RIM Under Siege

Is the bloom off the BlackBerry?

Research in Motion Ltd., which has fought a losing battle so far on the intellectual-property front, is now under yet another attack. InPro II, a Luxembourg-based licensing company, is suing RIM for patent infringement, according to Dow Jones Business News. RIM has already lost two recent cases: one against Good Technology, which continues to market a RIM clone service that enables products like the new Handspring 600; and the other, pending appeal, to NTP, which is seeking an injunction to stop RIM from selling its products.

The big danger to RIM isnt the litigation itself but the adverse effect such lawsuits could have on RIMs sales. Handheld computer makers are expected to face increasing competition in the coming year, and this could provide a window for others to enter this highly sought space.

By the end of 2005, any handheld computer that doesnt have capabilities like RIMs built in will be a doorstop; bigger competitors will be using their larger resources to catch up. RIM currently does not enjoy the developer support or manufacturing base of Palm or Microsoft. Plus, RIM is vertically integrated, which puts it at the same sort of disadvantage Apple and Sun face in their respective markets. RIM needs to increase its installed base dramatically while it still has a reputation for the best solution; once the other platform makers fully respond (and Palm has clearly begun its response), RIM will be effectively blocked.

If this happens, I doubt RIM can rebound; Ive never seen a vendor recover from that sort of situation. Such a fate would be ironic, since it would thwart at least two of the patent holders (InPro and NTP) from actually collecting on their actions, leaving them with only attorneys bills.

Overall, the issues surrounding the proliferation of relatively general patents make it very difficult for small companies to defend their ideas. Companies such as NTP, which simply acquire patents with no real plan to do anything with them, wait in the fog for someone with a similar idea to bring a product successfully to market—then pounce on that company like a vampire to suck its lifeblood.

Im not alone in my belief that there needs to be better protection for companies that are victimized in this way. As a buyer, however, you need to be aware of the risk and act accordingly. These issues are not trivial to RIM in its current state, and they do have the power to kill the company.

Rob Enderle is the principal analyst for the Enderle Group, a company specializing in emerging personal technology.