| RIM gains market share
despite legal troubles
22 February, 2006
By Chris Talbot
Despite the company's continuing legal troubles revolving
around patents, Research In Motion (RIM) has continued to
gain worldwide market share based on number of units shipped.
New data from Gartner shows that RIM has finally overtaken
Palm as the number one PDA vendor worldwide.
According to Todd Kort, principal analyst in Gartner's Computing
Platforms group, RIM moving up into the number one PDA vendor
based on units shipped was really no surprise. Although RIM
and NTP have fighting a war over patents since 2002, RIM's
marketshare has been increasing rather than decreasing.
"Since November 30th, I've talked to about 80 different
companies, and only about four of them are seriously considering
moving away from RIM," Kort said. Enterprise customers
simply aren't abandoning the Waterloo, Ont.- based company
that first made headlines in the 1990s with its BlackBerry
mobile e-mail devices.
Kort said there are three factors that are keeping companies
from switching away from RIM. The first is a big one -- cost.
It would cost enterprises approximately $1,000 per user to
switch from RIM to another platform. The costs aren't only
associated with the purchase of new devices, but also in buying
new software, paying for training, dealing with help desk
issues, etc.
The second reason is that long-standing BlackBerry customers
have invested a lot of time in mastering the little keyboards
on the devices, and they don't find the keyboards on competing
devices to be attractive, Kort said. Only about 25 per cent
of BlackBerry users would be willing to switch to a Palm Treo
or a BlackBerry 7100 type of device, he said. Most are adamant
about sticking with standard RIM BlackBerry devices.
The final reason has to do with a very slim chance that the
patent war between NTP and RIM will actually lead to RIM shutting
down, Kort said.
"There's just too much business sense for RIM to settle
if it comes to that," he said. Of course, RIM may be
running out of time, as the hearing has been set for Feb.
24. The judge could make a decision that day to threaten RIM
with an injunction, but he said it's likely the judge will
give them a 30-day grace period with which to negotiate with
NTP.
"Given RIM is likely to generate at least $1.5 billion
in revenue from the U.S. alone this year, it just would make
a lot of sense for RIM to settle for whatever amount they
can," Kort said.
A more interesting peculiarity is how the patent office is
making a move far different than what the courts appear to
be doing, Kort added. In May 2005, new evidence came to light
that showed a Norway-based company Telenor had published technical
manuals in the late 1980s that predate anything that NTP came
up with, he said. On the basis of that evidence, the patent
office is in the process of invalidating all of NTP's patents.
The patent office isn't likely to move fast enough for RIM,
though.
"NTP is now at the stage of appealing those invalidations
and it's likely that within the next 12 months all of NTP's
patents will be declared invalid," Kort said. However,
the judge overseeing the RIM/NTP case isn't likely to wait
until the patent office is finished it's work, and it's still
likely that RIM will have to pay something to NTP, he said.
RIM's recent announcement about a workaround could buy the
company the time it needs, though, Kort said.
"The court might even have to go into a whole other
round. There might have to be a whole other court case to
determine whether the workaround infringes on any of NTP's
patents," he said. That could stretch out the court case
long enough for NTP's patents to be declared invalid, although
Kort did say it's a remote possibility.
"The only question is whether the judge may allow the
case to drag out a bit further or whether he's going to force
some action this spring," Kort said.
According to Gartner's data, RIM now holds 21.4 per cent
of the PDA market (based on units shipped), beating out the
previous leader, Palm, which has found its market share declining.
While RIM had a 17.4 per cent market share in 2004 and Palm
had a 29.8 per cent market share, the tables have turned a
bit. Now, RIM holds 21.4 per cent and Palm's share of the
market has dropped to 18.6 per cent. HP currently holds 15.2
per cent of the market share for worldwide units shipped,
followed by Nokia at 6.8 per cent and T- Mobile at 5.5 per
cent.
With Microsoft's announcement at the 3GSM World Congress
2006 that it was pushing heavily into the mobility arena,
could that mean there will soon be another big player in the
market?
"Ultimately, Microsoft has the resources and market
power to become a prominent player over time, but I don't
think they're going to be much of a player this year. They're
still considerably behind where they need to be in terms of
such things a security and manageability," Kort said.
He added that the Pocket Outlook software still needs a lot
of work.
To expect Microsoft to step up and be on even ground with
RIM the first time is more than anyone should expect, Kort
said. In two or three years, Microsoft could be a serious
player, along with Nokia, which is making moves similar to
Microsoft with its recent acquisition of Intellisync, Kort
said.
"There will be several strong players, and the wireless
e-mail market is growing very rapidly, so there is room for
everyone to take a nice slice of a rapidly growing pie. RIM
is the dominant player today and they will certainly lose
marketshare over time as wireless e-mail gets into more and
more phones, but I think RIM will continue to be positioned
as sort of the gold standard for corporate wireless e-mail,"
Kort said.
That doesn't mean RIM is going to remain king forever, though.
Where RIM will likely falter, Kort said, is when enterprises
start mobilizing applications beyond e-mail (into CRM and
sales force automation). At that point, companies will likely
look for more open solutions with a greater variety of devices.
Most likely, that will mean they'll be looking for a Microsoft
operating system, he said.
"That's where Microsoft is likely to make their greatest
gains -- when companies start moving in that direction,"
Kort concluded.
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