Thursday, September 02, 2004

RIM to launch new e-mail device

"Charm" to spur growth: Analysts

Low-cost gadget targets consumers

TYLER HAMILTON
TECHNOLOGY REPORTER

Research In Motion Ltd. may soon be adding a little "Charm" to its line of popular BlackBerry devices.

The Waterloo, Ont.-based company, the country's highest-valued tech firm behind Nortel Networks Corp., is scheduled to make a major product announcement for the U.S. market next week, leading to speculation that a new consumer device, code-named Charm, will finally be unveiled after months of internal testing.

Rumours of the product first surfaced in May and a picture claiming to be the new device began floating around the Internet several weeks ago.

"A new driver will soon be introduced with the launch of the new mass-market consumer product," GMP Securities analyst Ray Sharma wrote in a recent research note foreshadowing an announcement.

The BlackBerry is widely used by business professionals, politicians and celebrities who enjoy having a mobile phone and instant wireless e-mail in a single product. RIM expects to have about 2 million subscribers by the end of this year — driven by strong growth in Asia — after reaching the 1 million milestone in February.

A mass-market device would dramatically accelerate growth, analysts said.

The new Charm device appears to be two-thirds the width of a typical BlackBerry and its design makes it more practical as a mobile phone, similar in many respects to the Treo 600 Smartphone by PalmOne Inc.

The Treo 600 is more stylish and less awkward to hold than the BlackBerry when used as a phone. It's also quad-band, meaning it works over a number of different frequency bands giving it "world" roaming capabilities.

The Treo 600 was called a "BlackBerry-basher" when launched last fall, and Bell Mobility on Tuesday became the second Canadian wireless carrier to begin selling the device. Insiders at RIM are touting Charm as a more affordable "Treo-killer," sources said.

The picture circulating on the Web shows a device with a condensed keypad that's presumably aided by "predictive-texting'' software that guesses words as they are typed. If true, Charm would be the first device from RIM that puts greater emphasis on the phone function and strays from the standard "QWERTY" keyboard format, a hallmark of the BlackBerry.

"I'm guessing it's a low-cost device geared to teenagers," said Barry Richards, a wireless analyst with Paradigm Capital Inc. in Toronto. "It's a whole new form factor."

Another analyst, who asked not to be named, said the device could be priced in the $200 range — making it accessible to a broader consumer market — and that T-Mobile is expected to be the first U.S. wireless carrier to carry the product.

RIM likely accelerated introduction of the product to pre-empt a new Nokia "Treo-like" handset coming to market in a couple of weeks, he said.

It is possible that Charm, which was widely expected to be unveiled this fall, might not make its debut next week. The announcement scheduled for Sept. 8 could instead relate to a number of other products RIM is working on behind the scenes.

Richards said RIM's announcement, scheduled for Wednesday, could introduce a "quad-band" BlackBerry device with cross-frequency roaming and featuring Bluetooth short-range wireless capabilities.

Sharma is expecting this year a low-cost Wi-Fi BlackBerry that would let users make voice-over-Internet phone calls through local wireless networks, or even public hotspots.

The new Wi-Fi device would be ideal for companies or government departments that don't want to pay expensive cellular-phone charges but want to give employees the flexibility to use the phone or e-mail on a campus or in a defined office setting, wrote Sharma.

A second generation of the Wi-Fi Blackberry would be enhanced to allow roaming between Wi-Fi and cellular frequencies.

RIM shares rose 33 cents yesterday to $79.46 on the Toronto Stock Exchange, more than a four-fold increase compared with a year ago, but down from a high of $95.15 reached July 2.

Analysts said the current share price takes into account any legal risks associated with RIM's patent battle with NTP Inc. of Virginia.

Whatever next week's announcement brings, RIM is on a roll. The company has dramatically ramped up production of its BlackBerry devices, including the contracting out of some manufacturing operations, to meet a burst of demand in Asia, Europe and the United States.

Countries such as China and India are expected to contribute materially to RIM's earnings in 2005 and the company is aggressively expanding its partnerships with mobile-phone carriers around the world. At the same time, RIM has licensed its wireless-data technology to big-name handset manufacturers, including Motorola Inc., Nokia Corp., Sony-Ericsson Mobile Communications Japan Inc., Siemens AG and PalmSource Inc., in a move that could pay off down the road.

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