BlackBerry-Flavor Treo

Becoming the first carrier to offer BlackBerry mobile email over Palm Inc. devices, Singapore Telecommunications Ltd. (SingTel) (OTC: SGTJY) said today it now offers the BlackBerry Connect service over Palm's Treo 650 smartphones.

The move sets up a curious symbiosis between BlackBerry and Palm, which have long been fierce competitors in the growing market for corporate mobile messaging services. One of Asia's leading telecommunications companies, SingTel has operations in 20 countries including thousands of enterprise customers.

Once it becomes more widely available, the new service may also drive more enterprise IT managers in North America and Europe to consider Treos or other non-BlackBerry devices as they deploy or replace devices for their mobile users. The Treo device will now provide "push" email technology via BlackBerry Enterprise Server, which integrates with Microsoft Exchange and IBM Lotus Domino, the two dominant corporate email platforms. (See Palm Pushes Forward.)

"As mobile email has become an integral part of the business world today, we believe that the compact and feature-rich Treo 650 with BlackBerry Connect will appeal to many of our corporate customers," said SingTel vice president of consumer marketing Vicki Brady in a statement.

Analysts were virtually unanimous in viewing the SingTel move as good news for Palm and bad news for RIM. Standard & Poor’s Equity Research Services upgraded its rating of Palm shares to Buy from Hold, and S&P research analyst Megan Graham-Hackett wrote in a recent report that "We have long believed that a push e-mail service was key to broader adoption of the Treo."

"With net adds stabilizing in the 650-700K vicinity," writes Citigroup Investment Research wireless analyst Daryl Armstrong in a research note after the SingTel announcement, "RIM needs replacement demand to grow revenues. More Blackberry Connect competition hurts here."

Armstrong also pointed out that while RIM officials have consistently argued that no other device matches the functionality and ease of use of the BlackBerry, many corporate users have found that "the Treo 650 outstrips RIM devices in terms of features like attachment viewing."

The BlackBerry/Treo combination, however, also means that the mobile email market is no longer a zero-sum game. "I think it's good for both Palm and RIM," says Palm spokesman Jimmy Johnson. "RIM is obviously focused on extending their platform to other mobile phones through the BlackBerry connect program, and now they have a powerful new handset to offer. It helps us out because we now have instant access to this massive installed base."

The news today comes in the wake of lackluster fourth-quarter earnings by RIM and mixed signals from the company's executive leadership. In a conference call after RIM released its earnings report, co-CEO Jim Balsillie indicated that the Waterloo, Ontario-based mobile messaging pioneer, which has built a dominant market position in corporate email, would seek future growth in the consumer market. (See RIM Eyes Consumer Game.)

But in an interview with Reuters today, RIM's other CEO, Mike Lazaridis, who normally keeps a much lower profile than Balsillie, appeared to back away from that strategy.

"We're not going to change our spots," said Lazaridis. "I think what's happening is the market is realizing that the BlackBerry encapsulates the kind of... lifestyle that they're evolving to. We're becoming busier."

As RIM seeks to broaden its product offerings -- moving beyond pure corporate email into the wider mobile messaging sphere, as well as attracting consumers with new BlackBerry devices -- it is also moving into new geographic markets. The company said today that its discussions with China Mobile Communications Corp. on bringing BlackBerry to China, the fastest growing telecom market in the world, are "going well." Norm Lo, RIM's vice president for Asia/Pacific, said the company expects to finalize a deal by mid-summer.

- Richard Martin, Senior Editor, Unstrung

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