Subject: [NEXTEL-1] Wackberry- The company has lost $110 million the last four quarters........

From: [email-masked]
Date: Mon, 10 Nov 2003 14:36:58 -0500

Wackberry- The company has lost $110 million the last four
quarters........

As wireless crowds in, Canadian tech pioneers seek to retain edge
By Brian Bergstein, The Associated Press
WATERLOO, Ontario — Look around the headquarters of Research in Motion
and it's
easy to understand its co-chief executives' optimism about their company
and its
pioneering invention, the BlackBerry wireless e-mail device.

A carpeted warehouse where workers in blue lab coats assemble
BlackBerrys is ratcheting up capacity from a hefty
2 million devices per year to 2.5 million.

A rich pool of engineering talent, students at the adjoining University
of Waterloo — sometimes called Canada's MIT
— traipse across RIM's parking lot on their way to classes.

But the executives, Mike Lazaridis and Jim Balsillie, may not be seeing
clearly enough beyond their realm. Some
analysts say a tidal wave of competition threatens to stomp the
BlackBerry.

The skeptics believe that within a year or so, RIM will be struggling to
keep up with big-time device makers like
Nokia, Dell and Palm. that crave bigger chunks of the business market
RIM has all but dominated.

In such a scenario, RIM might have to slow those BlackBerry assembly
lines and focus instead on carrying e-mail to
other devices, a potentially painful comedown.

"The bottom line on RIM is: Long term, they're toast," said Meta Group
analyst Jack Gold. "Everyone falls off a cliff at
some point if they don't see the cliff coming."

RIM executives bristle at the suggestion that competition will diminish
the company's position. They call that analysis
oversimplified.

Investors certainly hope so. The company has lost $110 million the last
four quarters, but with revenue expected to
leap 73% in fiscal 2004, RIM's stock price has tripled this year.

"We're not some dot-commers that just started," said Lazaridis, who
founded RIM in 1984 while attending the
University of Waterloo and is now the school's chancellor. "We know how
to run a business."

But the company that began primarily as a pager provider has myriad
challenges. One is a patent lawsuit from NTP
Inc. of Arlington, Va., which claims it owns a radio communications
technology the BlackBerrys use.

In August, a U.S. judge ordered RIM to pay $54 million in damages and
stop selling BlackBerrys, though he stayed
that decision while RIM appeals. Fears about the case prompted Nokia to
postpone plans to have RIM's e-mail
service in one model of phones in the United States.

As daunting as the August verdict sounds, analysts say it probably
doesn't represent a major long-term threat
because NTP likely would rather collect royalties from RIM than put it
out of business.

Instead, RIM and its 2,300 employees probably have more to fear from
changes roiling their market.

The genius of the BlackBerry, which debuted in 1999 after RIM engineers
originally developed it for their own internal
use, was that it was small yet had a full QWERTY keypad for thumb typing
and could automatically send and receive
e-mail.

That simple formula became a huge hit with on-the-go information addicts
— some called it the "CrackBerry" —
especially on Wall Street, in courthouses and the halls of government,
including the U.S. Congress. Corporate
technology managers appreciated RIM's secure and stable network.

Over the years, the BlackBerry got cell phone and Web functions and
color screens. And its new models
automatically synchronize with users' e-mail networks instead of having
to be put into a cradle attached to a PC.

RIM counts more than 700,000 users in 14,000 companies — mostly in North
America — but it no longer sells
directly to customers. Instead, wireless carriers sell BlackBerrys as
part of their phone fleet. For example, Nextel
Communications Inc. sells a $350 BlackBerry with walkie-talkie features.

Balsillie contends that the wireless carriers' marketing power shields
RIM from would-be rivals.

"It's not me versus the big gorilla," he said. "It's the big gorilla
versus the carriers."

But a wireless customer could increasingly clamor for something else to
keep out-of-the-office employees
connected to e-mail: namely, the cell phones and personal digital
assistants that are melding into powerful "smart
phones" with several messaging functions. The trend led Palm to acquire
Handspring Inc., maker of the Treo smart
phones, this year.

As those devices proliferate, BlackBerrys will be competing more
directly with big manufacturers that could slash
costs — and RIM's profit margins.

In the next month or so, Dell will begin selling a Blackberry-like
messaging device powered by Good Technology,
which funnels e-mail to Handspring devices and others — even
BlackBerrys. (RIM and Good are suing each other
over patent issues.)

Dell, which also resells BlackBerrys to its customers, is working with
Good to develop a next-generation messaging
device (though Dell spokeswoman Anne Camden said Dell will maintain its
partnership with RIM because its
products remain popular).

Another RIM rival, Visto, has deals to carry e-mail to devices made by
Palm, Motorola Inc., Sony Corp. and Kyocera
Corp. Visto CEO Brian Bogosian hopes to beat RIM by supporting not only
e-mail, but also cell phone-style text
messaging, and at a lower cost.

"I think we can get to millions of users much faster than they will," he
said. "They're going to end up becoming
roadkill."

Meta Group's Gold says Good is better than RIM at relaying users'
calendar and contact information. Then again,
Good and Visto are options only for companies with servers running
Microsoft's Exchange software, while RIM also
connects to IBM's Lotus e-mail platform. Balsillie calls that a huge
selling point in Microsoft-resistant overseas
markets.

However, another mobile e-mail competitor touting lower costs than RIM,
Seven Networks, connects low-end users
to Lotus and pledges to do it for all customers within months.

RIM critics say this landscape parallels the competitive forces that
eventually hurt other high-end technology
companies, such as Apple Computer and Sun Microsystems, whose markets
became standardized and
commoditized.

RIM's leaders reject that as a cautionary tale. They say there's still
room for wireless data companies to distinguish
themselves with superior technology. For example, Lazaridis says RIM is
best at making phone and messaging
functions work together without any of them losing strength.

Even so, RIM is trying to get its e-mail engine into other
manufacturers' devices. In fact, it has developed e-mail
software for digital assistants running Microsoft's Pocket PC operating
system, which account for 28% of the market.
RIM hasn't announced a release date.

In the meantime, RIM must win over more customers like Justin Hectus,
head of technology for Keesal, Young &
Logan, a California-based law firm that used to have 30 BlackBerrys.

Its lawyers now use 100 Good-powered devices. Hectus said Good offered a
more intuitive user interface and less
set-up time.

"It's going to be pretty tough," he said, "for BlackBerry to catch up."
http://www.usatoday.com/tech/techinvestor/techcorporatenews/2003-11-10-blackberry-competition_x.htm

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