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RIM to Go Symbian?

Could BlackBerry move its market-leading BlackBerry devices to the Symbian Ltd. operating system in the near future?

That's the prediction of a new report from Nomura Securities , which notes that RIM's current in-house OS will reach the end of the road, in terms of the processing power that can be squeezed out of it, within three years. Nomura analyst Richard Windsor contends that a partnership between RIM and Symbian on future generations of the BlackBerry OS could benefit both companies. He feels the Ontario-based mobile email giant has no more than 18 to 24 months to move to a new platform in the dog-eat-dog enterprise smartphone market.

Chief RIM rival Palm Inc. also faces a period of transition for its mobile OS, as deadline disputes threaten the platform partnership between the Treo-maker and PalmSource Inc. (Nasdaq: PSRC), which controls the Palm OS.

RIM has traditionally enjoyed high margins on its handsets -- up to 50 percent gross, according to Windsor -- because it doesn't use an additional applications processor in the BlackBerry. This could, however, leave RIM in "deep trouble" as the market starts to demand the processing power to handle tasks such as viewing and editing office documents on mobile devices, the Nomura analyst claims.

In order to build more powerful devices, RIM would need to completely rebuild its software -- a costly endeavor that could take years and allow key rivals such as Microsoft Corp. (Nasdaq: MSFT) to eat into its core enterprise business.

Therefore, it would be more cost-effective for RIM to port its software to an agnostic operating system, and Symbian -- which currently has the lion's share of the mobile-OS market -- is the logical choice.

Gartner Inc. analyst Todd Kort agrees that it may make sense for RIM to consider Symbian, particularly in the European market. "As RIM moves deeper into the consumer market with products like the new 'Pearl,' it would make sense for RIM to test the European market with a few Symbian-based models," Kort tells Unstrung.

"Symbian accounted for about 71 percent of worldwide smartphone shipments in the second quarter of 2006 and serves the consumer market well," Kort notes. "Microsoft, Palm, and RIM each accounted for only about 3 percent of smartphone shipments in the second quarter, with Linux accounting for the remaining 19 percent."

Indeed, some industry observers see mobile Linux as RIM's path to the future. "I’d bet on them going to a Linux OS before going to Symbian," says Jack Gold of J.Gold Associates. "But even this is probably not in the cards in the short term, as Linux still has a way to go for higher-end devices."

Gold suggests that RIM is less likely to move to the Symbian platform, simply because the major shareholder in Symbian is rival device-maker Nokia Corp. (NYSE: NOK).

Windsor, on the other hand, argues that Nokia "wants more commitment from others... I think it would welcome RIM." The analyst contends that Linux is not an option for the Canadian vendor because the security infrastructure is not yet in place around the open-source code. In fact, he describes present-day mobile Linux as "totally unsecured."

RIM officials did not respond to requests for comment on this story.

— Dan Jones, Site Editor, Unstrung

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