Microsoft, Nokia, and Google Take Aim at RIM

Three giant names in mobile technology are making moves to challenge the BlackBerry's dominance among business users of smartphones

By Olga Kharif

Some of the biggest names in mobile technology are girding for battle against BlackBerry maker Research In Motion (RIMM) and iPhone creator Apple (AAPL).

Later this year, Google (GOOG) and partners that include handset maker Motorola (MOT) plan devices and features aimed at business users of mobile phones. Meantime, Nokia (NOK) and Microsoft (MSFT) are joining forces in their effort to take share in the lucrative market for company-friendly smartphones.

The moves are aimed mainly at RIM, the U.S. leader in smartphones for businesses, and defending against a rising threat from Apple and Palm (PALM). In July, RIM accounted for 34% of smartphone sales in the stores of the largest U.S. wireless service providers, and it boasted the most popular smartphone on the market, the BlackBerry Curve, according to research by Avian Securities.

Microsoft and Nokia announced their offensive on Aug. 12, saying that beginning in 2010 they'll unveil features including tight security and syncing with other devices. The companies also said they'll work together to get other applications, such as Microsoft's Office productivity tools, onto cell phones, and that by working together they can make it cheaper for corporations to support smartphones for employees.

"Way Beyond E-Mail"

"This is a move targeted towards RIM," Ed Snyder, principal at Charter Equity Research, wrote in an Aug. 12 research report. The first fruits of the collaboration will debut in Nokia's E-series smartphones next year. "BlackBerry and RIM have taken a very prominent place [in the market] based on e-mail," Robert Andersson, executive vice-president for devices at Nokia, tells BusinessWeek.com. "What we are offering is way beyond e-mail."

Nokia says it will give corporate IT managers ways to support its smartphones for less than it costs to support BlackBerrys, by doing away with the need for some servers. "We are definitely confident we can deliver this in a more cost-effective way," Andersson says. Apples-to-apples comparisons are tough to make because Research In Motion offers a variety of service options, says Ronald Gruia, principal analyst at consultant Frost & Sullivan. RIM didn't respond to requests for comment.

The alliance marks the first time Microsoft will develop applications for phones based on rival mobile software, in this case Nokia's Symbian operating system, instead of its homegrown Windows Mobile. "We know customers want choice in the devices they select," Takeshi Numoto, corporate vice-president for Office at Microsoft, tells BusinessWeek.com. "This shouldn't be taken as in any way a lack of our commitment to Windows Mobile."

At the same time, Google has redoubled its push into the business market, also promising more features at a lower cost. Till now, the so-called Android operating system developed by Google and partners has been aimed mainly at consumers, but that's set to change. "Today, we don't support many enterprise applications, but in the future, I think enterprise will be a good focus for us," Andy Rubin, the executive pushing Android for Google, told news service Reuters on July 31.

Google's Offering Value

Outside developers have long offered business apps for Android devices, but Google plans to adapt existing applications, including e-mail and tools for creating documents and calendars, to Android-based smartphones, Rubin says. Google's offering may be cheaper than RIM's, Gruia says. "They'll have a very compelling value proposition, for sure," he says.

Google's enterprise push coincides with the release of several new Android-based devices from Motorola, Samsung, and HTC that may carry particular appeal to business users. In late 2009 the manufacturers will release the first Android-based devices that have the look and feel of the traditional BlackBerrys, with full Qwerty keyboards convenient for typing long e-mails, according to Avian Securities data. "One of the things we are waiting to see is a truly enterprise-class device that runs Android," says Will Stofega, a program manager at consultant IDC. "That could start a new competitive round. It has a lot of possibility."

Large business-software companies are looking to start supporting Android-based phones as well. Later this year, Good Technology, a rival to BlackBerry's "push" e-mail services, plans to release an Android app that will let IT managers manage Android-based handsets remotely. It will also let mobile users log in to a corporate network using a virtual private network (VPN). "Our goal…is to be able to go to the enterprise and say, 'You can have the same kind of experience with all mobile devices, so you don't have to stay with the BlackBerry,' " says Good Chief Marketing Officer John Herrema III.

Security Risks?

To succeed, Nokia, Google, and others will need to win over skeptical IT managers who have come to trust the BlackBerry and are leery of security risks posed by new systems. "Every time you add another service, you are adding additional complexity and risk," says Morteza Rahimi, chief technology officer at Northwestern University. "However, we don't really have much choice, because the value of these devices when they work right is tremendous. We are going to support all of [the devices]."

And even if they can't convince IT execs, RIM's rivals will certainly want to get the so-called prosumer, or the person who uses purchases for both personal and professional use. Today, fewer corporations are buying smartphones for employees, says Ken Dulaney, a vice-president at consultant Gartner (IT). Instead, consumers buy an increasing proportion of smartphones on their own, for both personal and business use, and ask their companies to support them later. Up to 60% of all smartphones purchased today are used for both personal and business functions, Dulaney estimates.

Consumers evaluate security and capabilities differently from IT managers. Many people have begun using Apple's iPhones for business purposes, for example, long before Apple began winning IT managers over. End-user demand eventually pushed many corporations to support the iPhone. Now, Nokia, Google, and Microsoft hope prosumers will work their magic with rival tools as well.

Source: BusinessWeek

Microsoft and Nokia team up for smartphone

Microsoft and Nokia announced an alliance to bring advanced business software to smartphones in an attempt to counter the dominance of Research in Motion’s BlackBerry devices and the growing threat from the Apple iPhone.

The partnership between the world’s largest software company and the largest mobile phone maker means that the latest online versions of Microsoft’s dominant Office suite of applications, including Word, Excel and PowerPoint, will be available on a range of Nokia handheld devices.

The two companies, once fierce rivals in the mobile telecommunications business, expect to offer Nokia phones running Office sometime next year, targeting the lucrative business users market.

Robert Andersson, Nokia executive vice-president, said: “This is giving some of our competitors — let’s spell it out, RIM — a run for their money. I don’t think BlackBerry has seen the kind of competition we can provide them now.”

The rise of smartphones, on which users can browse the web and edit documents and presentations on the move, have presented software makers and mobile phone manufacturers with a new market to conquer.

Worldwide mobile phone sales totalled 286.1 million units in the second quarter of 2009, a 6.1 per cent decrease from the second quarter of 2008, according to Gartner, the research company. Yet smartphone sales surpassed 40 million units, a 27 per cent increase from the same period last year, representing the fastest-growing segment of the mobile devices market.

Microsoft is looking to bolster its Office franchise, which is nearly ubiquitous on personal computers and is vital to its profits. The company is already planning to launch web versions of Word, Excel, PowerPoint and OneNote, expanding its reach to make it compatible with all leading browsers on both PCs and Macs.

Until now only phones running Microsoft’s own Windows Mobile software have been able to use Office fully.

The alliance may also counter Google’s moves into free online software, which has been aimed at Microsoft’s business customers.

John Jackson, an analyst at the wireless research company CCS Insight, said: “It’s clear Nokia and Microsoft are both facing competitive challenges, most notably from Google. It makes sense for these two companies to work together to see if they can pool their competitive strengths to try and counter some of this pressure.”

The alliance means that Microsoft’s new Office suite of applications could be available to a much wider audience. Nokia accounts for 45 per cent of smartphones worldwide, with about 200 million users, according to Gartner.

The two companies emphasised that the venture would not affect the future of Microsoft’s Windows Mobile and Nokia’s Symbian operating systems. Executives said that Nokia had no plans to make a Windows Mobile device.

The announcement builds on Nokia’s drive to optimise access to e-mail and other personal information with its Exchange ActiveSync feature.

Meanwhile, a US federal court ruled that Microsoft would have to pay more than $290 million (£176 million) in damages to i4i, a Canadian software company, for infringing a patent. The Toronto-based i4i, a privately held maker of software for manipulating documents, had claimed in a 2007 lawsuit that Microsoft knowingly infringed one of its patents. Microsoft said that it planned to appeal.

Lower charges may mean higher call costs

Forcing down wholesale network charges will not lead to lower phone bills, mobile phone companies including Vodafone and O2 have warned Ofcom, the industry regulator. Telecoms groups, responding to Ofcom’s proposal to potentially alter the way that mobile termination rates (the cost an operator pays to connect a call to a rival network) are regulated, believe that cutting the rates could lead to higher call costs and lower handset subsidies. The shift threatens to cost the industry hundreds of millions of pounds in revenue a year.

Source: Times Online