2006 Predictions 7 and 8

7. MVNOs will gain in popularity, with new services announced and launching regularly. But the thinning of the herd will also begin, with at least one high-profile casualty before the end of the year.

8. RIM will take it on the chin, even if it comes out of its patent suit okay. Push e-mail will become a commodity offering from carriers, and rivals like Visto, Seven, Nokia and Good will make gains in the enterprise market, partly because of their support of all types of mobile devices.

Things are again looking good for Research In Motion in its patent fight with NTP — the latest update has the Patent Office saying it expects to throw out all of NTP’s relevant patents, and it’s moving quickly to beat the tight schedule the judge in the case has imposed. I’m not going to wade into the issue of the patents too deeply — there are people with far deeper knowledge on that topic than I — other than to say I think the right move is for the USPTO to revoke the patents, and I hope this and other high-profile cases will lead to a badly needed overhaul of the US patent system.

The court case, though, is the least of RIM’s concerns. Several rivals are waiting to pounce as the spectre of a Blackberry shutdown has lead plenty of potential (and existing) customers to explore other push e-mail options, giving companies like Good a significant, if somewhat artificial, marketing boost, increasing their foothold in the market. This exposure will help them in the long run, in addition to any customers they can grab in the short term.

But the real rivals for Blackberry are the carriers it depends on for sales on connectivity. They’re realizing that people like getting their e-mail, both business users, and to a lesser extent, general consumers. Push e-mail will quickly become a commodity, carriers offering the service either for free or very cheaply as a way to push data charges. They’ll do it on all the devices they sell, whether it’s through built-in messaging applications or J2ME e-mail clients. Most people, even business users, will find this a good enough solution, both in terms of cost, but also because they don’t have to switch to a bulky Blackberry device, they can use whatever handset they want — even their existing one. They might give up the Blackberry keyboard, but can get a Treo or other device that has one instead.

RIM has licensed Blackberry Connect to other device manufacturers, though devices that feature it are coming out in a trickle rather than a torrent. The crux is what RIM can add to the Blackberry service to make it better than a commoditized offering — and from where I’m standing, I see very little. The differentiation in delivering e-mail to a mobile device and processing responses is pretty invisible, and isn’t apparent at all when users have a smartphone that can handle attachments and do all the other things a Blackberry can, with the added bonus of supporting far more add-on applications than the Blackberry OS.

So, if RIM ends up prevailing in its patent fight, its stock will undoubtedly bounce and some observers will say it’s smooth sailing for the company. But, in reality, 2006 will be a tough year for the Blackberry.

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