RIM Dominance Slips, Slightly

As competition in the expanding market for mobile enterprise email heats up, the dominance of Research In Motion Ltd. (RIM) (Nasdaq: RIMM; Toronto: RIM)'s BlackBerry devices is eroding slightly, according to new industry analyst reports.

Cliff Raskind, director of the wireless enterprise strategies service at research firm Strategy Analytics Inc. , released a report this week saying that that while the installed base of mobile email users is set to double this year, RIM's market share in the first half of 2006 dipped to 59 percent from almost 65 percent.

A lessening of RIM's stranglehold on mobile email has been expected thanks to an array of competitive forces, including the launch of appealing new devices, such as the new line of Treos from Palm Inc. and Motorola Inc. (NYSE: MOT)'s Q, the advent of Windows Mobile 5.0 with a free push email upgrade on Microsoft Corp. (Nasdaq: MSFT)'s Exchange Server, and the continuing uncertainty resulting from RIM's legal battles over mobile email patents. (See New Treo out of the Box.)

Those forces had not manifested themselves in the numbers until recently, however, and Raskind is quick to point out that the slippage in RIM's market share is less a consequence of any weakening of BlackBerry than of an overall strengthening across the mobile email landscape.

"This just means that RIM will have a slightly smaller piece of an ever-expanding pie," Raskind comments. "It's generally agreed that their amazing market share is not sustainable over the long run. That's not to say that they can't remain the dominant market leader over the coming years."

Whether a market share closer to 50 percent than 65 is acceptable to RIM's combative chairman Jim Balsillie remains to be seen. It's clear, however, that as alternatives to BlackBerry -- including third-party "white-label" solutions marketed by carriers, rival providers like Good Technology Inc. running on Treos and other devices, and open-standards systems from companies like Consilient Technologies Corp. and Funambol Inc. -- proliferate, the market for corporate email is moving into a new growth phase. (See Good Wins on RIM Turf.)

On the user side, "historically recalcitrant IT managers," as Raskind terms them, are being won over by the combination of lower prices, enhanced security, and wider availability. The Strategy Analytics report forecasts that the average revenue per user for mobile email will be halved, from the $30-plus level of today, and that by 2009 15 percent of corporate inboxes will be "mobilized." Currently just over 1 percent of the estimated 650 million corporate email accounts have some form of mobile capability.

At the same time, in the face of intensifying competition, RIM continues to launch new devices in an effort to broaden its market. Device insider Website Engadget reports that the long-anticipated multimedia BlackBerry, nicknamed the Stealth and to be designated the 8100, will be introduced by either Cingular or T-Mobile before the end of the year.

The 8100 will be the first BlackBerry to include consumer-oriented features, such as a camera and media-playback capability. According to Engadget, the new device will have a keyboard based on RIM's Sure-Type system rather than a conventional full QWERTY design, and will include a GSM/EDGE radio.

The purported device is designed to appeal to customers who want a mobile-email device for both personal and professional use, according to a research note from Vivek Arya of Merrill Lynch & Co. Inc.

"While RIM has traditionally focused on enterprise users, it has grown rapidly in the high-end professional consumer (prosumer) segment, which we estimate to comprise about 25 percent of RIM's current customer base of 5.6 million subscribers," writes Arya. "In our view, the new 8100 expands the handset choices in the prosumer segment."

Through a spokesperson, RIM officials declined to comment for this story.

— Richard Martin, Senior Editor, Unstrung