Microsoft, Nokia, and Google Take Aim at RIM
Later this year, Google (GOOG) and partners that include handset maker Motorola (MOT) plan devices and features aimed at business users of mobile phones. Meantime, Nokia (NOK) and Microsoft (MSFT) are joining forces in their effort to take share in the lucrative market for company-friendly smartphones.
The moves are aimed mainly at RIM, the U.S. leader in smartphones for businesses, and defending against a rising threat from Apple and Palm (PALM). In July, RIM accounted for 34% of smartphone sales in the stores of the largest U.S. wireless service providers, and it boasted the most popular smartphone on the market, the BlackBerry Curve, according to research by Avian Securities.
Microsoft and Nokia announced their offensive on Aug. 12, saying that beginning in 2010 they'll unveil features including tight security and syncing with other devices. The companies also said they'll work together to get other applications, such as Microsoft's Office productivity tools, onto cell phones, and that by working together they can make it cheaper for corporations to support smartphones for employees.
"Way Beyond E-Mail" "This is a move targeted towards RIM," Ed Snyder, principal at Charter Equity Research, wrote in an Aug. 12 research report. The first fruits of the collaboration will debut in Nokia's E-series smartphones next year. "BlackBerry and RIM have taken a very prominent place [in the market] based on e-mail," Robert Andersson, executive vice-president for devices at Nokia, tells BusinessWeek.com. "What we are offering is way beyond e-mail."
Nokia says it will give corporate IT managers ways to support its smartphones for less than it costs to support BlackBerrys, by doing away with the need for some servers. "We are definitely confident we can deliver this in a more cost-effective way," Andersson says. Apples-to-apples comparisons are tough to make because Research In Motion offers a variety of service options, says Ronald Gruia, principal analyst at consultant Frost & Sullivan. RIM didn't respond to requests for comment.
The alliance marks the first time Microsoft will develop applications for phones based on rival mobile software, in this case Nokia's Symbian operating system, instead of its homegrown Windows Mobile. "We know customers want choice in the devices they select," Takeshi Numoto, corporate vice-president for Office at Microsoft, tells BusinessWeek.com. "This shouldn't be taken as in any way a lack of our commitment to Windows Mobile."
At the same time, Google has redoubled its push into the business market, also promising more features at a lower cost. Till now, the so-called Android operating system developed by Google and partners has been aimed mainly at consumers, but that's set to change. "Today, we don't support many enterprise applications, but in the future, I think enterprise will be a good focus for us," Andy Rubin, the executive pushing Android for Google, told news service Reuters on July 31.
Google's Offering Value Outside developers have long offered business apps for Android devices, but Google plans to adapt existing applications, including e-mail and tools for creating documents and calendars, to Android-based smartphones, Rubin says. Google's offering may be cheaper than RIM's, Gruia says. "They'll have a very compelling value proposition, for sure," he says.
Google's enterprise push coincides with the release of several new Android-based devices from Motorola, Samsung, and HTC that may carry particular appeal to business users. In late 2009 the manufacturers will release the first Android-based devices that have the look and feel of the traditional BlackBerrys, with full Qwerty keyboards convenient for typing long e-mails, according to Avian Securities data. "One of the things we are waiting to see is a truly enterprise-class device that runs Android," says Will Stofega, a program manager at consultant IDC. "That could start a new competitive round. It has a lot of possibility."
Large business-software companies are looking to start supporting Android-based phones as well. Later this year, Good Technology, a rival to BlackBerry's "push" e-mail services, plans to release an Android app that will let IT managers manage Android-based handsets remotely. It will also let mobile users log in to a corporate network using a virtual private network (VPN). "Our goal…is to be able to go to the enterprise and say, 'You can have the same kind of experience with all mobile devices, so you don't have to stay with the BlackBerry,' " says Good Chief Marketing Officer John Herrema III.
Security Risks? To succeed, Nokia, Google, and others will need to win over skeptical IT managers who have come to trust the BlackBerry and are leery of security risks posed by new systems. "Every time you add another service, you are adding additional complexity and risk," says Morteza Rahimi, chief technology officer at Northwestern University. "However, we don't really have much choice, because the value of these devices when they work right is tremendous. We are going to support all of [the devices]."
And even if they can't convince IT execs, RIM's rivals will certainly want to get the so-called prosumer, or the person who uses purchases for both personal and professional use. Today, fewer corporations are buying smartphones for employees, says Ken Dulaney, a vice-president at consultant Gartner (IT). Instead, consumers buy an increasing proportion of smartphones on their own, for both personal and business use, and ask their companies to support them later. Up to 60% of all smartphones purchased today are used for both personal and business functions, Dulaney estimates.
Consumers evaluate security and capabilities differently from IT managers. Many people have begun using Apple's iPhones for business purposes, for example, long before Apple began winning IT managers over. End-user demand eventually pushed many corporations to support the iPhone. Now, Nokia, Google, and Microsoft hope prosumers will work their magic with rival tools as well.