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RIM Picks Intel for Blackberry

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LR Mobile News Analysis
Light Reading
9/27/2005

SAN FRANCISCO -- CTIA IT & Entertainment Show 2005 -- Intel Corp.'s (Nasdaq: INTC) technology deal with the creators of the Blackberry handheld -- Research In Motion Ltd. (RIM) (Nasdaq: RIMM; Toronto: RIM) -- is another indicator of the battle royale over the next generation of enterprise wireless data access.

Intel has signed a deal to supply RIM with its "Hermon" 3G wireless chipset -- a.k.a. the Intel PXA9xx cellular processor -- the latest of its XScale cellular chips (See Intel Wants to Eat TI's Lunch and Intel Maxes on 3G Spend). Hermon is an Enhanced Data Rates for Global Evolution (EDGE) chip that Intel says will offer enhanced battery life for smartphones and other mobile devices.

RIM says the deal will allow it to offer new features without comprising the battery life of its popular handheld devices.

On Monday, Microsoft Corp. (Nasdaq: MSFT) announced that it is working with former archrival Palm Inc. (Nasdaq: PALM) to deliver a version of the firm's Treo smartphone that runs Windows rather than the Palm OS -- an unthinkable concept just a few short years ago.

But then, the market is quite different than it was just a few short years ago.

Market research firm Gartner Inc. says that RIM was the leading hardware provider in the PDA market in the second quarter of 2005 with a 23 percent share. The number crunchers say the Canadian firm shipped 840,000 Blackberry devices in that quarter, representing an increase of almost 65 percent over the 510,000 units shipped in the second quarter of 2004.

Palm came in at number two with nearly 18 percent market share. And Hewlett-Packard Co. (NYSE: HPQ), which uses Microsoft's OS, was third with a device market share of 12.5 percent. Microsoft operating systems were on with nearly 46 percent of all devices shipped, according to Gartner.

But what's clear is that RIM is growing fast -- and most of its growth is in the enterprise space -- where vendors can expect to sell more expensive devices and charge higher royalties.

Eventually, what both Microsoft and RIM want to do is to break away from the notion of their devices being "traditional" handhelds and move into the higher-volume smartphone market, with devices that support voice -- and even video -- as well as wireless data access with WiFi and cellular connectivity.

This is the point of these deals. Running on Palm's Treo gives Microsoft more share in the smartphone market. While RIM will need more horsepower to keep adding features that will keep it attractive to enterprise users.

Both will face tough competition: Nokia Corp. (NYSE: NOK), which uses the Symbian Ltd. OS in its devices, is the market leader in the smartphone market with a 55 percent share, according to Canalys.com Ltd.

— Dan Jones, Site Editor, Unstrung

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