The seemingly ubiquitous e-mail device faces growing competition.
WHAT Apple's iPod music-player is to teenagers, the BlackBerry e-mail hand-held is to executives: the gizmo they cannot be seen without, and often cannot live without. But you probably knew that already: readers of The Economist are smack in the middle of the BlackBerry demographic. At conferences, in boardrooms and on commuter planes and trains, they are everywhere. The BlackBerry has spawned designer accessories; earned a nickname ( CrackBerry ) that reflects its addictive nature; and even has a malady ( BlackBerry Thumb ) associated with over-use. But its success means that the Canadian firm that makes it, Research in Motion (RIM), now faces a growing throng of competitors.
Most complex technologies start out in industry, then hit mass scale. We've crossed over now, says Mike Lazaridis, who founded RIM in
1984 while a student at the University of Waterloo in Ontario. RIM hopes to benefit as wireless e-mail, like the mobile phone before it, goes from being an executive toy to a technology with mass appeal. But so do its many rivals.As a result, warns Brian Modoff, an analyst at Deutsche Bank, RIM has reached a turning point, as the potential reward of a far wider market is balanced with the risk of much greater competition.
At the moment, 70% of RIM's revenue comes from the sale of BlackBerry devices, and the rest from software and services. To broaden its reach, RIM has licensed the BlackBerry software to big handset-makers such as Nokia, Motorola and Samsung, while continuing to sell its own devices. It is therefore both co-operating and competing with some much larger companies, as it navigates the transition to a more software-and services-based business. Business-model transitions are always fraught with challenges, says Mr Modoff.
Other firms sense an opportunity to offer handset-makers their own BlackBerry-like software instead. This segment is switching from proprietary innovation to standards-based mainstream growth, says Danny Shader of Good Technology, a maker of wireless e-mail software that runs on a wide range of hand-held computers and smartphones. Without a hardware business, Good is not competing with the handset-makers (such as Nokia) that license its programs. Its software, running on Treo and PocketPC hand-helds, is already in use at nearly 5,000 companies, including seven of America's top ten firms.
Brian Bogosian of Visto, another software firm that hopes to dethrone RIM, claims that mobile operators, like handset-makers, are also ambivalent about the BlackBerry. Many operators that resell the BlackBerry co-branded with their own logos would prefer not to dilute their own brands, he says.
Visto offers white label software that runs on almost any device, and can be offered by operators under their own brands. So far, Visto has signed up ten operators, and will announce a deal with one of the world's biggest operators next month, says Mr Bogosian. Other firms pursuing a similar strategy include Intellisync, Seven and Smartner. Patent-infringement claims abound, underlining the intensity of competition. This week RIM paid $450m to settle a long-running suit with NTP, based in Virginia. Visto has filed suits against Seven and Smartner.
If all this were not enough, another threat looms on the horizon: Microsoft, the world's largest software company. These guys exist because Microsoft is bad at mobile e-mail, says Mr Modoff. But the next versions of Microsoft's mail-server and PocketPC software, due in a few months, will include support for BlackBerry-style push e-mail, whereby new messages simply appear in the in-box. Anyone who ignores Microsoft needs to take a history lesson, says Mr Shader, who once worked at Netscape, a software-maker crushed by Microsoft because its web browser posed a competitive threat. RIM is risking the same fate, says Mr Shader, by promoting the BlackBerry as a platform.
Mr Lazaridis is unfazed. Getting mobile e-mail to work is far harder than it looks, he says, and RIM has over a decade of experience. The complexity is masked by this very simple, user-friendly device, he says of the BlackBerry. This is a solution that has evolved and developed, and gone through trial by fire. Any competitor is going to have to go through that.
We've done it right, we have the brand, we know how to make these devices. It's a very high standard to try to match. RIM continues to improve its hardware and software to maintain its lead, he says.
Yet while RIM will continue to grow at an impressive rate, it will probably do so more slowly than the overall market as competitors start to muscle in. One possible outcome is that RIM and Good will end up fighting over the lucrative corporate market, while the less-demanding consumer market becomes commoditised. But with hundreds of millions of e-mail users worldwide and, despite their apparent ubiquity, only 2.5m BlackBerry devices in circulation, it is still early days for the mobile e-mail business.
Copyright 2005 The Economist Newspaper and The Economist Group.
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