RIM and NTP finally settle the BlackBerry dispute

Sarah Burnett, senior research analyst, Butler Group, Europe''s leading independent IT Research and Advisory firm, says the BlackBerry settlement is desirable for consumers, in this article, written exclusively for domain-b.

Research In Motion (RIM), the maker of the BlackBerry portable email device finally struck a $612.5m deal as settlement of its patent dispute with NTP. The deal was finalised on Friday March 3, a week after the much anticipated court hearing in Virginia ended with no decision on the threatened injunction to shut down BlackBerry sales and services in the US.

According to RIM, the deal includes a signed definitive licensing agreement with NTP which settles all claims against RIM as well as for a perpetual, fully-paid up license going forward.

This settlement was much awaited for and is a good outcome for all BlackBerry users in the US. If the shutdown had gone ahead, users would have had to rush into contingency alternative services or to roll out the RIM workaround, on an emergency basis, spending time and money in the process.

The settlement saves users from both unplanned activity and expenditure, whilst allowing RIM to concentrate on product development and service expansion in a highly competitive market sector.

With 3 million* BlackBerry users in the United States of America (USA), and many competitors waiting for any opportunity to win over RIM''s customers, it was a high time that the court case was settled. According to a report by Datamonitor, an independent market analysis company, the mobile e-mail market is set for mass adoption. A Datamonitor report titled Mobile Email: the quest for differentiation, estimates that there are an estimated 650 million corporate email inboxes world-wide today. Of those at least 35 per cent to 40 per cent could potentially be mobilised, and therefore the global addressable market for enterprise mobile email is at around 260 million subscriptions. Mobile operators are in a position to make the most of the upsurge in the growth anticipated for mobile email.

All the mobile email vendors are offering true push-email, as well as simple installation and integration. They all address the issues of security and management in similar ways, and they all offer three tiers of packages that target the enterprise market, the SMB market, and the home-worker / consumer market. However Datamonitor puts RIM in a category of its own. It was the first to market. That, along with the vertical integration of its products, has served it well. RIM''s BlackBerry brand is very well recognised and RIM has contributed substantially to increasing customer awareness of mobile email.

The main differentiator between RIM and other mobile email infrastructure providers is vertical integration, which basically translates into RIM designing and making its own devices. This has enabled RIM to offer a superior solution in the past, and to rake in impressive revenues from the sale of the very popular Blackberry devices.

Other mobile email infrastructure providers
Besides RIM there are several software vendors who specialise in mobile email solutions. Datamonitor points out that these vendors have a lot in their favour; to varying degrees, they have all been successful in creating partnerships with mobile operators. This is due to their flexibility, as they can vary their pricing and strategy to suit the requirements of mobile operators. They also offer standards-based, white-labelled solutions which enable operators to deploy mobile email solutions on almost any device, using their own brand.

Seven, for example, thanks to its merger with Smartner, has substantially improved its market position thanks to Smartner''s reach in the EMEA market. Visto is strong in North America and maintains some presence in the European and Asian market. iAnywhere, which is a subsidiary of Sybase, is well positioned as an enterprise mobility vendor. This position may help iAnywhere''s Pylon email solution gain market share, as the market for enterprise mobile applications grows. iAnywhere''s acquisition of Extended Systems has improved its mobile email offering.

Device manufacturers
With the exception of Nokia, device manufacturers have had a very limited role in the mobile email market. Nokia''s acquisition of Intellisync and its recent announcement of the "Nokia Business Centre" suggest that it is eyeing the market seriously. Nokia is promising to enable mass adoption of mobile email through competitive pricing, unlimited basic client licenses with every server, and compatibility with a large number of devices and platforms.

Mobile operators
According to Datamonitor, Mobile operators have every interest in rolling out mobile email solutions to their networks. They see mobile email as an indispensable element in their competitive strategy. It will allow them to use excess bandwidth on their networks, especially after the 2.5G/3G network upgrades, reduce subscriber churn, and eventually become a major source of revenue further down the line. Mobile operators are expecting to reap substantial benefits from increasing enterprise adoption of mobile data services. As mobile ARPU continues its decline, operators are trying to offset this trend by growing their data services revenues.

The mobile market remains extremely competitive, and pricing patterns for mobile email services will almost certainly follow the same downward trends as for voice and SMS services. As the technology matures, operators will increasingly use aggressive pricing to differentiate their offerings. In view of this the report goes on to say that RIM will be under pressure to open up its platform to devices from competing vendors, and to reduce prices.

Challenges to RIM''s business model
The market is changing; competitive pressures are pushing prices down, and demand for device-independent solutions is increasing. Under these conditions, RIM, which makes 70% of its revenues from device sales, remains reluctant to cannibalize these revenues by focusing on device-independent solutions.

Mobile operators will be more inclined to sell solutions that bear their own brand, or at least are device-agnostic. This poses a risk to RIM and an opportunity for its competitors to chip away at some of its dominance. RIM has gradually increased the number of devices that support Blackberry Connect and Datamonitor expects the software portion of RIM''s business to become more prominent.

More recently, Vodafone and Microsoft announced the launch of a new push corporate e-mail service to rival BlackBerry. The service will allow mobile phone users to receive e-mails from their corporate Microsoft Outlook software and edit Excel and Word attachments. Private mobile e-mail users are also going to be targeted. Bouygues, a leading mobile operator in France, announced it intends to deliver a specifically designed version of MSN Hotmail, for mobile phones.

This is to allow MSN Hotmail mobile services to provide customers additional communication options to enable people to talk with friends and family through an array of mobile Internet services, helping to bridge the gap between the PC and mobile worlds.

No doubt the strength of the Blackberry brand and the popularity of its devices will allow RIM to continue to develop its device business and services in parallel. With the litigation settled, RIM now has one less battle to counter: holding on to its lead position in the mobile email area and keeping the ever sprouting competition at bay. However RIM has its work cut out and cannot rest on its laurels.