"Human sacrifice! Dogs and cats living together! Mass hysteria!"
But the gang at RIM didn't come anywhere near the level of concern expressed by Dr. Venkman (Bill Murray) in Ghostbusters in the company's latest quarterly earnings conference call. Let's take a look at why.
In the spirit of "coopetition"
Former Canon (NYSE: CAJ ) CEO Ryuzaburo Kaku, explained in a Harvard Book Review article titled "The Path of Kyosei," how the folks at Canon approached Hewlett-Packard (NYSE: HPQ ) to share Canon's inkjet printer advancements so that both could win. Sleeping with the enemy, if you will, actually happens all the time in business. A more recent example comes from Netflix and how it viewed Blockbuster's entry into the mail-delivery model as a win-win for both companies.
There has been a term coined for this kind of cooperation between two fiercely competitive companies: "coopetition." Adam Brandenburger and Barry Nalebuff in a 1995 Harvard Business Review article "The Right Game: Use Game Theory to Shape Strategy," explain the term as "looking for win-win as well as win-lose opportunities." The people at RIM currently see Apple's iPhone as a win-win for both companies.
The second question asked during RIM's latest earnings call was the big question: The analyst wanted to know how the management at BlackBerry's company viewed the potential impact of Apple's iPhone and its relationship with AT&T's (NYSE: T ) Cingular Wireless.
This was RIM CEO Jim Balsille's response:
"I think they [Apple] did us a great favor because they drove attention to the converged appliance base [smartphones, PDAs, etc.], and particularly that you should expect media as a soft wrap on your converged smartphone, which we built clear market leadership in. ... We think the attention to it [iPhone] is, and its impact on the dynamic has, quite frankly, been overwhelmingly positive to our business."
That all sounds nice and chummy, doesn't it? Well, there is good reason for management's optimism, and it has just a little more to do than the positive attention coming to BlackBerry via the iPhone. The folks at RIM feel somewhat comfortable right now because the iPhone is a very limited launch at this point. Again, Balsille explains:
"iPhone is launching, to the best of my knowledge, in one carrier and one country. And we're in about 100 countries and 300 carriers, so to the extent there is interest there, there are another 99 countries that are interested in these kinds of things."
We learned in the call that BlackBerry also is now being offered to corporate customers in key Chinese cities like Beijing, Shanghai, and Guangzhou. Additionally, several carriers in Latin America are now offering the Pearl in all three color variations. And the Pearl has seen "excellent" growth in India. Finally, the list of international carriers continues to grow by the quarter. The latest additions include Maroc Telecom in Morocco, Globul in Bulgaria, Millicom in Latin America, and Handcell in Uruguay.
I get Balsille's point, but I am not sure I am totally convinced that this will end up being a win-win for both companies. It is true that the iPhone is attracting an enormous amount of attention, as far as I can see however, that attention is being directed at the iPhone only. Like Apple's latest move to bring the iMac to Best Buy and the threat this agreement presents to Hewlett-Packard and other computer manufacturers, at best I see Apple's entry into the world of mobile communication as a wakeup call to RIM, Motorola (NYSE: MOT ) , Palm (Nasdaq: PALM ) , and others.
My colleague Tim Beyers sees the iPhone as a serious threat to BlackBerry, and I agree completely. The biggest positive I can muster up for RIM and others given the success of the iPhone launch is exactly what Balsille noted, the iPhone is currently a very limited launch. As far I see it, RIM has about two years to get on the ball with an equally attractive multifunction device. That's when Apple can begin working with other carriers and other markets. And if it doesn't, this win-win, as Balsille sees it, could very easily turn into a win-lose, with the BlackBerry getting the boot.
Early innings of a big game
When talking about how BlackBerrys are being used by grain farmers in Latin America and the potential there to further develop the business-to-consumer and business-to-business markets, Balsille said, "We're in the early innings of a big game."
Apple just stepped up to the plate and hit a homerun to kick off its entry into mobile communication. Fortunately for RIM, it currently enjoys a sizable lead over its newest threat. Can RIM hold off the furious comeback that Apple and iPhone are sure to mount? Stay dialed in to find out.
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