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)

Motorola launched its Hail Mary pass in the smartphone market and it goes by the name of Cliq, or Dext, depending on where you live. One would assume plenty of branding research went into the names (Cliq in the U.S. and Dext elsewhere), as this is the company that created such easy-to-remember names as Razr, Rokr and Rizr.

Motorola, once a cellphone leader producing iconic products, has fallen well behind the competition as the smartphone market continues to sizzle and consumers flock to devices like the iPhone (which, incidentally, goes by the name “iPhone” everywhere it sells).

With so many new smartphones coming to the market, analysts say the key to success is differentiation — which is often a software issue rather than a hardware one. Motorola hopes its MOTOBLUR software, based on Google’s Android platform, will help it carve out a niche.

The company calls the Cliq/Dext “the first phone with social skills.” It says MOTOBLUR integrates contacts, emails, texts, postings, photos and the like from sources like Facebook, Twitter and Gmail and makes them easier to manage.

Motorola has put all its eggs in Android’s basket, reorganizing its handset unit around the platform, but it faces quite a challenge. Many of its rivals have already integrated social-networking function into their phones.

“Not only do you have to design and build interesting phones and get them into carriers, but also can you make money on it?” said Macquarie Research analyst Phil Cusick. “The smartphone landscape is exploding and there is tons of opportunity here for somebody who can build a great device, but you also have a ton of competition. Not only the traditional smartphone guys like Apple, Palm, and HTC, but LG and Samsung - who are phenomenal executors - getting into the smartphone space as well with Android.”

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)

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

Jim Balsillie, the co-CEO of BlackBerry maker Research In Motion desperately wants a National Hockey League franchise and relocate it to his native Southern Ontario.

Balsillie has tried twice in recent years to buy a hockey team, only to be blocked by NHL Commissioner Gary Bettman, who this week assured people there was nothing personal between him and Balsillie. Balsillie is currently locked in a court battle with the NHL in his efforts to move the bankrupt Phoenix Coyotes to Hamilton.

On Monday, Balsillie sent in his application to the NHL explaining why the Phoenix Coyotes should move to Hamilton, Ontario and why he'd make a good owner. Late Tuesday, he supplemented that with 22 letters of recommendation from a variety of mostly Canadian VIPs.

Still, with friends like these, maybe Bettman will be swayed this time. Here are some excerpts:

From Ontario Premier Dalton McGuinty , congratulating Balsillie on May 21 for receiving a Public Policy Forum Testimonial Award: "Take pride in knowing that you are playing a pivotal role in advancing the discourse that is so vital to the health of a democratic society."
Fellow Premier, Brad Wall of Saskatchewan, also sent him a written note on April 4 to congratulate him on the honor.

From Isadore Sharp, CEO of Four Seasons Hotels and Resorts: "Congratulations on this distinguished honour" in reference to receiving Order of the Business Hall of Fame in Canada.

From WIlliam Swanson, CEO of Raytheon: "Your presentation helped us better understand the importance of driving innovation through leadership."

From former U.S. Ambassador to Canada David Wilkins: "Please know how much your friendship (those two words underlined by hand by Wilkins) has meant to me these past few years."

Others providing heart-warming testimonials for Balsillie: the member of the Canadian Parliament for Kitchener-Waterloo, where RIM is based, Ontario's Minister of Economic Development and Trade, the Elton John AIDS Foundation for a $48,305gift, and the Lance Armstrong Foundation for the free BlackBerry Curves.

But curiously, no letter praised Balsillie for his gumption for trying to buy a hockey team that filed for bankruptcy without even telling the NHL first and going through the courts, rather than the usual channels, to make his case.

(PHOTO: Reuters/Fred Thornhill, Sept. 2008 at charity hockey game in Toronto.)

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.

One billion makes for a catchy and memorable milestone. The world’s population passed the 1 billion mark in 1804. McDonald’s sold its 1 billionth hamburger in 1963. The 1billionth PC shipped in 2002.

Apple’s App Store hit that mark today, in just nine months, with much fanfare.

Granted, downloading a small program to your iPhone or iPod Touch is an entirely different sort of commerce than selling a burger or a PC, but Apple’s app universe has managed to acquire a remarkable amount of cultural currency in a short amount of time.  As evidence, look at the controversy over the “Baby Shaker” app, which Apple quickly removed and apologized for on Thursday (the company’s statement said in part “this application was deeply offensive and should not have been approved for distribution on the App Store”).

It goes without saying that apps have changed smartphones and mobile computing. They have also given rise to a lucrative cottage industry for developers and entrepreneurs, and made Apple a serious player in the mobile gaming space.

Such success invariably invites competition,  which is already here and promises to heat up further. Research in Motion recently opened its app store for the BlackBerry, Nokia will launch its Ovi store soon, and Palm will soon follow with a store for its forthcoming Pre smartphone.