Research In Motion may dodge a shutdown of its U.S. BlackBerry service, part of a patent fight with NTP. Some of its clients aren't taking...
Research In Motion may dodge a shutdown of its U.S. BlackBerry service, part of a patent fight with NTP. Some of its clients aren’t taking the chance.
United Parcel Service and FedEx are talking to Research In Motion competitor Good Technology and others in case a U.S. district court judge follows through with a threat to halt service as early as February. The move would cut off the e-mail device favored by roughly 2 million U.S. customers from Wall Street bankers to Silicon Valley venture capitalists.
“They will likely come up with some way around it,” said UPS Vice President John Nallin, whose company uses about 2,000 BlackBerries. “But we’ve taken other measures too.”
Even if Research In Motion wins a four-year battle with NTP over the technology on which BlackBerries run, the company is vulnerable now that clients are exploring alternatives.
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“The problem is the lawsuit is holding them up from answering the competitive threat,” said Richard Williams, an analyst with Garban Institutional Equities in Jersey City, N.J., who rates the shares “sell” and doesn’t own them.
“It’s allowing competitors to get stronger quicker,” said Williams, who expects BlackBerry’s U.S. service to continue or at worst face a brief disruption.
Customers, once tethered exclusively to their BlackBerries, have a choice of products from Good, Palm, Seven Networks and Microsoft. Nokia and Motorola, the world’s No. 1 and No. 2 mobile-phone makers, will begin selling BlackBerrylike devices in the first quarter, eyeing Research In Motion customers.
While few clients have dumped BlackBerries altogether amid the litigation, customer wariness has hampered subscriber growth, Research In Motion Co-Chief Executive James Balsillie said this week. Research In Motion will add 700,000 to 750,000 new users this quarter, down from a prediction of 775,000 to 825,000, he said. “People may have paused to consider but we haven’t heard of any competitive shift,” Balsillie said.
Balsillie said he and Co-CEO Michael Lazaridis are calling on UPS, FedEx and other customers to reassure them that Research In Motion has a feasible alternative technology that will permit service to continue even if U.S. District Judge James Spencer orders a halt in the U.S.
NTP, which has no employees, convinced a jury in Spencer’s courtroom in 2002 that Research In Motion had infringed patents related to wireless e-mail. The two companies reached a tentative agreement in March 2005 for Research In Motion to pay NTP $450 million. That deal fell apart three months later and the companies have failed to reach a settlement.
While Research In Motion navigates the patent dispute, Nokia and Motorola are cranking out new products. At its annual meeting with investors in New York on Dec. 1, Nokia showed off competing devices. Among them was the E61 with a so-called Qwerty keyboard similar to the BlackBerry’s.
Motorola unveiled a prototype of its e-mail product, known as the Q, in July. Motorola is aiming for business users as well as what it calls “prosumers,” a combination of professionals and consumers who would use the Q at work and for leisure.
“You will see a larger number of competitors in this market going forward,” said Benjamin Bollin, an analyst at FTN Midwest Securities in Boston, who rates Research In Motion shares a “buy.” “It’s a very attractive market. The growth opportunities are very strong.”
UPS is bracing for a BlackBerry blackout. It outfits its field engineers, who support the drivers and workers in retail stores, with a choice of either BlackBerries or Palm’s Treo devices.
Nallin said if Research In Motion suffers a long-term shutdown, UPS will switch the BlackBerry users to Treos, and ask engineers to rely temporarily on text messages — instead of e-mail. “If one goes, we go to the other one,” Nallin said.
In the interim, Research In Motion’s rivals say they’ve made inroads. In the week after Nov. 30, when Spencer ordered a hearing about shutting down BlackBerry service, Good Technology got more than 100 calls from potential corporate customers, Chief Executive Danny Shader said.
“It has been like watching a train wreck in slow motion,” he said. “It’s hard to keep up with all the interest.” Nokia and Good both have taken licenses with NTP, protecting them from similar litigation.
Bloomberg News reporters Susan Decker in Washington, D.C., and Lori Rothman in New York contributed to this article.