One On One With Ellen Daley, Telecom Analyst at Forrester Research.
Friday, March 03, 2006
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SUSIE GHARIB: Joining us now to talk more about the Blackberry settlement, Ellen Daley, telecom analyst at Forrester Research. Hi, Ellen.
ELLEN DALEY, TELECOM ANALYST, FORRESTER RESEARCH: Hi.
GHARIB: Well, certainly this is a good deal for users of Blackberries, but is it a good deal for the company?
DALEY: You know, it absolutely is a great deal right now in the short term for RIM. Let`s face it, this court case was getting everyone nervous. Users of Blackberry were looking to alternative technologies just in case it was going to be shut off. And that allowed the competitors into companies that RIM was already in on. The court case being closed now, it`s settled, now makes that competition basically go away.
GHARIB: But how about on the financial side? RIM said today -- Research in Motion said today that because of this settlement, that it is warning that its fourth quarter earnings -- which are going to come out in a few weeks -- will be lower than expected. Does that concern you?
DALEY: On the earnings side, I think that RIM can recover on that, particularly as they look to grow new sales moving forward. But that`s going to be increasingly difficult as they face new competition from a lot of different angles, both on the device side and the software side.
GHARIB: Let`s talk a little bit about the competition. Certainly a lot of people decided not to go with Blackberries over the last couple of months while there was uncertainty hanging over it and maybe turned to other hand held device makers. Who are the winners and losers here now that there`s a settlement?
DALEY: There`s a short-term win right now for RIM and really a short- term loser like for devices like Palm Inc. Also short-term losers on the software side like Good Technologies, Intellisync and even Microsoft in the short term. But that win for RIM is really only going to be visible for a short time. As the year goes on, we`re going to see those competitors really come back with a vengeance and go after RIM both from a cost perspective, dropping costs down and also from innovative product perspective. And RIM is going to have to focus and leap ahead on innovation to leap ahead of them.
GHARIB: So you`re saying it`s not an automatic that they settled this patent case and now there`s going to be a burst of new sales?
DALEY: Absolutely not. We think there will be a little increase in sales, nothing too significant to really shake up anything. But what we think we`re going to see throughout the year is beginning market share being taken away from RIM because there`s more competition. Microsoft has an offering now that`s a pretty steep competition to RIM that`s cheaper. And that users also, because there`s been a wedge created, right, because of this court case and user companies have had to try other products in case RIM was going to be shut down, that wedge is going to be exploited by the competition like Microsoft and really leverage throughout 2006.
GHARIB: One last question to you. I know you don`t analyze the stock, but we did see the stock in after hours trading of Research in Motion just surge, up more than 18 percent; it`s now at $86. What kind of investor reaction do you think there will be on Monday when markets open and the stock starts trading again?
DALEY: I think we`re going see a continued stream of optimism. I think people are going to be really bullish about RIM and they`re going to be excited and we`re going to see direction of the stock increase, but, again, for a short term, right? And then when reality sets in about some of the more strategic crises that RIM has on its hands, things may change over the year.
GHARIB: Thank you so much, Ellen, we appreciate your thoughts.
DALEY: Thank you.
GHARIB: We`ve been speaking with Ellen Daley, telecom analyst at Forrester Research.
