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RIM’s volatile week, competitors signal rough ride

Peter Nowak

For BlackBerry maker Research In Motion, it's been a Dickensian week. With the positive, concrete details of its long-awaited next-generation BlackBerry devices offset by the negatives of new patent and customer issues, it really was the best of times and the worst of times.

The Waterloo, Ont.-based company started off well. On Tuesday, RIM announced the release of the final version of the software development kit that developers will need to make apps for BlackBerry 10. The road is now clear for app makers to do their thing ahead of the official launch on Jan. 30.

BlackBerry 10 roadshow continues

BB10 also went on a road show to journalists around the world. In a demo in Toronto on Tuesday, company representatives showed off the new operating system on the prototype Alpha B phone, an all-touchscreen device. A second prototype with a physical keyboard and touchscreen, which will resemble the Bold, is about to ship to developers. RIM said the final version of this phone will closely follow the release of the all-touchscreen model.

While questions remain about how BlackBerry can compete against the likes of Apple and Android, the new operating system looks surprisingly polished, with several nice features that will appeal to business users. For one thing, it's clear a lot of effort has gone into improving typing on the touchscreen, something that's anathema to many power users.

The following day, images of what looks to be the final hardware — which could be known as the L-series — leaked out of Vietnam. The device in the photos looks very much like the Alpha B prototype.

Countering all that good stuff was the news, also on Tuesday, that patent licensing company Wi-Lan is going after RIM for allegedly infringing on one of its Bluetooth patents. RIM is, of course, no stranger to patent suits, with its most notorious being the 2006 settlement with NTP that cost it $612 million.

Rounding it all out was an announcement on Thursday that U.S. Customs and Immigration will be testing BB10 after all. The agency dealt RIM a big blow a few months ago when it said it was ditching BlackBerry in favour of the iPhone, but it now looks like the move isn't cut and dried. Still, government agencies were once a lock for the company.

All of the news, unsurprisingly, sent the stock bouncing up and down this week on both the Toronto Stock Exchange and Nasdaq. As of mid-Thursday, shares on both were up as high as 4 per cent.

RIM's long-term future

How the stock will fare in the long run is the more pertinent question. While RIM had the smartphone market largely to itself once upon a time, it's now facing the daunting task of competing against much bigger and better-financed competitors.

Google, especially, is the goliath that could make the BlackBerry maker irrelevant. The search engine company's designs on the smartphone market are a little different than everyone else's — it's not so much concerned about selling hardware as it is about getting people to use its services, which push its bread and butter: advertising.

Google is thus exerting serious downward pressure on smartphone prices and therefore margins. Its recently launched Nexus 4, selling for only $300, has proven to be a major hit, a fact that won't be lost on competitors, who are eventually going to have to start lowering prices or risk Google capturing more than its share of the market.

While big companies such as Apple, Samsung and Microsoft — effectively technology conglomerates with a range of other businesses — might be able to swallow lower margins to stay in the game, the inevitable trend spells nothing but trouble for much smaller, pure-play phone makers such as RIM and Nokia.