The low-hanging fruit

There are five categories that run across the top of Research In Motion’s homepage. They include “”Company,”” “”Products,”” “”Investors,”” “”Careers”” and “”News.”” It may exist somewhere deep within the site, but a page for “”Partners”” is nowhere to be seen.

While it certainly has partners — they

include Bell, Hewlett-Packard and Compaq, among others — the omission demonstrates RIM’s unusual position in the market. Whether it forms strategic relationships to expand its customer base or market share, it appears to do so reluctantly, guarding its technology like the way senior citizens hold on to their life savings. This is not a great way of becoming the leading player in the industry. For example, though it is often attacked for proprietary practices, imagine a world where Windows only ran on PCs developed, manufactured and sold by Microsoft.

All that changed late last week when RIM said it would, for the first time, license its hardware and software blueprints to customers of Analog Devices Inc. The deal, for which financial terms were not disclosed, includes its radio modem, chipset and operating system — the same one used in its popular BlackBerry line of e-mail pagers.

On Tuesday, RIM will release its quarterly results, at which point we may get a better idea of how much revenue the licensing deal will contribute to the firm’s bottom line. Revenue, however, cannot be the primary motivation for this move. RIM has spent the better part of the last two years lining up partnerships with companies (like British Telecom) which will expand its market share overseas. With efforts in Europe already underway, RIM is trying to make its way into Asia, which is exactly where it should be. Market research shows skyrocketing use of personal digital assistants and smart phones in countries like Japan; the BlackBerry has excellent prospects there.

The question is, what took RIM so long? There is a sense that the company is cautiously following the strategy of Palm, which came to its senses last year and split into two separate entities. The OS side of the business, Palmsource, already commands some 75 per cent of the market, according to IDC. With Microsoft’s PocketPC also making headway in the market, it will take RIM some time before it can become a serious contender in an already crowded field.

It will also depend, in part, on how RIM will take its licensing strategy. If it stops at Analog, this may not be much of a story. On the other hand, a determining factor will be the way licencees make use of RIM’s technology. As I have written in a previous editorial, RIM is starting to look as though it is starved for ideas: e-mail has proven a killer application on which it has built its business, but PDAs and cell phones are growing increasingly sophisticated, handling many other mission-critical tasks. Late last year, RIM began shipping general packet radio service (GPRS) products in Europe, potentially allowing carriers to add more features to the BlackBerry, but analysts have told us this is represents only a small improvement over 2G. The company has also sent executives to SAP-sponsored events to pitch its device as a receptacle for customer relationship management (CRM) data, but many Canadian CRM projects are still in mid-stream.

Sometimes it takes others to build upon a good OS foundation. Some of Handspring’s designs, for example, are more interesting than anything Palm came up with on its own. Other firms, like Danger Research, have come up with their own pager/PDAs that show improved GUIs. Licensing and establishing relationships with developers creates its own challenges, but the rewards can be worth it. RIM has to learn that if it really wants to grow the BlackBerry, it may have to work harder by scattering its seeds.

sschick@itbusiness.ca

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Jim Love, Chief Content Officer, IT World Canada

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