As increasingly popular smart phones push wireless-data usage to record levels scale is going to become more important around the world, including in Canada.Tibor Kolley/The Globe and Mail
It's the competitive advantage that happened almost by accident.
When Research In Motion executives made the decision many years ago to route much of the e-mail traffic on BlackBerrys through RIM's own servers, they probably weren't thinking about a future in which everyone carries around a mobile, bandwidth-hogging computer. The company was focused on how to give business and government clients a fast and secure means of sending and receiving sensitive information.
But as the smart-phone market - once populated almost entirely by RIM's business customers - shifts to a consumer focus, RIM's strategy is starting to look good again for an entirely different reason. At a time when wireless carriers are beginning to fret about all the bandwidth that devices such as Apple Inc.'s iPhones and the upcoming iPad will eat up, RIM's phones give them fewer headaches.
"They have a few things that they always worked on right from the start of the company," said Ronald Gruia, principal telecom analyst at Frost & Sullivan. "They've always been looking for ways to do more with less."
Increasingly, that more-with-less attitude has focused squarely on data transfer.
The majority of North Americans are expected to switch from traditional talk-and-text cellphones to smart phones some time in the next two years. In addition, mobile computing is effectively merging with cellular technology, creating another class of devices that includes the much-hyped Apple iPad tablet, due out in the next two months.
At the same time, the standard for wireless Web browsing is getting faster. The wireless industry is moving towards a benchmark of under three seconds for loading media-heavy Web pages, creating significant pressure on the networks handling the data.
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In a patent application filed in September and disclosed last month, RIM sought to address such concerns.
The company's new technology focuses on installing a proxy server on individual devices. The server would send and receive compressed data.
Such a move would give RIM phones the ability to load Web pages and other wireless data much faster - Web browsing is an area where the company tends to lag behind its competitors - and would also decrease the overall amount of wireless traffic, which is appealing to wireless companies.
"It's going to be interesting," Mr. Gruia said. "It's going to help out the carriers where they're feeling a pain point."
But that help isn't free, notes one analyst: Carriers pay RIM a fee per BlackBerry user.
"Yeah, [the carriers]like bandwidth efficiency," said the analyst, who asked not to be named. "No, they don't like paying for it."
It's also unclear whether RIM's success at making smart phones more efficient extends to video content, which is widely recognized as the next major area of bandwidth usage, the analyst noted.
As RIM attempts to position BlackBerrys as consumer-centric phones, the company is finding that its business and government legacy can both help and hinder its efforts.
For example, RIM's multiple security features - which are perhaps more comprehensive than on any other smart phone - make it an ideal tool for sending sensitive e-mails. But as consumers look for phones that offer a wide selection of applications, some developers have complained that stringent security makes it difficult to develop software for BlackBerrys.
But the company is trying to use that perception to its advantage. In a recent conference call, RIM executives noted that increased security makes the BlackBerry a more desirable device for tasks such as purchasing goods online and sending credit card information across a wireless network.
However, as the number of smart-phone users swell, bandwidth appears to be the major issue for carriers and device makers. The iPhone, for example, consumes five to seven times the bandwidth of a regular cellphone. That has caused major problems for AT&T Corp., which carries the iPhone in the U.S. and which has seen its network clogged by all the traffic
Carriers may not be happy to pay RIM a fee, the analyst said, but they'd likely rather do that then watch their networks crumble under the increased pressure - an issue that becomes all the more pertinent as consumers push for all-inclusive data plans on their phones.
"You can have an all-you can-eat data plan like in the U.S., but what happens when you have an all-you-can-eat buffet? People eat too much," the analyst said.
"There has to be a break point; either consumers pay more to regulate usage or the telcos struggle with a fundamentally lousy business."