Blackberry Communications Continue ...For Now
Friday, February 24, 2006LINDA O'BRYON: The patent battle over the Blackberry email device got a little stickier today. A Federal judge in Virginia refused to issue an injunction against Research in Motion, the maker of Blackberry. Instead, Judge James Spencer told Research in Motion and NTP they have left an incredibly important decision to the courts and that his ruling quote will be imperfect end quote for RIM`s business. NTP had asked the judge to shut down U.S. sales and service of the email device, claiming those devices violate technology patents. I spoke with telecom analyst Ellen Daley earlier today about what the judge said and what`s at stake for RIM. I began by asking her why the companies have been unable to reach a settlement. ELLEN DALEY, TELECOM ANALYST, FORRESTER RESEARCH: What the courts really had said up to this point is that they want RIM and NTP to settle. But no resolution yet. Why? Petty much because RIM and -- was looking at this more as a crusade rather than a business. They feel that NTP has been unethical in their practices around the licensing and they feel it is their innovation and they want to protect that and their culture of their company is to take that all the way down to the wire, which is what`s happened here.
O`BRYON: But it sounds like they haven`t been able to communicate that to the judge because he`s saying settle it.
DALEY: And that`s why in some sense, the judge said settle it a few months ago, but there`s been no real settlement. I think the ruling today is a little bit more of the same, and if the judge expects them to settle it, just with more pressure put on them, it`s not clear that`s going to happen. RIM is looking for a closure to this case and pretty much what NTP has been putting on this table, according to RIM, has been really a settlement that they can`t agree to. It`s partial in nature and the cost is quite high. So RIM is going down another path. They`re focused on this work-around technology solution to help get themselves out of this mess. And even if the judge ultimately rules, that will have no impact on them.
O`BRYON: Ellen, there is some speculation that the judge will create an injunction that doesn`t hurt the current Blackberry users but may block future sales of Blackberry. Is that likely?
DALEY: That is one possible outcome. That outcome, boy, you know either a partial injunction or a whole injunction is still going to affect RIM. Partial injunction all right, doesn`t hurt the current customers, but RIM is looking for growth as a company and halting new sales is really going to make a lot of companies say whoa, let me go look at the competition and let me see what I have to look at because I can`t consider Blackberry to expand wireless email bases (ph) in my company.
O`BRYON: Going the other way then, how much would a settlement likely cost RIM?
DALEY: There are no financial analysts here, but it`s definitely going to be somewhere in the $400 million to up to $1 billion at this point. Remember, both parties are in somewhat of a reduced position right now. NTP knows that the very patent of the case has been founded on has becoming rejected from the U.S. patent and trade office, and RIM is feeling extreme pressure right, from their customers to help settle this case. I`d say somewhere in the middle of that range is when a settlement might happen if it does happen.
O`BRYON: Is all of this legal activity hurting Blackberry`s sales?
DALEY: It`s not hurting Blackberry sales today. We don`t see a lot of migration in the user base to other technologies, but what we do see is really the opening for competition to come in. Pretty much RIM was such a great solution, that if any competitor wanted to go into the company and sell wireless e-mail, it was like climbing Mount Everest. People wouldn`t even answer the phone in the company. But now competition basically has (INAUDIBLE) four lane highway, because CIO`s are pressuring their IT department to say, find another solution just in case and this is the risk right? You open the door to competition, who knows what happens next time the decision has to be made about upgrading to a new platform.
O`BRYON: So you`re really saying that the real trouble then could be not from the court case per se but from the competition and your research has said companies like Microsoft may have an opening here.
DALEY: That`s right. Microsoft is looming on the horizon. All the noise and focus on the court case I think is taking RIM`s eye a little bit off what the real crisis ahead is and it`s really a strategic crisis. The playing field has gotten crowded. That period of time that RIM had to be ahead of the competitors has now ended. Microsoft has announced end-to-end solutions. I`m sure it will take a little while for the technology to work its bugs out. But they`re there. Nokia is coming up strong and real RIM`s issue once all this court stuff gets focused on (ph) is what are they going to be in the future? Just a small niche wireless e-mail provider or rather an innovator that`s going to set the tone for what next comes in enterprises going mobile.
O`BRYON: And a lot on that horizon. Ellen, thank you for joining us. My guest, Ellen Daley of Forrester Research.
