MH/ALL: WATCH FOR A RIMMSHOT IN THE 2ND QUARTER OF THE GAME; COULD BE AN EDIG SLAMDUNK. [but don't set your clock by it; you know how easily one quater can roll into the next]
Wireless: Research In Motion Leads Race to Introduce Voice-Enabled PDAs
August 28,2000 The next thing you hear from Research In Motion [T.RIM] [RIMM] might be the sound of its PDA ringing. And the next thing you see might be its stock price dancing to the tune.
Research In Motion's products have become synonymous with email for people on the go. No place where business folk assemble is safe from the sight of the Blackberry wireless two-way pager dangling off belt loops. But the company is now working on turning its new handheld device into a phone, as well.
RIM will be testing voice capabilities on the 957 Wireless Handheld, with its large screen and keyboard, in Europe this fall. The commercial rollout is expected around May. This is sooner than analysts had originally predicted. It means that Research In Motion will likely have the first voice-enabled PDA on the market, ahead of well-known competitor Palm [PALM]. Analysts believe that this has not yet been accounted for in RIM's stock price.
The commercial rollout is expected around May. This is sooner than analysts had originally predicted.
The 957 has an embedded radio which will communicate with the GSM network that is the dominant cellular system in Europe. The device will support GPRS, a next generation enhancement to GSM that enables a constant flow of packet data.
"There's no reason it can't do voice calls as well," says analyst William Crawford at Merrill Lynch.
By plugging an earpiece into the 957, it will retain its PDA-look but be able to take and make phone calls. "When coupled with RIM's always-on access to email and personal information, the unit could be a formidable competitor in the smart phone market," Crawford suggests.
Suddenly, Research In Motion would be encroaching on the Web phones that many believed would herald its demise. When Barron's featured the company on the front page of its February 28 issue, it caused quite a stir in wireless circles. Barron's claimed data devices such as RIM's Blackberry, would be ultimately be vanquished by Internet-enabled phones.
"Even as handhelds grow faster and smarter -- nearly all will soon offer e-mail and Internet access -- a mighty competitor lurks that will likely relegate them to technology's scrap heap by 2005. The enemy is the cellular phone," wrote Barron's Jay Palmer.
But by moving beyond the wireless email niche, at least RIM is a contender.
While Internet-enabled phones do offer many PDA functions, such as personal organizers and email, they are notoriously awkward for these purposes. It is too soon to tell whether a device from a voice background or data background will win consumers over. But by moving beyond the wireless email niche, at least RIM is a contender.
"People just don't like carrying around that many devices," says Francesca Mabarak, a senior analyst of wireless/mobile technologies at Yankee Group. "And the cell phones are still so clumsy." She doesn't consider voice-enabled PDAs a huge threat to cell phones, but she believes it will take a piece of the market.
She also suggests that for health reasons, consumers will choose to use a PDA that has an earpiece, rather than holding a phone that emits low levels of radiation to their heads. "It doesn't seem to be a worry yet, but it is feeding waves into your brain," she says. "It's very stupid to carry a cell phone and put a plug in your ear. But here, you use [the PDA] for both purposes."
RIM is not the only data-centric device company with voice development. Palm is working on voice-enabling its popular PDAs. "They're both going to go about it the same way," says Mabarak, "but RIM's going to get out to market first. It will definitely have some sort of impact."
Crawford believes the company will have another advantage when it hits the European market. "RIM's real advantage over other device companies…is Blackberry server's integration with enterprise messaging systems," he suggests.
Corporations that embrace the Blackberry and distribute it to employees have RIM servers installed behind the corporate firewall, making messages secure. Other companies offering mobile data services in Europe employ the Wireless Access Protocol (WAP) standard to access corporate data. This is not a secure connection. Crawford believes this difference will give RIM voice and data enabled devices an edge over competition. "RIM is positioned to be the best vendor of converged voice and data services in the European enterprise market."
The analyst has a US$70 target on the stock with a "near term accumulate" rating. He says that the company's potential in the voice arena is not reflected in the stock that closed at US$63.68 on Friday.
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