Smart phones put BlackBerry under siege

Switch to smart phones may be working against RIM

Road warriors -- those who spend a significant percentage of their time each month traveling -- are leading the switch from standard cell phones, e-mail devices and PDAs to multipurpose smart phones, according to a study released this week by market research firm In-Stat.

That's hardly big news, but there are several other significant implications to the study, according to its author, Allyn Hall, director of In-Stat's consumer practice. Among those implications is that the switch to smart phones means that the popular BlackBerry faces potentially withering competition. The study included a survey of more than 1,000 mobile enterprise users.

While BlackBerries now typically have voice capabilities, Hall noted that smart phones from most large vendors have e-mail capabilities similar to those made popular by BlackBerry. And the power of these relatively new competitors will be hard for Research In Motion Ltd. (RIM), which develops the BlackBerry, to match.

"All of a sudden, RIM has Motorola, Nokia, Samsung and Sony Ericsson providing strong competition," Hall said. "That makes it hard for a relatively little company like RIM."

A second analyst, Derek Kerton, principal of telecom research firm The Kerton Group, agrees with Hall but said that he expects RIM to weather the storm.

"The competition is definitely coming at RIM, but the market for smart phones will grow a lot faster than the competition," Kerton said. "So there's still room for RIM to grow."

Kerton noted that smart-phone vendors aren't the only ones competing with RIM. He said that other push e-mail vendors like Visto Corp. are also nipping at RIM's heels. And even Microsoft is competing, if indirectly, by pushing its Windows Mobile platform for smart phones and marketing devices built on that platform to enterprise users.

"If you look at their sales figures, though, RIM is growing and growing and growing," Kerton noted.

Hall noted -- and Kerton agreed -- that a second trend that emerges from the In-Stat study is that the nature of enterprise mobility and the employees who take advantage of it are changing. In particular, top-level executives, to whom the term road warrior once was most frequently applied, are no longer the only highly mobile employees in the enterprise, Hall said.

"One of the surprising things we found is that the term road warrior is becoming much less useful as a distinct group of people treated differently by their companies," Hall said. "It's no longer just the CEO of the company who is considered a road warrior. Wireless [data] is deep in organizations now, and it's not just for the top echelon. The claims adjuster type of person and many others now carry something with them that enables him to send in a report remotely rather than doing it by voice or getting back to the office."

Kerton added, "Mobility is being democratized. It's like cell phones in 1994 -- only executives and hotshots carried cell phones then. Now, almost every employee has one. Even 12-year-olds have them."

This trend has forced IT managers into an attitude change, the analysts said.

"There's pressure on IT managers in two directions," Hall said. "It's becoming necessary to be less resistant to mobility because it's no longer whether mobility is a good thing. It's a matter of how to do it. But there's still the nightmare that the CEO drops his BlackBerry in a cab with a download on it of the merger plan. With the legal climate, that's not only a business risk, but it also could be a legal risk."

As a result, IT managers are spending more of their time managing mobile devices and protecting against loss and theft. Hall said his company was typical of the resistance to mobile devices from IT shops.

"My company fought the BlackBerry for a long time," he said. "Ultimately, management said, 'This is silly. We need them.'"

"I wouldn't say IT is always doing it with a smile on their face," Kerton added. "But they realize if they don't get in front of this tornado, they'll be swept up by it. IT managers realize that if they sit back, people will bring in their own devices and IT will have to fix the problems."

Yet another important trend that was previously reported, Hall said, is the advent of lower-priced smart phones such as the $200 Treo 680, recently announced by Palm. Until recently, smart phones were used primarily by those who didn't care how much they cost -- and the typical price tag for such devices was between $400 and $600.

"In the [traditional] road warrior category, people are a lot less concerned about what something costs and more concerned about productivity," Hall said. "We're talking about people who spend a couple of hundred dollars a month on cellular service. You never want to say price isn't important, but it's far less important to an executive who is traveling two weeks a month."

But low-priced smart phones will enable enterprises to provide a single device to non-executives who otherwise would have a cell phone and a PDA, Hall noted. That, in turn, will herald the end of the PDA as a significant product category and not just one for high-end road warriors, Hall agreed.

"If a company is spending the money to buy a PDA and a cell phone, a low-cost smart phone is a real good bargain," Hall said. That's particularly true as smart phones get better at all their disparate tasks.

Kerton again agreed.

"Two hundred dollars is an important line to cross," he said. "There's a whole bunch of people who will pay anything, and there's a whole lot who will take whatever phone the carrier gives them for free. But there's a big middle class who will pay for value. There's a big swath of those people in the $150 to $200 range."

Hall noted that, besides decreasing prices, smart phones are becoming more attractive because vendors are making them more usable.

"Sometimes specialized devices are better than multiuse devices," Hall said. "Many people carry phones that can play music, but that hasn't hurt sales of the iPod. But now, smart phones have more memory, better battery life and use displays better, so [vendors] are addressing the issues that made it hard for a single smart phone to provide a good enough user experience."

IT managers, while they are compelled to go along with these trends, will continue to spend even more resources to protect these mobile data-carrying devices. With that will come innovations, Hall predicted.

For example, Hall noted that some companies in Japan have started deploying technology that prevents a mobile device from being used unless it is within a few feet of a small card carried by the employee. That way, if the device is lost or stolen, it can't be used.

The bottom line, though, Hall and Kerton agreed, is that this combination of increased demand and lower prices eventually will turn the smart phone into the de facto mobile device for many mobile workers.

Copyright © 2006 IDG Communications, Inc.

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