October 2007 - A Window on Wireless

Jim Balsillie, co-CEO of Research in Motion-makers of BlackBerry-reflects on the present and future of the wireless industry, and the implications for mobile marketing and e-commerce.

By Tom Dellner

Wireless industry pioneer, billionaire, philanthropist, Harvard man, patron of the arts and an accomplished athlete in multiple sports, Jim Balsillie is the quintessential Renaissance man for the new millennium. Just 46, Balsillie is co-CEO of Research in Motion (RIM), the Canadian wireless solutions company most famous for-and for all intents and purposes synonymous with-the BlackBerry wireless platform and devices.

Balsillie found time in his mind-numbingly busy schedule to sit down with Electronic Retailer to discuss the rapidly evolving wireless industry, the state of mobile marketing and e-commerce, and a certain well-marketed entrant to the market from an upstart called Apple.

Electronic Retailer: With mobile phones, PDAs and mobile media players all adding functionality, are we witnessing the convergence of these separate devices into a single product category-the smartphone? Will the old product categories and distinctions remain relevant?

Jim Balsillie: I think what we’re seeing, and it’s borne out by the data, is a bifurcation of the market where there’s a strong market for the low-end, very inexpensive phone-you see this especially in the emerging economies-and then you’re also witnessing the tremendous emergence of the higher-end smart appliance, or whatever you might wish to call it.

This high-end category will continue to expand. There’s just so much capability; much of what we offer are almost software features in a smart appliance. For instance, a media player for music is a software feature in memory. The little bit of extra cost of a smart appliance brings so much in additional capability and functionality in messaging, media, Internet browsing and e-commerce; it’s a sure bet that this category will continue to develop. But, for the foreseeable future, I think you’ll continue to see lots of activity in the low end, as well, leading to this bifurcation of the market and a hollowing out of the middle tier.

ER: It’s frequently noted that North America is lagging behind Europe and Asia when it comes to mobile marketing and mobile e-commerce. As the head of a company that manufactures some of the most sophisticated mobile devices worldwide, you’re uniquely positioned to comment on this. Do you agree with that assessment?

Balsillie: Obviously, wireless has become a big deal around the world and many make great characterizations about geography, as you’ve pointed out. However, I’ve not seen any particular lagging behind in North America whatsoever, at least in terms of wireless innovation. Perhaps the region is behind on adoption and penetration percentages, and I think you can attribute that to a couple of things. One, the population is just a lot more spread out. Two, the fixed line business is so reliable and inexpensive, so the imperative wasn’t there as it might have been for, say, Europe.

But once you get past the penetration side of it, wireless applications and solutions are just as innovative in North America as in any other part of the world when it comes to mobile marketing and e-commerce. For example, companies like Digby are leading the way in convenience e-commerce, enabling easy convenience purchases of items like fast food, gifts, books, CDs and other products. This can all be done on a BlackBerry. Internet marketing has really taken off on the BlackBerry, as well, with things like search and all its various advertising components, Google Maps and all the associated digital advertisements and Yahoo! Go with all their interrelated ads. And then we see the wireless use of sites like Amazon for digital purchasing and eBay as a digital marketplace. These are all very active applications on the BlackBerry and have been for some time.

Really, it all can be attributed to a few basic categories. The first is the extension of Internet marketing and e-commerce as we know it today to your belt, because the smart appliance is just another Internet terminal with access. The second includes the highly contextualized location, search and lifestyle applications like Yahoo! Go and Google Maps that are clearly targeted to a mobile location position. A third one would be convenience purchases. Do people really order pizza on the Internet? I suppose they do, but with a smart appliance you can be commuting home and with a few quick clicks, you can complete a cashed-up order. Same thing with flowers or any convenience purchase. These are a big part of the equation, as well.

ER: But what about marketers-especially in North America-who may complain that it’s difficult to introduce a sophisticated mobile marketing program across all the various carriers and handsets-isn’t the fragmented carrier (with conflicting protocols) and handset landscape an imposing barrier to effective mobile marketing?

Balsillie: Personally, I think this is something of a red herring. Structurally, the handset markets and operating environments are just fragmented in Europe and in much of Asia as they are in North America. The desire by the carriers to differentiate themselves and create a strong and unique position in a campaign is just as strong in Europe as it is here. We may have a little more fragmentation in protocols with the CDMA and GSM distinctions, but that shouldn’t preclude a retailer or marketer from doing whatever they want to do. In other words, there are structural reasons that make wireless an issue-working with the carriers, enabling the market and working with different environments-but these are endemic across the world.

We use a lot of open tools, proxying technologies and efficiency technologies. Plus, you have an open environment with a BlackBerry-I don’t think there’s any real barrier to keep a marketer from initiating any campaign they may be interested in pursuing.

ER: We commonly make a distinction between the mobile or wireless web and the Internet. Is this still fair? Will we soon be at the point where we have the same functionality and ease of use on our handsets as we do on our desktop or laptop computers?

Balsillie: In terms of functionality, there was often a tendency to think of the wireless web as limited, but I think this is starting to go away. Today, you are getting a very rich rendering, you’re getting very fast networks, you’re getting a lot of memory. So I think the scarcity dimension of the wireless web is really beginning to evolve away. But I think the wireless web will still remain relevant as a descriptor because it is highly contextualized. It is much more contextualized than the Internet. It knows who you are, it can know where you are and it can be very event-driven. It can get to you and enunciate to you right then and there. I think these elements will combine to make “wireless web” a relevant term. However, it will mean something quite different a year from now than it did a year ago. Whereas it used to connote scarcity, it soon will mean greater enabling.

ER: Some of the mobile applications in widespread use in Asia-such as QR codes (which allow the mobile device to interact with the outside world via the camera phone feature and enable a wide variety of functionality) and the mobile wallet-are nothing short of fascinating. Do you expect these technologies to migrate to North America in the foreseeable future?

Balsillie: Oh, for sure. Asia has some exceptionally strong mobile e-commerce applications and there are a lot of teachings to be had. Product codes is a very exciting one; that’s a pretty straightforward evolution, not so much technological, that needs to be adopted. And I am a big believer in stored value on the device for e-commerce and in contextualizing-and pointing your device at a product code is about as contextualized as you can get: “I want that thing there right now!” It’s about as good an R-squared scenario as you’re going to find.

It all goes back to what I said earlier regarding the mobile web. The mobile web and mobile e-commerce started from compromise, scarcity and difficulty, but it’s evolving to mean access, immediacy, relevance, contextualization-and these are all very powerful enablers.

ER: What are some interesting innovations in your current line of smartphones that have the greatest impact on mobile or e-commerce?

Balsillie: Among the exciting things that we have now is a full set of web services and tools that are free in the BlackBerry, so you have full http and xml development tools for .net or for clips for enterprise or the Internet. It’s an open, global environment in 120 countries and on 300 carriers around the world. There’s nothing to stop you from rolling out any program globally. It’s the open platform that’s, by far, the most important part of the equation, in my opinion. It’s how you get the game started and turn things on.

GPS is now built in to most of the devices, so you have location and mapping capability. Companies like Yahoo!, Google and Microsoft are working with us to create mapping and location-based marketing applications that will really open up the game a lot.

We also have encryption technology built in to allow you as a marketer to assure security in your commercial transactions and to protect stored value. And we have a media player in the product, and wifi, which enables potentially even more innovative categories.

Research in Motion

Research in Motion (RIM) was founded in Waterloo, Ontario, Canada, in 1984. Prior to the introduction of the BlackBerry, RIM worked with Swedish communications company Ericsson to develop a two-way paging and wireless e-mail network.

Launched in early 1999, the BlackBerry achieved quick success, largely because the technology provided a solution to the “two-mailbox problem.” E-mail was retrieved directly from servers and pushed instantly to the device; users no longer had to log on to e-mail servers to receive messages.

Today’s BlackBerry devices are multi-functional “smart appliances” and integrate phone, Internet browsing, e-mail, camera, multimedia and organizer applications, among many others.

But it’s really not about this whizbang feature or that whizbang feature. While those are nice, it’s really about whether there’s an open, rich, efficient environment that allows the marketer to do what they want on it. From there, you can then begin to look at network speeds, specific features and so forth.

ER: You have a heavily marketed competitor on the scene now with Apple’s iPhone. This isn’t the first time your company has encountered a well-hyped challenger. What has allowed RIM to thrive in the face of these past challenges and what strategies will you apply now?

Balsillie: For us, the essentials remain the same: a rich, open program environment, one that’s highly efficient, global and that’s based on a model that strengthens the carrier’s platform role to the customer. You put all this together and I believe that’s what makes for a compelling environment for the market, the user and the carrier. Our business is thriving, and we’ll just stay with it. Wireless is obviously a rapidly emerging space. It’s got open standards and customers benefit from this. New entrants drive a lot of awareness and excitement and I think that’s great. There are always new things happening in this industry. It’s what makes it exciting and what makes it grow.

ER: What was the competitive landscape like in RIM’s early days, when BlackBerry first took off? What were the drivers of the company’s initial success?

Balsillie: It was highly competitive back then, with about 30 middleware players in the sector. What we did was focus on addressing the problem, and that’s what allowed us to succeed. We were secure. We were push, which gave us immediacy. It was a turnkey solution that just worked. It was strategically aligned with the carriers’ agenda so that they became a platform and not a pipe. It was reliable and efficient with a fixed price and a long battery life. Combined, these were the things that allowed us to crack the code and emerge from the pack.

ER: Without giving away the farm, can you tell us what’s coming down the pike for BlackBerry?

Balsillie: I think the key is more adoption, with more applications and greater enabling. You’ll see more wifi, more voice integration and more multimedia. These are the underpinnings of our future products.

We would appreciate your feedback. To submit comments, please e-mail the magazine at [email protected].


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