The Storm is a Netbook, says RIM founderAbout the businessCNET Asia: According to Gartner's latest smartphone report, RIM did exceptionally well in the last quarter with a market growth of 81.7 percent compared with the same quarter last year. How do you interpret the figures? Jim Balsillie, Co-CEO: I think that's what's happening in the sector based on US statistics. Globally, it's a bunch of different trends. The cell phone market in the US declined by 5 percent compounded per annum in the past five years, but the smartphone market grew 58 percent. So what's happening is, there is a substitution in the cell phone market and different markets are at different levels of maturity for smartphones. It's like the color TV sets in the 1960s or FM radios in the 1970s. It substitutes the traditional. The second thing that's happening with smartphones is that it's subsuming more of the other features around it, like an MP3 player. It's a personal navigation device and it does a lot of what your laptop would do. I think what's really driving it is sector substitution and this expands the capacity of computing, but the one thing that stays is the one that's got the radio because you need the radio for your cellular. You need something to talk and move packets on. I think that what is really driving the sector is substitution and the subsuming and interfacing of other things. I think what made RIM successful is that we have very high performance in implementation as we interface everything. We are an interface and we don't compete with the ecosystem. We also have a carrier-channel strategy. Those are the key elements for RIM, but the truth of it is you can capitalize on an opportunity, but I don't believe you can create an opportunity. So that's why we did well. 
(Credit: RIM) Balsillie: We have to focus on both [referring to the enterprise sector]. Obviously, our traditions are in the business, but you have to remember that in the channel, about 75 percent of B2B SIMs are bought in B2C channels. So B2C just puts the device out there and supports it. You're not going to get the channel adoption if you don't support whatever somebody is going to walk into a store to buy. So you have to support both. We have teams that support both sides equally. Our legacy is much bigger with B2B, but B2C is growing much faster. The other thing that's interesting is that there is a large proportion of B2B users who also use B2C apps. They like games, social networking, personal navigation, e-commerce, multimedia and music. Every B2B person is also a B2C if their policies let them load up. People think of this as a lifestyle terminal. Australia and New Zealand will be getting the Storm this month. What's your take on the product rollout in Asia Pacific and also Storm's availability in Singapore? Balsillie: The Bold is already available and the Storm should be, too, very soon. There's a tremendous demand and we are backlogged right now for the Storm. But we plan to launch in Singapore as soon as possible. I don't know the exact dates, but it shouldn't be too late into the New Year. It's clear that we can do a lot with smartphones these days. Are we seeing bottlenecks, for example, in terms of battery performance? Are we looking at, perhaps, the use of fuel cells? Balsillie: The problem with fuel cells is that they haven't gotten them working that well. They are expensive and have thermodynamic issues right now because they get too hot. So it's possible, but right now they have been hitting a lot of diminishing returns. It's possible they'll get a breakout in technology, but they are also hitting real issues with network capacity. It's like a car that can go 300kmh on the roads that are shared. There is a lot of traffic. The theory is one, but the practical reality is that it's a shared road. It's the same with wireless with finite capacity. I think battery optimization is important, but it only matters once you start to hit the capacity congestion point. What's the game changer for mobile phones in 2009? Balsillie: I think the game changer is the network speed as the network hype gets inordinate attention. You are going to see more wireless Web services, both in B2B and B2C. You put a faster network and it's like going from a four-lane road to a six-lane road with finer asphalt. You may be able to go a little faster and put more cars, but fundamentally it's still a road. It's pretty capable right now, but there is better stuff out there. I think the most important thing is the transforming of services that people are using. Has it come to a point where technology advancement is moving off tangent compared with how fast society is progressing? Balsillie: I think it's fair to say that technology is ahead of society a lot of the times. Sometimes society is ahead of technology and pulls technology into it. This is the case where people are enabling far more than they use, but I also see where the applications are going as they become so easy to use and so compelling, including street-level GPS and rich social networking. So to answer your question, yes, the technology enablers are ahead of the world, but there's going to be a point where that enabler suddenly does something very, very profound for people. How would the increasingly competitive smartphone market and longer replacement cycles in mature markets affect RIM's business model? Dennis Kavelman, COO: I'm not sure I agree with the longer replacement cycles part. You want to have something different and you want to have something new. I would argue that with the rapid introduction of new products, we are seeing their replacement cycles as a big segment of our market. People held on to the first BlackBerry for two to three years because they all knew they weren't switching anything. It's kind of like an iDEN Nextel in the US. There're only a few handsets people hang on to for years, but when there's a new, hot device, it drives them nuts. We get a long life out of our products. The Pearl and Curve have been selling very well for a long time. We've been very fortunate that we don't get people churning out of a BlackBerry. They may switch operators and devices going between a SureType keyboard Pearl up to a full keyboard. They may want to go from 2G to 3G, but it's rare that we lose people from BlackBerry to something else. So we almost have a base that we continue upgrading plus bringing in new folks. Tags: Research In Motion Ltd., Smart Phone, Netbook, RIM BlackBerry, Sales |
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