BlackBerry-maker Research In Motion is a victim of its own success. Having dominated the market for corporate e-mail devices for years, it is being forced to seek out growth in consumer markets, where, so far, it has had trouble differentiating its products.

Going mainstream has helped vastly expand its consumer base -- which now represents half of all BlackBerry subscribers. Fully 80 percent of its new subscribers now come from outside its traditional corporate base.

But that success is coming at a growing cost to the once lofty average selling price of its phones, the latest quarterly results show. Profits for its second fiscal quarter dipped 3.5 percent, amid weak subscriber growth. Product prices appear under pressure at both ends of its business, both among corporate users and with consumers.

Fixing these issues will take time, several quarters at least, something which investors who have bid the stock up more than 100 percent in the past year were not prepared to hear: they sent RIM stock tumbling 17 percent, to below $70, on Friday.

The trouble is that RIM must develop and introduce new products that can recapture customer attention in increasingly crowded markets. Phone companies must be convinced to sell the new BlackBerrys in their stores. Consumers must get the message. Rivals have to be kept at bay.

And RIM no longer has the luxury of retreating to its corporate base. There has been a proliferation of rival devices from the Apple iPhone to newer phones from HTC and Motorola based on Google's Android operating system, all of which now offer customers secure access to Microsoft Exchange e-mail and contacts.

The company is desperate for a hot new product to replace its three-year-old Pearl phone, its first device to make a splash in consumer markets. Its standout keyboard for text input is less special than it once was. Rival mobile phone makers offer better cameras, more memory and a wider selection of zippy software for their devices.

But Research In Motion has a plan that involves more than just waiting for the global economy to recover.

A solid step in that direction is the new low-cost Curve, which offers many of the features found in pricier smartphones. It has seen early success in the United States and Europe convincing phone operators to market it to teenagers. This mass-market device is an example of RIM's land-grab strategy in action. It won't improve RIM's finances any time soon, but the goal here appears to be market share.

Rather than trying to always be first to lead with cool new features, RIM's contrarian theory is that by building products that handle data more efficiently, they are more likely to become the preferred devices sold by network operators. It's akin to the strategy that made BlackBerry so popular with corporate technology managers.

Another part of its strategy, no doubt egged on by the success of the iPhone, is to improve not just how its phones make use of the Web, but the basic software that defines what users see and do on BlackBerrys, says Ben Wood, a mobile device analyst with UK-based CCS Insight. Toward this end, RIM acquired Torch Mobile, the maker of an innovative Web browser for mobile phones, in August.

The problem is that -- in a bid to grab market share from rivals like Apple and Nokia -- RIM says it must accept far lower average selling prices on its phones than when it was known mainly as the preferred supplier of secure corporate email.

This strategy will take time -- not a few quarters, but years to play out. RIM effectively is asking investors to have faith that it can repeat its miraculous rise in the corporate e-mail market, only this time in fickle consumer ones.

You can read some of Eric's recent colums here. 

(Photo credit: Reuters/Mike Cassese)

LONDON, Aug 13 (Reuters) - Once they were warriors battling one another on the digital battlefield. Nowadays, Microsoft and Nokia are worriers, huddling together for comfort.

The world's top phone and software companies need each other to compete with Apple, Google and Blackberry-maker Research in Motion (RIM), whose products increasingly define what users expect from phones and charge premium prices in consequence.

In the market for so-called "smartphones", Deutsche Bank estimates Apple and RIM now take home more than half of all profits, despite producing less than a third of high-end mobile phones. Nokia held a 45 percent share of the smartphone market in June, according to Gartner Inc. (Table 2 in Gartner release)

The news this week that Nokia will feature Microsoft's office software -- features such as Word and Excel -- on phones aimed at business users is symbolic of what is possible rather than significant in itself. It fell short of predictions in the gadget trade press that Nokia might introduce phones running on Microsoft's own Windows Mobile software.

But that doesn't mean their collaboration should be dismissed. There's more to this budding relationship than meets the eye.

First and foremost, Microsoft and Nokia say they are taking on the Blackberry email-phone, a must have among corporate professionals. So far the they haven't done very much, for all the big talk. But they have pledged to make Microsoft Outlook work smoothly on Nokia phones.

This is crucial in overcoming Blackberry's key advantage -- the underlying software that companies rely on to securely manage corporate e-mail.

The opportunity here is that corporate technology managers are no longer content to supply only Blackberry devices but are gearing up to support a wider range of devices and software systems, reflecting shifting user tastes and demands.

Microsoft and Nokia need one another because despite being leaders in their respective fields -- computer software in Microsoft's case and phones for Nokia. But these powers have not translated into dominance in the era of converged devices.

To some extent, they have themselves to blame. The two giants spent the first half of the decade at war with one another over Microsoft's bid to enter the mobile phone business with its Windows Mobile software and Nokia's half-hearted attempts to do the reverse and expand its presence in computer
markets.

Years of legal and technology standards battles resulted in a stalemate. Windows-based phones number only a little over 20 million in a market of billions, and Nokia has made only tentative steps to enter computer tablet or netbook computer markets. Nimbler rivals have exploited these distractions.

Microsoft isn't the only technology giant Nokia is cuddling up to. In June, the Finnish company announced that it would team up with computer chip king Intel Corp on chips for future phones. Nokia was careful this week to underscore that the Intel deal is about future generations of Nokia products while the Microsoft ties are for phones in the here and now.

Whether or not Nokia sells some Windows-based phone models or Nokia eventually introduces a mini-netbook computer running Windows software is largely irrelevant to the central problem these two companies face.

Microsoft and Nokia must create differentiated products that help users do things Apple and Research in Motion cannot do. Otherwise these two giants face marginalization in the era when phones become computers.

You can read some of Eric's recent columns here.

(Photo: Reuters/Vivek Prakash, Singapore)

Most people have one phone or handheld device for work, and maybe another one for play. But how about 14?

That’s how many devices Google’s vice president of engineering Vic Gundotra has. They make it “very hard to get through the airport,” he joked.

We asked him and other executives in the mobile advertising industry what devices they use, after about an hour of a panel discussion on where mobile advertising is going at the Fortune Brainstorm: TECH conference.

Gundotra said he had only a few of his 14 devices with him.

“I have an Android, a BlackBerry and an iPhone with me and another device that I can’t talk about,” he said, adding his company wants to make sure that consumers have a good Google experience with any device that they choose. His email and calendar are synced on all devices, but he has pictures only on the Android. “If you call Google Voice, all 14 phones ring,” he joked.

It’s an Apple iPhone and a Blackberry for Omar Hamoui, chief executive of AdMob, one of the largest marketplaces for mobile advertisers. “I carry two because I use them quite differently,” he said. The iPhone is for anything involved with data and applications and the Blackberry, for email and calendar.

Anand Chandrasekher, senior vice president and general manager of Intel Corp’s Ultra Mobility Group, said he uses a notebook, Blackberry for work-related applications and an iPhone for more personal use like Internet browsing.

“I don’t have a phone,” deadpanned Marty Beard, president of Sybase 365, a unit of business software maker Sybase Inc. Beard was the only executive on the panel who used only one device: an iPhone, which he chose for heavy Web usage, its text and multimedia capabilities and to get familiar with applications.

– Laura Isensee also contributed to this post

(Photo: REUTERS/Mike Segar)

(Updated to reflect that Apple was referring to application downloads, not application sales.  Many iPhone apps are free.)

Apple Inc impressed the tech world with the rapid take off of its applications store, announcing on April 24th that it had sold 1 billion apps downloads in just 9 months to users of its iPhone and its iPod Touch.

That was just for starters. Now it says it has sold seen another half a billion apps downloaded in around a third of that time, showing that its growth is speeding up despite the fact that its rivals have all opened their own apps stores.

App developers appear to be taking notice too as Apple says it now has 65,000 apps available in its store ready for download to the 40 million iPod Touch and iPhone devices it has sold.

How will its rivals — Android from Google, BlackBerry from Rim, Windows Marketplace from Microsoft and Ovi from Nokia – ever get a break with that kind of competition?

But could it really be just a coincidence that Apple revealed its numbers on the same day that Techcruch notes Microsoft is expected to kick off its Worldwide Partner Conference in New Orleans with an announcement of the opening of its mobile app developmer program?

Keep an eye on:

• NY Daily News owner Mort Zuckerman describes an analyst’s prediction — that Rupert Murdoch could buy the paper instead of New York Times — as “total fiction” (DailyFinance)
• FT Tweets that it has an iPhone App (Techcruch)
• Michael Jackson family says concert plans were too much for him (Reuters)
• Netbook shipments to double this year (PCWorld)

(Photo: Reuters)

I’ve been pretty excited about the new BlackBerry Curve 8900 that my office handed me to replace a prehistoric 8800-series machine. Now there’s a new BlackBerry device, the Tour, which is making its debut this summer. So naturally, I rushed to check out the specs on the web to see what I missed.

Here’s what it’s got: 4.4 inches tall, 2.4 inches wide and 0.6 inch thick. There’s a 3.2 megapixel camera, enhanced media player with 256MB built-in memory, video playback and recording capability, and other consumer-friendly features. At under 5 ounces, it’s a little heavier than the Curve 8900, but it doesn’t look that much different.

But Research in Motion Co-Chief Executive Jim Balsillie told Reuters this latest phone is a “big step forward.” They’re calling it a “world phone”, which means globetrotters can easily access voice and data services on networks outside their home country.

Like the Curve, the Tour is meant to appeal to both executives and regular folks, i.e. those who don’t wear suits but like to surf, e-mail and take pictures on their smartphones.

The Tour will launch with Verizon and Sprint in the US, and Telus and Bell in Canada. But long before then, we’ll get a temperature check on RIM. It’s due to report earnings this week. And analysts expect the Canadian company to do just fine, although it remains to be seen how Apple’s aggressive new pricing on the iPhone will impact BlackBerry sales going forward.

Keep an eye on:

• Amazon’s Kindle will support more book formats in the future. (NYTimes Bits)
• What will Eric Hippeau do as HuffPo CEO? (The Wall Street Journal)
• Boston Globe and a key union continue to discuss concessions. (Reuters)
• Spending on digital entertainment will fuel growth in the sector in the next few years. (Reuters)

Photo: BlackBerry Tour, courtesy website

When Dell hired Motorola’s cell phone president Ron Garriques in 2007, the talk was that the PC giant was preparing to enter the smartphone market.

More than two years later, Dell is still without a handheld gadget.

Instead of trying to build its own smartphone, Dell should simply acquire Palm, said Collins Stewart analyst Ashok Kumar in a note to investors on Friday.

Kumar posits that a Dell acquisition of Palm would help both companies, giving Dell a hot new product in Palm’s recently-released Pre, while giving Palm the deep pockets necessary to hang with the big guys.

“This acquisition will be born out of mutual necessity and represent a strategic fit for both parties,” wrote Kumar in a note to investors.

Palm’s Pre has received good reviews, but there are concerns that Palm’s supply of the new gadgets may be constrained amid stiff competition from the likes of Apple’s iPhone and Research in Motion’s Blackberry.

With only $260 million in cash, Palm doesn’t have the balance sheet to go through an extended period of cash burn as it ramps its production of Pre phones to the level necessary for it to become a force in the market, wrote Kumar.

Meanwhile, Dell, which has repeatedly stated its intention to acquire outside companies, has more than enough cash to grab Palm. Kumar said Dell could afford to spend up to $3 billion, or a third of its gross cash, on an all-cash transaction and that Palm falls well below that threshold.

Writing on the Barron’s Tech Trader Daily blog, Eric Savitz cites another benefit from such a deal: newly-appointed Palm CEO Jon Rubinstein, a former Apple executive, could be just the guy to take the reins from Michael Dell.

“An ex-Apple exec at the helm of Dell is an intriguing idea, no?” wrote Savitz.

(Photo: Reuters)

Netbooks: flavor of the month? Not according to Dell's Steven Schuckenbrock.

The PC giant's head of enterprise sales was quick to point out flaws in the stripped-down, no-frills mini-computers that have garnered rave reiews for their ultra-portability and anywhere-connectivity.

"Netbooks are a secondary device. The user experience of a netbook is just not as good. It's slower than a conventional notebook computer," Schuckenbrock said at the Reuters Global Technology Summit in New York.

Perhaps that's why Dell was slow to get into a space dominated early on by aggressive Taiwanese upstarts like Asustek. Dell, the once-preminent U.S. personal computer manufacturer, which has steadily given away market share to rivals from Hewlett Packard to Lenovo, unveiled its first netbook only in September.

Schuckenbrock, however, acknowledged that the netbook was an ideal device for non-demanding consumers. "I carried one with me on the road this week to check it out. A great device. Light, easy to use. But a different performance. If I'm in my office, it's probably not gonna work."

Which is fine by some investors. Dell had endured criticism from the Wall Street community for appearing at times to see-saw between different and sometimes contradictory corporate strategies, from its initial tardiness in latching onto the netbook craze to its flirtation with the hand-held device market.

Amid a wave of hype about wireless gadgets like netbook computers and mobile internet devices, Research In Motion’s Co-CEO Jim Balsillie says he will keep focused on the BlackBerry maker’s core business of phones even as computer makers are starting to make phones and phone rival Nokia eyes netbooks.  

This means that Balsillie is focused on developing more new versions of each of BlackBerry phones: those shaped like candy-bars, with touch-screen controls and devices with mini-QWERTY keypads. 

“Form factor is a personal preference but it’s got to be something that lasts the better part of the day and you can hold up to your ear and clip onto your belt,” he said  in response to our question about his vision for future products. “Those are a very tight systems constraints for a netbook.” 

And, if a phone’s dimensions seems too cramped for the increasingly sophisticated media, entertainment and business services offered, Balsillie said this:
“If you want richer keyboards and richer displays you can just use perphiperals and bluetooth.”
 
Bob Stutz an executive from business software supplier SAP, which delivers business applications to BlackBerry devices, was dismissive of the relevance of devices like netbooks for his clients. 

“We’ve been down this route with these kinds of devices,” he said, referring to “iPaqs, fliptop notebooks and other specialist devices.”

“Why we are doing this with RIM today is because these (other) devices don’t work,” he said, noting that consumers want sturdy, inexpensive and well connected devices.
“Customers really have been down the gamut … They’ve been down this path. At the end of the day what we’ve really found is that if they can do it on a BlackBerry that’s what they’ll want.”

(Photo: Reuters)

*Verizon to sell wirelessly enabled netbook computers from HP (Reuters)
* Facebook to test payments platform (Silicon Alley Insider) 
* $13,000 bid for Huffington Post Internship (AdvertisingAge)

We’ve been hearing for years about the so-called “paperless office” but it seems as mythical as ever. This is of course not such a bad thing for printer giant Hewlett-Packard, which is aiming to provide businesses with new avenues to print stuff.

HP announced on Monday, along with Research in Motion, that it will extend its Web-based CloudPrint service to the BlackBerry, allowing users to print directly from the ubiquitous email devices.

“For the first time you are truly mobile on everything,” said Patrick Scaglia, chief technology officer of HP’s imaging and printing group, in a interview.

“Smartphones are great to read an email, but as soon as it’s a little too much information on the one page, it’s really painful…it’s really needed to be able to say, ‘I can’t read this, let’s print it.’”

Users can select any printer, HP or not, in a company’s network. Scaglia wouldn’t say when the CloudPrint service for the BlackBerry will launch. In the near future, he said, BlackBerry users will be able to register printers outside the office — say, in a copy shop — and print from there.

In a rivalry that should only grow more heated in the months to come, Research in Motion’s BlackBerry Curve moved past Apple’s iPhone in the first quarter to become the best-selling consumer smartphone in the U.S., research group NPD said on Monday.

RIM had three of the top five best-selling consumer smartphones in the period, with the Storm at No. 3 and the Pearl at No. 4, NPD said. T-Mobile’s G1 ranked No. 5.

NPD credited a “buy-one-get-one” promotion by Verizon Wireless for the Curve’s push past the iPhone.

“The more familiar, and less expensive, Curve benefited from these giveaways and was able to leapfrog the iPhone, due to its broader availability on the four major U.S. national carriers,” NPD’s Ross Rubin said in the release.

RIM’s consumer smartphone market share climbed 15 percent from the previous period to nearly 50 percent in the first quarter, as Apple’s and Palm’s share both fell 10 percent. But don’t be surprised if those numbers change soon. Apple is widely expected to unveil a new iPhone in the coming months, while Palm’s highly-anticipated Pre smartphone is set to launch some time in the second quarter.

The smartphone market as a whole continues to grow, even as the larger handset market stagnates. The devices made up 23 percent of U.S. handset sales in the first quarter, up from 17 percent in the year-ago quarter.