerry service in the U.S. But at the same time, numerous companies announced intentions to challenge RIM's hegemony in the mobile e-mail and data market.
Microsoft Corp., the world's largest software company, is rolling out a free wireless feature to customers that use its e-mail server software. Palm Inc. and Motorola Inc. are both selling versions of their most popular devices running Microsoft's new Windows mobile operating system.
Nokia Corp., the world's largest maker of handsets, recently boosted its wireless software portfolio with the purchase of Intellisync Corp. The Finnish company is also expected to launch a RIM-like device in North America shortly.
As new competitors come to the field, business customers have started clamouring for more types of wireless applications beyond e-mail, an area where Microsoft has an advantage, Ms. Daley said.
“There's no question that RIM is and will be for a very long time the best wireless e-mail provider. But they don't want to become like the Apple of the computer industry, where Apple arguably has one of the best operating systems, but the majority [of customers] go over to Microsoft,” she said.
RIM needs to apply the same secure model it created for wireless e-mail to other business software on the BlackBerry and to do so very quickly, she said. Now that RIM engineers no longer have to worry about working around NTP patents, the company probably has a 60- to 70-per-cent chance of staying ahead of competition.
The legal settlement with NTP will also free RIM's management to focus more on the competition, said Neil Strother, mobile device analyst in Seattle with the tech research firm NPD Group Inc. “They have a better story going forward. RIM is back in the hunt.”
It's going to be crucial for the company to push into a wider market, he said.
Only 2 per cent of consumers are using mobile e-mail in the U.S. market, primarily because the cost of the devices is too high and the software installation requirements are too complicated, he said.
Part of the challenge is figuring out what the market wants. The success of Apple Computer Inc.'s iPod shows that smartly packaged features sell. But the failure two years ago of Nokia's N-Gage device, which paired a cellphone with a mobile game device, shows it can be a tough market to decipher.
RIM can't afford to be too dramatic with its strategy because it is much smaller than Microsoft and Nokia and doesn't have the resources to absorb big mistakes.
“It's important RIM doesn't get distracted and remains disciplined and orderly about what it does,” Mr. Strother said. The key is “can they tip their toe into other segments without losing the laser focus they brought to mobile e-mail? |