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Competition Will Increase Blackberry's Popularity

So far RIM was best known for BlackBerry and its push e-mail, and it lacked the media features that are Pearl’s attraction. With multi-media features and camera, will the introduction of Pearl eat into the other Blackberry solutions and products? Read the interview to find out Gregory's opinion on various issues and features

As Director of Asia Pacific for Research In Motion (RIM), Mr. Gregory Wade drives BlackBerry growth and success in market and is responsible for building and cultivating RIM's relationships with various partners and carriers offering the BlackBerry solution in the region. For the past four and a half years at RIM, he has been instrumental in establishing the business relationship and growing the BlackBerry offering for the iDEN network in North America and supporting carrier marketing and solution sales as well as third party application development. Prior to joining RIM in May of 2001, Mr. Wade worked for AT&T Canada, serving in various roles within the organization. He was a key contributor to the establishment of the first intelligent call processing infrastructure linking Canada and the United States.

SDA: RIM recently launched its BlackBerry Pearl, with multi-media features such as MP3 player and camera. Pearl is already drawing a strong demand at T-Mobile USA Inc. retail stores. Speculation on Web sites has focused on GSM-based operator Cingular Wireless L.L.C. as the next to offer Pearl. Can you throw some light on the future of the device in terms of market expansion?

Gregory Wade (GW): BlackBerry is network agonistic. BlackBerry is now available on UMTS, EVDO, EDGE, GPRS/GSM, CDMA, Wi-Fi, iDEN, Mobitex and DataTAC. The latest network technology offers more bandwidth, providing a faster speed for data application. However, we have to be aware that there are limitations on the telecom world, such as bandwidth, network coverage, battery life, screen size, performance of operation system etc. BlackBerry is a well-balanced communications offering in the current situation. It’s stable, accessible, secure, manageable and robust. The core value of BlackBerry remains unchanged no matter which device we are launching to the market.

We are very excited about opportunities around BlackBerry Pearl. It elegantly combines an incredibly small, stylish and full-featured smartphone with the gold standard in wireless email and the result is something really special. We are working with carriers in region regarding Pearl launch plans and will keep you posted when details are finalized.

SDA: RIM is the irrefutable leader in the business market, where it faces no strong challenger. But with Pearl, you are foraying into the much broader wireless handset market, where you face stiff competition from others like Microsoft and Motorola. How does Blackberry plan to cut through this market space? Do you plan to market the phone more aggressively than past ventures?

GW:BlackBerry, as a pioneer in wireless email and data delivery, has an established global customer base, and we’ve successfully achieved that through a variety of measures such as utilizing the extensive distribution channels of our carrier partners. The attraction that we’ve been able to create for our end users lies in the strength and position of BlackBerry.

The approach employed by Research In Motion for BlackBerry does not change. As part of our positioning within the respective marketplaces, we focus on the key fundamentals - what BlackBerry is all about. The BlackBerry is not just a handset - it is a device incorporating both software and service and an end-to-end wireless solution. With the Pearl, it integrates email, phone, messaging and IM capabilities along with aspects and characteristics all wrapped into one clever device - the BlackBerry.

SDA: BlackBerry has already made business consumers addicted, so far as to even to earn the name “Crackberry”. But studies show that service providers have steadily failed to tempt the consumer market to run their bills by using more wireless data services. Do you think Pearl can spread the e-mail addiction to the consumer market too, considering that your presence in the broader wireless handset market is small?

GW:We are established in the category as a market leader in terms of wireless email and data delivery with over 6.2 million subscribers worldwide. We have achieved that not solely by the offering of just a handset with specific functionalities, but also by providing a complete package, which comprises of hardware and services through our carrier partners, in particularly, new and innovative price plans and offers that will attract wireless email users to the proven BlackBerry platform.

Figure 1: Gregory Wade, Director, Asia Pacific, at Research In Motion

And yes, we do believe that the Pearl can assist in the growth and expansion in the consumer market.

SDA: So far RIM was best known for BlackBerry and its push e-mail, and it lacked the media features that are Pearl’s attraction. With multi-media features and camera, will the introduction of Pearl eat into the other Blackberry solutions and products?

GW:The introduction of the BlackBerry Pearl will not eat into other BlackBerry solutions and products. On the contrary, it will complement the existing BlackBerry portfolio.

Firstly, it provides us with the opportunity to further expand our market opportunities and secondly, through the BlackBerry platform from the enterprise standpoint, it enables access to multiple applications, such as ERP and CRM applications. Fundamentally, the options abound in terms of its capability.

SDA: The BlackBerry platform is largely considered secure, and used by huge number of executives to have remote access of critical corporate data. However, a security consultant who recently made a presentation about insecurities of the BlackBerry platform at an annual hacking conference exposed its security risks. Dubbed 'BlackBerry Attack Toolkit' the software demonstrates how code on a BlackBerry could theoretically pose a security risk to internal corporate networks. Is RIM taking this threat seriously and planning any counter measures?

GW:On August 5 at DEFCON 14, Jesse D'Aguanno (x30n) demonstrated how Trojan software (i.e. malware) consciously downloaded by a user to their BlackBerry device, could be used to access systems on an internal network if the built-in security policies of the BlackBerry Enterprise Server are not enabled. Such exploits are possible on any mobile device, including smartphones, PDAs and laptops.

The IT policy settings for preventing malware exploits are built into the BlackBerry Enterprise Server software and can be set by the administrator. Additional measures can be taken by installing BlackBerry servers in a segmented network. Administrators can also reference two documents published on the BlackBerry security and knowledgebase sites - "Protecting the BlackBerry Device Platform Against Malware" and "Placing the BlackBerry Enterprise Solution in a Segmented Network".

Some online coverage inaccurately reports that the Trojan software can be passed through an email attachment to an unsuspecting BlackBerry user. Contrary to the reports, BlackBerry Enterprise Server does not allow the user to download attachments to the device, hence Trojan software cannot be delivered as an email attachment to a BlackBerry user.

The scenario depicted at DEFCON makes several reaching assumptions about a BlackBerry Enterprise Server deployment. The ability to load and run any third party software on a BlackBerry device is controlled by an IT policy setting on the BlackBerry Enterprise Server, which would have to be allowed by the administrator.

Furthermore, the ability for a third party application to make an external connection from a BlackBerry device is also controlled by an IT policy setting in BlackBerry Enterprise Server and would have to be allowed by the administrator.

In addition, the ability for the BlackBerry Mobile Data System to have access to systems on an internal network is also controlled by an IT policy setting in BlackBerry Enterprise Server, which would also have to be allowed by the administrator.

SDA: RIM was an early leader in wireless email, but now you're feeling the heat from new competitors. Why do you think RIM won't get ploughed under by Microsoft and Nokia?

GW:RIM has been identified as the market leader and the pioneer of wireless email, providing access to corporate data. We welcome competition. The more providers educating users on the benefits of mobile email the more popular it gets - which is good for us.

Compared to email-centric devices in the market, BlackBerry is truly beyond email

BlackBerry is built on industry standards. Over 400 partners joined our BlackBerry Alliance Program. Third party software which ranges from CRM, ERP, network management applications to games, ring tones, and personalized entertainment are also available on BlackBerry.

Mobile Data System (MDS) incorporated at BlackBerry Enterprise Server – our server software offering for corporate customers - provides a powerful yet user-friendly environment to develop, customize, deploy and manager corporate data applications on BlackBerry.

In some areas, we are cooperating with handset manufacturers to promote BlackBerry. RIM has launched two licensing programs – BlackBerry Connect and BlackBerry Built-in, which enables devices from handset manufactures to access to selective BlackBerry services. We have partnership with handset manufacturers Nokia, Motorola, Sony Ericsson, Ben Q Siemens, Samsung and HTC, as well as OS providers Palm, Window Mobile and Symbian.

We will continue to focus on the future and strive to innovate, grow and expand our portfolio. Ultimately, our aim is to offer our customers the BlackBerry experience.

SDA: RIM has been off late facing a lot of heat with patent infringement lawsuits. The lawsuit with NTP saw RIM coughing up $612.5 million for a settlement, and now the company is again in news with Visto filing another suit in May. Sales, and shares, have been inevitably affected in this process. Your comments?

GW:We’re consistently seeing a strong growth rate throughout this period of challenge. We are performing very well as seen in our Accelerating Revenue Growth.

Revenue generated from hardware, service, software & support

Q2 FY07 revenue grew 34.4% over same quarter last year (USD 490.1M to USD 658.5M
Q3 FY07 revenue guidance of USD 780 - USD820 million

Drivers are global expansion of the BlackBerry platform, execution by our carrier partners numbering over 200 and new product launches.

Revenue and Subscriber Growth:

Net subscriber adds of 705,000 in Q2 and we have over 6.2 million subscribers at present
New carrier partners and international markets contributing meaningfully to subscriber growth

SDA: RIM Co-CEO Jim Balsillie made a statement that Motorola’s new "Q" smartphone has not yet eaten into the market for RIM's BlackBerry devices. But with Motorola buying Symbol Technologies, analysts predict that Motorola will become one of the largest sellers of hand-held scanners and devices that connect to networks wirelessly. Do you think they could now make bigger inroads into the market serving corporate customers?

GW:We at RIM certainly welcome new entrants and competition. The more end users are informed about the benefits of mobility, the more popular BlackBerry becomes, which in turn serves to ascertain our position as a market leader.

The Bluetooth capability talks specifically to BlackBerry as relevant within point-of-sale and technical support-type environment. We provide capability for BlackBerry to expand well beyond the traditional enterprise management blare to businesses.

BlackBerry is most definitely more than just push mail. Where we’re at is already beyond email. Our partnerships and alliances, as well as third party applications, drive more value and benefits for enterprise and individuals.

SDA: BlackBerry was launched in Taiwan by the Taiwan Mobile Co, furthering BlackBerry’s expansion plans in the Asia Pacific. How does BlackBerry plan to market itself in the island in the face of stiff competition from Microsoft and Chunghwa Telecom Co?

GW:BlackBerry will not deviate from its successful distribution model. We will continue to thrive for success through strong execution via our carrier partners. We’re going to do that by focusing on providing their sales force with tools and knowledge to sell our solutions effectively.

Support will be given on employee training programmes to focus on the attributes of the proven BlackBerry platform and extensibility message, as well as from a collaboration perspective – anything related to targeting, selling and promoting BlackBerry in the various market segments.

SDA: RIM recently inaugurated Asia Pacific Customer Support Operations (CSO) Centre in Singapore. How is the Centre expected to help the company’s consumer support in the region? Could you throw some light into the company’s further plans of expansion?

GW:RIM’s support model illustrates that our carrier partners are the prime point of contact relating to an enterprise query. The CSO Centre will provide advanced technical support for carriers in situations when the carrier determines they need assistance from the manufacturer regarding the BlackBerry server. The facility is for corporate customers on a contractual basis.

With 60 employees currently, we target to grow to 200 in the next two years.

SDA: What are the emerging trends in wireless solutions and mobile communications market in Asia Pacific (including Japan)? What do you see as the next set of market drivers? What interest does RIM have for India, as a region?

GW:In terms of emerging trends, there is a desire by enterprises and individuals to increase mobility in their everyday lives, which will in turn create demand for BlackBerry in the market space. This group of market drivers is extending beyond email and messaging into the realm of self-taught motivation and customer relationship management. RIM recognizes the shift and desire to mobilize the workforce. We are also looking forward to expanding our partnership with carriers through focus on BlackBerry extensibility and the application development environment in a near future.