Article Title: "Tech World Goes Gaga Over Hand-Held Device "
Author: Catherine Lacoursiere
Section: The New America
Date: 2/1/2000
Research In Motion Ltd.'s time in the spotlight with what is considered to be the smallest and most innovative personal digital assistant is about to be cut short.
Larger players say they recognize a good thing when they see it. That means Research's superior technology should enable it to ride the wave of the market it helped create.
Research's technology edge is the BlackBerry, a wearable personal digital assistant with some bells and whistles. Similar to 3Com Corp.'s wireless Palm, the device provides access to e-mail and personal information management tools like calendars and contacts via a cradle that synchronizes with your desktop.
But this 4-ounce innovation also provides a connection to enterprise or e-mail that is always connected. The appliance offers access to stock trading, news, e-commerce and applications such as Web browsing. It also is equipped with a small keyboard and several weeks of continuous run time powered by a single AA battery.
It's a lifeline to your data business, said analyst Robert Stone of SG Cowen, a BlackBerry user. If you need to be in constant contact with your inbox all day long, you need a BlackBerry.
The time value of information is very high. That's why Research's BlackBerry has done so well, said analyst Bill Crawford of Merrill Lynch, another convert.
15,000 Subscribers
Launched in April, there are more than 2,000 companies and 15,000 subscribers using BlackBerry. It comprises more than 20% of revenue, up from 5% in August.
We are capitalizing on several trends, said Dennis Kavelman, BlackBerry's chief financial officer. The growth of the Internet is number one and the growth in the popularity of handheld devices.
Revenue in the third quarter ended Nov. 30, was $23.7 million, up 35% from last year. Earnings per share increased from 4 cents a share a year ago to 5 cents. First Call estimates the company will earn 16 cents a share for fiscal 2000 ending in February and 44 cents for 2001. The company trades as RIMM around 67.
The company also sells two-way pagers and radio modems, but the BlackBerry generates most of its sales from the corporate market. Intel just signed up for 2,000 units. Both Fidelity and Muriel Siebert allow investors to get real time quotes and trade via a BlackBerry.
Research distributes the pagers through partnerships with BellSouth Corp., American Mobile, Skytel and PageNet. It also has distribution pacts with several value-added resellers such as Dell Computer Corp.
The launch of a bigger device with a larger screen could help Research capture consumer market share. As pricing falls on the device and usage, it will become more of a consumer play, says Merrill's Crawford. The unit sells for under $400 and it has a flat-rate pricing plan.
Research recently experienced a slight setback when one of its distributors PageNet delayed shipments. But the company still has room to grow in its core business market.
We expect to see more penetration into the enterprise as well as (Internet service providers) going forward, Crawford said. The company also should benefit when the Skytel-MCI WorldCom Inc. merger expands distribution channels.
Bigger Demand
The demand for wireless e-mail is growing at a healthy clip. Worldwide e-mail accounts from Internet service providers are expected to grow more than 100% from 263 million e-mail boxes today to 555 million by 2002, according to the Electronic Market Association.
A recent SG Cowen report cites forecasts of 5 million U.S. e-mail account holders who will subscribe to wireless e-mail. SG Cowen considers that estimate to be conservative.
But the BlackBerry will not be lonely, says Merrill Lynch's Crawford. Cell-phone makers such as Nokia Corp. and Ericsson AB are working to integrate BlackBerry functionality into their devices. And 3Com has moved into the wireless market with Palm.
Many factors, however, still give BlackBerry an edge, analysts say.
Their radio, antennae and battery technologies are relatively advanced, says Merrill Lynch's Crawford. The total mix is very compelling.
Advantages
If a cell-phone battery goes dead, users lose access to their contacts and business data in addition to the phone service. Cell phones and the Palm also require that users dial into their access provider and tap on keyboard-less devices multiple times to access e-mail. The BlackBerry provides a perpetual connection.
Telecommunications giant Nortel Networks Corp. just invested $25 million in Research with a view to cooperating on technological advancements and market opportunities in the wireless market.
US Bancorp Piper Jaffray expects to see a 280% increase in BlackBerry subscriber growth over the next year, climbing to 151,000. The upside may be even higher given the strength of the Dell brand in the consumer marketplace, the firm says.
Meanwhile, Research's radio business, which accounts for just under 20% of revenue, should post 50% revenue growth over the next year, according to US Bancorp. Its interactive paging division, responsible for 80% of double-digital revenue growth in fiscal 1999, is continuing to grow market share and sign on new distribution partners.
I can say with first hand experience that the Blackberry is awesome to access financial info. I use Midcast Pro to get streaming quotes on mine. It's still amazes me that wireless can provide something like that......
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