snider
Globe and Mail Update Published on Thursday, Jul. 13, 2006 1:21PM EDT Last updated on Tuesday, Apr. 07, 2009 12:33AM EDT
Research In Motion Ltd. has gradually got its BlackBerry sales back on track after settling a damaging patent infringement suit earlier this year. But what now? Where does the company go next in the face of increasing competition from much better financed rivals, including Nokia, Motorola and Samsung?
Globe technology writer Simon Avery, was on-line earlier Thursday to take your questions on RIM, BlackBerry and competing wireless devices.
Recently, Simon has written about Research in Motion's purchase of a small company that will help it bring
multimedia features
to the BlackBerry, an interview with CEO
Jim Balsillie
and an article on the company's plans to develop technology that could turn future versions of its popular device into a
remote control
for digital cameras.
Simon Avery is the Globe's technology reporter and has covered Research In Motion since June 2004. Previously, he was a staff reporter for The Associated Press in Los Angeles and for The Wall Street Journal in San Francisco. He covered the boom and bust in Silicon Valley for the Financial Post between 1998 and 2001. Mr. Avery holds a Master's degree in journalism from Columbia University and a Bachelor of Arts in English and political science from the University of Western Ontario.
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Michael Snider, globeandmail.com: Hello Simon, thanks for being with us today. And welcome readers. Simon, what are the biggest issues RIM faces over the next year or so?
Simon Avery: Hi Michael. Thanks for the chance to talk about RIM today. This is still a rapidly growing company in an expanding market so the executive team has a lot on its plate. Top of the list is staying several steps ahead of new competitors in both the hardware and software sides of the business. RIM has to be smarter in how it spends its resources to develop new products because it is smaller than Nokia, Motorola and Microsoft, to name a few. RIM also has to decide how much it wants to expand beyond selling to companies and start competing in the consumer side of the wireless industry - and what it's willing to spend to gain business here. Executives also need to keep an eye on patent litigation brewing in the background to make sure cases are handled better than the NTP fiasco.
James Carney from Kitchener writes: Roughly six months ago our firm was investigating a secure wireless solution. At that time RIM currently had roughly 152 security patents for their software and transmission of data and the Microsoft product (Magneto) had 3. These were for the same mail environment (Exchange). We were also informed by a source (a friend from another firm who had recently researched wireless devices for the same reasons as myself) that the European Governing Agency responsible for testing software security, vulnerability and testing came back to RIM and reported theirs was the only software that required absolutely no changes before it's release in the European market, it was also the only engineered piece of software the United States National Security Agency or 'NSA' couldn't compromise. My question is, how close are other companies; in respect to security and the transmission of secure data, to RIM at this time? In other words, can anyone even hold a candle to these guys?
Simon Avery: Yes, this is a good question, James. A lot gets written about 'cool' new devices, but for corporate and government customers (RIM's most lucrative clients) security is a key factor in their choice of wireless hardware and software.
I get out of my depth very quickly trying to rate standards from different companies, but I think an import thing to remember about RIM is that it has designed its products from day one with security top of mind and that it encrypts data on its system end-to-end ... from the device to the server. RIM is not building a patchwork of security features as new threats emerge. The company has done a good job of using its leadership in security as a sales tool. Obviously if other manufacturers can match RIM's security, that advantage erodes. One of the best ways for outsiders to judge who's leading in the area of security is to look at government certifications awarded.
Co-Chief Executive Mike Lazaridis recently said RIM is waiting for approval on at least six military or government certifications. And as you point out, BlackBerry already has the support of the NSA. NATO has also approved the BlackBerry system for storing and transmitting sensitive data, as have the governments of the U.S. Britain, Australia and Canada. And I don't see similar announcements coming from rivals at the moment.
Gerry Cloutier from Cornwall writes: How do you see competition affecting/or not affecting RIM in future?
Simon Avery: Thanks for your question, Gerry. Of course it's all about competition. RIM created the market for wireless e-mail in 1997 and other players are just catching up following advances in related technology, including faster wireless networks, smaller processors running devices and cheaper display screens. Companies that are big on the desktop computer — like Microsoft — and others that have made their fortunes with cell phones (Nokia) see a future where computing moves to handheld devices and they want a piece of that big, emerging market. Rivals such as Good Technology and Visto, which make software, are much smaller than RIM and still in the rear view mirror. But the Nokias and Motorolas have massive research and development budgets and marketing budgets and they will force RIM to very smart with its own resources.
JA M from Your Town writes: Buy, sell or hold their stock Simon?
Simon Avery: That's a question for your broker, but here are a few points to consider. The folks at Bloomberg tell us that 19 analysts, or 63 per cent of those following RIM, rate the stock a "buy," 20 per cent call it a "hold" and 17 per cent rank it a "sell." If you believe in the stock, you're betting that the company can keep adding subscribers at high double-digit growth rates each quarter. What many of the bullish analysts are saying is that the market for wireless data is going to be so big that there's room for RIM and competitors to do well. If you're doubting the stock, you're probably worried about RIM's ability to keep its innovation and development levels above better-financed rivals.
Matt Zwick from Edmonton writes: Hello Mr. Avery. Two quick questions for you. As a blackberry user, I completely understand why RIM has not included a camera on their handheld devices, for security reasons. Do you think that RIM will develop a 'personal blackberry' that will be used primarily by people outside the office, including a camera and other multimedia features and keep their current models for 'business use'? Secondly, do you think the high prices set by the three providers in Canada (Telus, Bell and Rogers) stop more Canadians from purchasing and using the blackberry?
Simon Avery: I think a lot of people are wondering the same thing, Matt. RIM is pretty coy about its plans for adding cameras, music players and other multi media features to the BlackBerry. The idea of a separate "fun" model for the consumer makes some sense, but I think RIM really wants to fold the new features smartly into existing business models because they don't want executive users moving to other devices on the weekends and after hours. They want the BlackBerry to be the single, must-have device. The challenge is how to add these rich features without disrupting the efficiency of RIM's model, which uses low bandwidth and power.
As far as what the carriers are charging, the rates are higher than some of those offered in the U.S. I think the figure from Stats Can last week was that only 3 per cent of Canadians use a BlackBerry. That figure would surely rise with lower carrier prices.
Chas Birkett from Guelph writes: I've read that the worldwide market for wireless e-mail PIMs will reach 125 million in the next few years. If true, does it not follow that, even if RIM's market share slips significantly, there is still major growth ahead for them?
Simon Avery: Absolutely, Chas. Pretty well all the market research points to massive growth in the wireless market. One common figure thrown around is that today less than 5 per cent of business e-mail users have mobile access. So RIM could keep growing at a healthy clip even if it lost share. The challenge is, RIM needs to hold on to the high-use corporate customers who are the most profitable. It also needs to grab market share in new international markets where "BlackBerry" is not a household name. And experience in other technology markets has shown that big players like Microsoft can dominate a market once they win the platform war. Remember that RIM's corporate users are installing RIM server software inside their organizations and often developing proprietary applications to run on that.
Ken Humphlett from Gainesville, FL writes: When will QWERTY keyboard BlackBerrys get cameras and memory card slots?
Simon Avery: That's the question everybody wants RIM to answer, Ken, and so far the company is vague about its plans. Executives have said recently that they will launch new products this fall and that RIM will throw more advertising and marketing dollars behind them than ever before. It's probably a good bet that RIM will be targeting a broader market with these devices, and that means they should have some of these new features people are demanding. It's going to be hard for RIM to avoid camera and memory slots when Motorola, Palm and others include them as standard.
Michael Snider, globeandmail.com: Thanks for coming on today, Simon. It was a good chat. Readers, thanks for your questions. Feel free to add your thoughts on the discussion or the topic by clicking on the "comment" link below.
If you would like to see a particular reporter/columnist invited on or a particular subject covered, let us know. You can email your suggestions to msnider@globeandmail.com
Simon Avery: It's going to be an interesting year for RIM no doubt. Thanks for the questions.
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