From Forbes.com:
forbes.com
BlackBerry----Or Black Eye?
Leigh Gallagher, Forbes Magazine, 11.27.00
THERE'S GOOD REASON RESEARCH IN MOTION'S handheld
electronic organizer and e-mail device called BlackBerry is known as
"crackberry." People at the 5,000 companies that use the system act
addicted, thumbing away on the wireless gadgets throughout
meetings, at boring client dinners—even during visits to the rest room.
That's why employees at one Wall Street firm are being cautioned not
to take their BlackBerrys to the john. The IT folks fear they might
accidentally drop the $500 gizmos in the toilet—mid-e-mail.
The trick for tiny RIM is to avoid a similar fate. Companies like the fact
that the BlackBerry server-software is synced with their internal e-mail
systems, something that sets it apart from two-way pagers that were
on the market before BlackBerry was introduced in early 1999. In
short order RIM grabbed a 32% share of the estimated $157 million
market for two-way wireless pagers last year, says Strategis Group.
Corporate users, including Merrill Lynch and Salomon Smith Barney,
account for most of the 200,000 BlackBerrys in circulation. "I can't live
without it," says Rob Enderle, vice president of technology consulting
firm Giga Group.
But RIM has only started trying to get consumer e-mailaholics
hooked. Just this month it began peddling a consumer version of the
device online to AOL's 25 million subscribers and 61 million instant
messaging customers. Many of those users are kids. It's also offering
its service (excluding about $500 for the device itself) for $40 a month
on a limited scale through ISPs such as GoAmerica and EarthLink.
But bigger rivals threaten to eat BlackBerry alive. You can practically
hear the lip-smacking over at Motorola. It rolled out the cool-looking
Talkabout T900 ($180) two-way pager last summer and plans a major
Christmas push for the device. Kids are already snapping up the
translucent cobalt-blue, aqua and red devices so they can send e-mail
to pals from the mall, the movies—and in the middle of class.
Motorola is pitching the Talkabout on ESPN's X Games and in trendy
magazines such as Teen People and Spin. It's also seeding the
gadget on college campuses. "If you win the consumer market, you
win big," says Robert J. Sanderson, a telecom analyst with Banc of
America.
Motorola may have lost its lead in the mobile-phone market to rival
Nokia, but it's not about to be outgunned by upstart RIM. It cornered
Hollywood to pitch its more upscale BlackBerry-like Timeport ($400).
MTV veejay Carson Daly plugs it on-air and Mariah Carey uses it in
her latest music video. Motorola, too, has a deal to offer AOL's e-mail
and instant message service on its pagers.
Can RIM compete? BlackBerry as it currently exists is only the
beginning, if you believe Co-Chief Executive Jim L. Balsillie. He says
it's only a matter of time before there's a BlackBerry that lets users
trade stocks and make airline reservations. And then there's the
"wireless wallet" he envisions, which would store electronic versions
of users' driver's licenses, passports and credit cards. Cash? Who
needs it?
RIM, for one. The Waterloo, Ont.-based company earned $10.5 million
on revenue that jumped 79% last year to $85 million, but this year it is
estimated the company will lose $2.3 million on revenue of $183
million, due to a steep increase in expenses. Its stock has seesawed
with the rest of the tech sector. It lost 64% of its value in April,
plunging to $36 a share, but bounced back to a recent $100. A
6-million-share offering this month should raise $580 million—but it
won't keep away the competition.
So far BlackBerry's popularity has spread mostly by word of mouth.
That's enviable in the marketing world, but the company will need to
take off outside WallStreet rest rooms if it's going to stand up to
Motorola, which had $33 billion in revenue last year. RIM spent a
scant $3.6 million on print ads in the first six months of this year,
says Competitive Media Reporting. Even if RIM shells out more to
woo young e-mail addicts, analysts think consumers may balk at its
high price tag (though AOL may provide subsidies to its users). And
there's more competition on the horizon. Sony, Palm and Handspring
are marketing their own e-mailing organizers.
By 2003, however, all these handy gadgets might be obsolete.
Handset makers such as Nokia, Ericsson and Motorola will provide
all-in-one voice and e-mail cell phones when U.S. wireless standards
allow it. They are already a hit in Europe, where people use their cell
phones to play games, order train tickets and send e-mail.
"Everybody's getting into it," says Balsillie, who hopes "a rising tide
will raise all boats."
It could also sink a few. |
