BlackBerry ripe for picking

Research in Motion Ltd. has been so successful that it has given new meaning to a word previously associated only with fruit. The firm's BlackBerry device dominates the rapidly growing market for on-the-go business communications.

But over the next year, BlackBerry's competition will get a lot tougher. Microsoft Corp. is making a major push into the software side of mobile e-mail. Meanwhile, a lot of new hardware is due to hit the market.


Palm Inc., BlackBerry's biggest hardware competitor, will launch an updated model of its popular Treo, one that will run for the first time on Microsoft software. And BlackBerry rivals are in the offing from Nokia and Motorola, the world's two biggest makers of mobile phones.

All three will join a Hewlett-Packard iPaq mobile device that went on sale through Cingular Wireless last fall.


Their timing couldn't be better: Research in Motion is locked in a legal battle with NTP Inc. over patents, a fight that has threatened to shut down the BlackBerry e-mail system.

Such a court-ordered shutdown is unlikely, but it has created uncertainty for Research in Motion's customers - and opportunities for competitors.

Good Technology Inc., probably Research in Motion's biggest competitor on the software and service side of the business, has fielded more than a hundred calls over the past couple of weeks from anxious BlackBerry customers, said Danny Shader, Good Technology's chief executive officer.

"We're sort of everybody's contingency plan," he said.

Shader said his California company also would be buoyed by the scheduled launch this winter of Motorola's Q and Nokia's E61. Both devices feature QWERTY keyboards and are aimed at BlackBerry users.

"We love the Q," Shader said. "We love the Nokia E series."

That's because Good Technology's e-mail system runs on mobile devices made by several manufacturers. The more non-BlackBerry devices in the market, the better for Good Technology.

Research in Motion has historically packaged its BlackBerry with its own e-mail system, a proprietary network of servers and operations hubs.


With competition growing, though, Research in Motion has been licensing its system to mobile phone-makers, including Motorola. The first non-BlackBerry device in this country to run on Research in Motion's network, the Nokia 9300, was launched in November.

Research in Motion, which declined to comment for this article, basically built the mobile "enterprise" market, or wireless communications targeted at businesses.

For the most part, Research in Motion's devices are sold to companies that parcel them out to employees. Employees can access their work e-mail from the road and also are able to use their BlackBerries as phones.

Research in Motion "was the first to market with a turnkey solution," said Benjamin Bollin, a stock analyst with FTN Midwest Securities in Cleveland. "It's kind of a one-stop shop."

The company's ability to offer a package has been important to its success, analysts say.

"The service and the device work extraordinarily well together," said Eugene Signorini, a wireless industry analyst at market researcher Yankee Group in Boston. "The whole user experience is kind of seamless."


Signorini likened the BlackBerry to another iconic gadget, Apple Computer's iPod portable music player. The iPod became a huge force partly by packaging a device with a service: Apple's iTunes Music Store, where songs can be downloaded for 99 cents.

As the iPod dominates digital music, the BlackBerry dominates mobile business communications. Analysts estimate that Research in Motion has 70 percent to 80 percent of the mobile e-mail market.

The company, based in Waterloo, Ontario, has grown at a torrid pace, too. It has 4.3 million BlackBerry subscribers, up from 1.1 million in February 2004 and just 25,000 in early 2000. In mid-December, Research in Motion reported fiscal third-quarter sales of $561 million, up 53 percent from a year earlier.

As in any business, success breeds competition.

"This is a market a lot of people want to be in," Bollin said.

Among them is Microsoft, which is a huge force in corporate e-mail through its Exchange server software.


Last year, Microsoft launched a new version of its phone operating system, Windows Mobile 5.0. In November it began offering free updates to Exchange that will allow for "push e-mail" on phones.

Push is the type of e-mail system run by Research in Motion and Good Technology. In it, e-mail is sent almost immediately from a server at an office to a mobile device in the field.

In a "pull" system - what Microsoft has been offering - mobile devices must effectively request e-mail from office servers. They are able to pull e-mail every few minutes.

Microsoft's e-mail system doesn't require a separate network of servers and operations centers like Research in Motion's does. Essentially, Microsoft houses both an office-based e-mail system and a mobile system under the roof of a Microsoft Exchange server.

Information technology "departments can manage a single platform," said John Starkweather, Microsoft's group manager for mobile devices. That gives companies a cost advantage, as they don't need to pay for a separate system, he said.

But Ken Dulaney, a wireless industry analyst for market researcher Gartner Inc., said that some businesses don't mind integrating two e-mail systems, because with Research in Motion's system, companies effectively outsource work.


Messages and phone calls made from BlackBerry devices run through the wireless networks of firms such as Verizon and Cingular. Research in Motion's own system essentially routes signals through the carriers' networks.

Wireless carriers have an extra incentive to push BlackBerry, Dulaney said. The service and the devices are resold through carriers, generating revenues for the carriers themselves.

Mike Hughlett writes for the Chicago Tribune.