Despite success, RIM can’t afford to stand still, says CEO

Published in the Ottawa Business Journal newspaper and website.
March 5, 2007

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Innovation is just “going and going” in the wireless handheld device market, and Jim Balsillie believes Research in Motion is poised to take the lead in growing the industry.

Mr. Balsillie, who will be the opening speaker for the Ottawa Centre for Research and Innovation’s Technology Showcase on March 7, says there are incredible opportunities in having information and data “on your belt,” with obvious implications for companies like RIM.

“The outlook is incredibly bullish, and it’s undoubtedly a hyper-growth market if (industry players) navigate it right,” says Mr. Balsillie, who is RIM’s co-CEO. “We’re seeing a lot of growth and expect it to keep up… and we’re right smack dab in the middle of it all.”

He noted that the trend of data-enabled “smart” phones with tons of features means that players have to keep innovating and moving quickly or risk being left behind, because the industry is one of open standards.

Part of the challenge of moving forward with these innovations, however, is trying to balance the addition of resource-draining new features and the physical constraints of technology, Mr. Balsillie says.

“We’re living in a scarcity context, so we need to watch things like Airlink network consumption and battery life (when we add new features),” he says. “You see these fancy phones coming out but they’re slow, expensive and hard on battery life… the wireless industry is user experience-driven, and it’s all about optimizing scarcity.”

He says that’s where RIM has an advantage because the company “manages scarcity so darn well” and has been able to give people the top three things they want in wireless devices without killing battery power, and without charging an arm and a leg for the product.

“These constraints are not going away, so it’s important to manage optimization in a world of constraints,” he says. “It’s about distilling the complexity so the price-value equation meets expectations.”

Mr. Balsillie says there’s also a difficulty in managing growth, which he calls the company’s “biggest challenge,” especially since RIM’s signature BlackBerry product and network is available in nearly 100 countries with 100,000 servers and 650 enterprise Internet service providers (ISPs).

And what about competition from companies such as Apple Inc., which has just splashed right into the market with its new iPhone all-in-one device?

“Apple’s done us a huge favour by saying that you should have music on your phone,” says Mr. Balsillie, adding that competition is “endemic” to the industry and that it’s not a huge challenge to overcome. “The validation of the technology is fantastic.”

He points to the early days of the two-way pager space and competing against the “behemoth” that is Motorola, as well as to newer competitors in the wireless space such as Palm and Sony-Ericsson, as examples of how RIM has thrived and competed to benefit customers.

“We’ve had a record number of products to market, and there’s a litany of innovation here,” he says. “We’re not going to slow down, and you can count on this innovation going and going. We’re going full speed ahead.”

This competitiveness is reflected in the fragmentation of the market on the operating system side, Mr. Balsillie adds, contrary to the convergence occurring in many other tech sectors.

“There’s hundreds of thousands of applications and a lot of diversity in the wireless space; I’m not seeing it rationalized,” he says.

However, this divergence is a good thing for RIM, says Mr. Balsillie, since the BlackBerry is a convergence platform.

“Our architecture is designed to deal with different applications and devices,” he says.

Nonetheless, Mr. Balsillie says it’s important for RIM – and other players in the wireless industry – to play their cards right, as the smartest, most established companies are poised to do well in this growing space, as long as they don’t rest on their laurels.

“We have to earn our spot every single day,” he adds.

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