special report A PlayBook for fighting Apple and With its new tablet , RIM has a small window of opportunity to reinvigorate itself and match the momentum of its rivals.

REUTERS/Robert Galbraith By Alastair Sharp its way -- if not quite its throne. millions of its workaholic devices each WATERLOO, , March 15 Research In Motion is holding on to profit quarter to a growing global audience. growth and impressive margins. For all But the attention of investors, analysts nce upon a time, BlackBerry was the consumer appeal of Apple products, and developers is drifting elsewhere and king. Then came the iPhone, followed BlackBerry is still dominant in corporate the Canadian company, in the midst of byO Android. And BlackBerry seemingly lost mobile communications and RIM sells a major platform and product transition,

march 2011 RIM march 2011

is seen possessing but a small window of opportunity to reinvigorate itself and match Research In Motion and its peers the momentum of rival mobile monarchs Apple and Google. RIM valuation limited by expectation of slowing earnings. The PlayBook , due to Research In Motion Apple Google Nokia launch within weeks after a six-month pitch, Share price performance – percent Forward P/E ratio is RIM’s first product to use an industrial- 400 50 strength based on QNX, a powerhouse (rather than the 300 40 typical monolithic kernel) which RIM bought last year and aims to incorporate into its future . 200 30 QNX -- which also runs nuclear power

plants, medical instrumentation and Cisco’s 100 20 core Internet routers -- is the brains behind many of the infotainment systems shipping in

new cars, and RIM plans seamless interaction 0 10 08/03/1 between those dashboards, its PlayBook and 1 its range of BlackBerry smartphones. -100 0 The PlayBook is a multitasking behemoth 2007 2008 2009 2010 '11 2007 2008 2009 2010 '11

in a petite package, able to stream a high- Source: Thomson Reuters definition video to a television screen via a Reuters graphic/Stephen Culp HDMI cable while a user simultaneously edits a presentation or plays an immersive game “The Playbook on the 7-inch device. It is also a minor revolution for a myopic shows that RIM has company that has long been intolerant of lost some of its risk, insiders say. Find more Reuters special reports at “The Playbook shows that RIM has lost collective fear, but our blog The Deep End here: some of its collective fear, but only because only because it’s a http://link.reuters.com/heq72q it’s a proven moneymaker for other companies two years,” Fraser said. If it was the iPad’s who have already blazed a path for RIM to proven moneymaker runaway success that forced RIM’s hand, take,” said one former RIM engineer. for other companies Lazaridis ain’t admitting it. Those who know him best say Mike In several interviews with Reuters in recent Lazaridis, the engineer founder of Research who have already months, executives including Lazaridis and In Motion, never believed a tablet computer blazed a path for his salesman co-chief have was the right fit for the BlackBerry maker. painted the PlayBook as a gilded object “Mike is a purist. He sticks to his main RIM to take.” blessed with perfect timing and pedigree. theme,” said Robert Fraser, an early wireless “For me, it’s all about mobile computing pioneer and RIM partner whose concept of installed worldwide. and always was. And it’s about always a personal communicator was eventually That overwhelming success, however, choosing the right moment, the right time, embodied by the BlackBerry. “One of the coupled with a lawsuit that almost shut the the right technology,” Lazaridis said. reasons RIM has been so successful is whole operation down, bred intense caution That’s why RIM took the painful decision because they haven’t deviated.” that could ultimately threaten the company’s to delay the project to ensure it packed Texas That theme was wireless email, sent via a future as it shies away from betting on risky Instruments’ dual-core processor at launch, server network that compresses and encrypts innovations. which is expected within weeks. messages and guarantees delivery, vital for “We decided the tablet market was still business in a world of limited radio resources. SOMETHING CHANGED in its infancy, it hasn’t really taken off yet,” Part of RIM’s solution, the BlackBerry As far back as 2005, when it became Lazaridis said, dismissing the headstart of Enterprise Server, sits behind a corporate feasible to display a browser on a wireless Apple, which pocketed $9.5 billion from firewall and ties closely to proprietary device, Fraser was pushing his friend sales of almost 15 million iPads in 2010, three back-end systems. The whole operation is Lazaridis to branch out to a larger screen, to times most initial forecasts, and this month managed by massive data centers run by no avail. unveiled an updated version. RIM, which also enable the free BlackBerry Yet a year after Apple’s iPad captured It may be in its infancy, still dwarfed by Messenger service so beloved by teenagers. imaginations and made the long-possible both and laptop sales, but it is RIM’s BlackBerry service, launched in tablet computer a market reality, RIM is growing fast and a verdict on the viability 1999, was an immediate hit with white-collar about to follow suit, with its smaller, more of PlayBook and its QNX centerpiece is workers and politicians, and today there are business-friendly version, the PlayBook. expected by year-end. more than 250,000 of its enterprise servers “Something changed his mind in the last

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CONNECTED: A man uses a as he walks in front of a poster advertising BlackBerry phones inside a hall of the upcoming CeBIT fair in Hanover February 28, 2009. REUTERS/Hannibal Hanschke

“Let’s not make any bones about it, they’re trying to fulfill this transition during Research In Motion shipments, subscriber growth an incredibly hectic time and one where RIM keeps impressing with BlackBerry numbers. they’re seeing a huge amount of competition Millions Net subscriber additions* Units shipped externally,” said Geoff Blaber, an analyst at 16 CCS Insight. “It gives them the framework, it gives 14 them the opportunity to compete,” he said 12 in reference to QNX. “What is uncertain now ... is how they’re going to deliver that beyond 10 the tablet.” 8 Then he adds a hedge: “History has taught us to be very careful of writing RIM off. By the 6 end of this year I’d expect to see a pretty big 4 change in terms of what they’re offering.” 08/03/1 2

BUSINESS ALTERNATIVES 1 0 Perhaps the biggest threat RIM faces is FY 2008 FY 2009 FY 2010 FY 2011 the impression its secure enterprise solution * RIM will no longer publish subscriber metrics on a quarterly basis can be easily replicated or even dismissed as Source: Company reports unnecessary, allowing employees to use their Reuters graphic/Stephen Culp own device and handily saving corporations the cost of providing and managing a fleet of “There will be a need for one system “Other device makers are catching up on BlackBerrys. that supports multiple devices,” says the encryption and how to share information Business software company SAP is certainly company’s chief technology officer, Oliver without storing it on the device,” he said. not waiting on RIM to move on its own mobile Bussmann. RIM’s Waterloo neighbor Open Text, a computing strategy. It has bought 3,500 And SAP has one, called Afaria, which leading provider of software to manage iPads for internal use as it advises its more promises device-agnostic security and enterprise content and workflows, recently than 100,000 corporate customers that application management for Apple’s iPhone bought a company that builds app platforms there is life beyond BlackBerry. and iPad and Android devices from Samsung. on any device.

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NO VISIBILITY Research In Motion: revenue by region There is perhaps no other technology company on the planet, no other established RIM increasingly relies on international markets for growth. Revenue – $ billion company in any sector for that matter, whose 6 future prospects elicit such determined variance of opinion as Research In Motion. Other 5 Its fiscal 2011 results are due by the end U.K. of the month, with analysts expecting the 4 company’s earnings to have grown by 44 U.S. percent to $6.33 a share. Yet for the next 3 twelve months, expectations range between $4 and $8 a share. “The PlayBook is a great example of 2

where we don’t feel like there is any visibility 1 whatsoever,” said Tim Caulfield, head of 08/03/ 11

equity research at Franklin Templeton’s 0 Bissett Investment Management. “It’s Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 extremely intriguing but it just leaves me FY 2009 FY 2010 FY 2011 with so many question marks.” Source: Company reports Bissett exited its position in RIM by late in Reuters graphic/Stephen Culp 2007 -- around the time RIM briefly became Canada’s most valuable company -- after building it since early 2005. They sold because the price “was “Smart Money” and Research in discounting not only a bright future but an Motion, click here: incredibly bright future in a scenario that http://r.reuters.com/quv38r would have required flawless execution and zero competition to come true,” Caulfield Another giant of the pre-iPhone world, said. RIM has had neither. Nokia, has succumbed to the pressure, discarding its operating system to IT’S AN APP WORLD AFTER ALL throw its lot in with . RIM is facing two distinct and powerful Both Apple and Android nurtured what forces in its life-or-death battle for relevance are now thriving ecosystems around their as smartphones straddle corporate and products, populated by energetic third-party consumer markets. developers. RIM has many more coders In one corner is Apple and the cult writing for its BlackBerry platform but most of , a man who brought the work on proprietary programs that never see computer company back from the brink by the light of the app store day. revolutionizing portable music, redefining “RIM dramatically misjudged ... they what phones are for and reinvigorating a completely missed the rich user experience tablet market that lay dormant for years. end of the market which is the driving force RIM, like much of the mobile phone of smartphones today,” said Chris Albinson, OLD STYLE: BlackBerry devices are seen in Los industry, was blindsided by the popularity Angeles in this March 3, 2006 file photo. REUTERS/ a Silicon Valley-based Canadian whose of Apple’s first iPhone, which burst onto the Mario Anzuoni/Files Panorama Capital has ploughed half of a scene in mid-2007 and was immediately set $240-million fund into companies working upon by a voracious developer community in mobile. users didn’t care.” building small applications, now universally With the PlayBook, RIM has lowered In the other corner stands Google, the known as apps, to improve the experience. the barriers to developer entry by offering darling of the first commercial wave of The smartphone, once the domain of RIM many more coding tools, dropping (first the Internet, a search engine machine and its addicted white-collar workers, had temporarily, now permanently) the entrance that targeted mobile and within two years gone mainstream. fee it charged and the requirement of a leapfrogged the U.S. smartphone market “RIM didn’t expect iPhone to take off the notarized identity, and incorporating a share of both Apple and RIM. way it did because it was so badly flawed unified system to deliver payments collected It gives its Android operating system away from day one,” the former RIM employee via advertising, credit card and carrier billing. to all and sundry, its scale in turn refreshing said. “They believed that users wanted The development environment RIM the fortunes of the likes of Motorola and great battery life, great security, great mail has built for QNX is similar enough to allowing once low-end manufacturers like handling, minimal network use, and a great Android that coders can easily rewrite their HTC to play in the big-time. keyboard experience. They never expected applications for the PlayBook.

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Albinson, who says RIM should open its Messenger and enterprise servers to the world to avoid irrelevance, is doubtful it’s enough. “Every single venture capitalist in Silicon Valley is telling their companies to focus on Apple and Android,” he said. While most developers will make the choice to engage or shun RIM based on a perceived return on investment, one outfit started by a graduate had that choice imposed on it by legal writ.

KIK’D IN THE TEETH Ted Livingston learned a little too much from his time at RIM, at least as far as the company’s lawyers were concerned. In a lawsuit filed late last year, RIM accused Livingston and his startup Kik Interactive of infringing patents relating to its BlackBerry Messenger platform to create what quickly became a popular cross-platform alternative to one of the unique consumer selling points of BlackBerry. The move had a chilling effect on Jason Braverman, whose company Blue Planet Apps was working on similar software. “They would have shut us down and then they would have sued us and probably gone a little crazy trying to figure out how we did it,” he said. “But that’s all history at this point because I dropped the project. And not only did I drop the project, I dropped RIM as a developer because it was just not worth it to develop for them anymore.” PLAYING HARD: Research in Motion co-CEO Jim Balsillie discusses the new BlackBerry PlayBook device during Braverman, who is also building a biometric an interview with Reuters in New York September 24, 2010. REUTERS/Lucas Jackson scanner for Android and Windows platforms, into data-wielding smartphone customers. said manufacturers using these platforms are compelling. And the Finnish company just gave itself forced to focus on improving their hardware “We have decidedly taken a different a handicap with its Microsoft partnership offerings to be noticed, and RIM is struggling approach than some of our competitors unlikely to produce a refreshed product until to keep up. and contemporaries. We decided to work late in 2012. “There’s no indication the company is closely with our carrier partners because we These are not trifling funds in play, either: doing anything interesting going forward, the understand the physics and the economics” the total North American market likely had stuff they’re showing is ancient history at this of their operations, Lazaridis said. handset sales of $35 billion in 2010, the rest point, the PlayBook isn’t a really impressive In early 2002, RIM was carried in around of the world around $115 billion. device anymore compared to what’s coming ten countries. Three years later it was in forty. RIM retains a strange mix of pricing power out,” he said. By early 2008 its phones were sold by more and prestige branding in emerging markets, And Kik? It just scored $8 million in series than 350 carriers in 135 countries and by early especially useful in countries with massive A venture capital funding and added group 2010 it was 580 carriers and 175 countries. populations, rising economic power and chat and picture sharing to its offering, which Lazaridis is dismissive of suggestions the expanding middle classes such as India, has close to 3.4 million users. company he built right next to the university Indonesia and much of Latin America, he attended is in any way deficient when MEANWHILE, ELSEWHERE... especially Argentina and Brazil. stacked up against Californian competitors All is far from lost for RIM, however, In such price-sensitive markets, RIM’s six and ten times its size. especially in emerging markets outside of ability to crunch email down to one-fifth “Just because the rest of the world wants North America where carriers are much less its weight on competing devices and to use to go one way doesn’t mean it’s the right likely to subsidize device costs, users are up to two-thirds less bandwidth to browse way and we will continue to chart our own much more likely to prepay and smartphone the web is a major drawing card. Add in course,” he said. “Don’t let the hype cloud penetration is much lower. BlackBerry Messenger as a free alternative the truth.” Nokia and RIM are frontrunners in the race to texting which can now be used to transfer (Editing by Jim Impoco and to convert billions of users airtime and other goods and the package is Claudia Parsons)

5 RIM march 2011 q&a______not support , Android tablets do. RIM’s PlayBook, worth the wait? In fact, with support for WebKit and HTML5 esearch In Motion will soon launch its issue for non-BlackBerry types. coding as well as Adobe AIR, web developers RPlayBook tablet computer, joining a The company has not said as much, but should have little trouble making very market dominated by two versions of Apple’s packaged PlayBook-plus-BlackBerry sales attractive applications to run on it. iPad and filling quickly with a slew of devices will likely be a major plank of the sales pitch Native applications will be written in C/ running Google’s Android software. for carriers, who stand to gain little from C++ and it also supports Java, meaning apps Below are some questions and answers selling a tablet without a data plan. designed for BlackBerry smartphones can be about the PlayBook. ported. What are the Do I need a BlackBerry to make technical specifications? Anything else I should know? the most of PlayBook? Why should I care? The borders of the screen, known as In a word, yes. The first version will not The PlayBook is powered by a 1 GHz the bezel, are also touch-sensitive. Swipe have its own cellular connection, instead dual-core processor from Texas Instruments up from the bottom to minimize what you’re relying on WiFi to access the Internet for (if you really must know, it’s their OMAP doing, down to access in-app options, itself. 4430) and has 1 GB RAM system memory. and from left or right to toggle between Using a secure connection, the It has a 7-inch , comes with applications. A gesture from the bottom left PlayBook will “bridge” with a BlackBerry to either 16, 32 or 64 GB of storage, and weighs corner brings up the . access corporate or consumer email, address in at 425g, or just under a pound. It comes with a full suite of editable word book, calendar and other features including Its two high-def video should processor, spreadsheet and presentation BlackBerry Messenger. make video conferencing and recording software. When the link is broken, all that data is momentous occasions a breeze. For stills its instantly wiped. got 3 megapixels up front and 5 megapixel So when can I get it and how much The company has set up this relationship out back. will it cost? deliberately to pitch PlayBook to corporations It runs an all-new BlackBerry Tablet OS, Those are some big questions. RIM and other security-conscious enterprises powered by the QNX Neutrino kernel, and hasn’t been very forthcoming on either point, that will not need to verify the PlayBook’s multitasks with ease. Numerous demos have maintaining a vague “under $500” price tag credentials; it will effectively not exist on shown it playing HD video, running a Quake and a “very soon” launch. their radar. demo and two or three others applications Whether this means the 16 GB WiFi-only It can also pair with any smartphone able without a hitch. Why you would want to do PlayBook will be $499, the exact pricing to act as a mobile hotspot; this point has not all those things at the same time is another of the cheapest iPad, or the entire fleet is been heavily advertised. matter. more competitively priced remains an open A software upgrade some time after the One reason could be to play a video or question. launch will add native email, calendar and presentation on a bigger screen via HDMI Initially saying it would launch in the first address book apps for users who do not also cable while doing other tasks on the device. quarter, then narrowing it to March, the own a BlackBerry. Oh, and it supports Adobe’s Flash, which is company has lately been hinting at an April prevalent on today’s Web, as well as HTML5, start date. Will it get its own which will one day replace it. The iPad does (Reporting by Alastair Sharp; cellular connection later? Editing by Claudia Parsons) Yes. The company will release radio-enabled versions later this year for use on high- speed WiMax, LTE and HSPA+ networks, and these devices will be able to connect COMING SOON: A directly to RIM’s enterprise servers if new BlackBerry tablet, so desired by the hosting company. the PlayBook tablet The first named carrier is Sprint in the computer, is displayed at the GSMA Mobile World United States. Congress in Barcelona February 16, 2011. Worth buying a PlayBook if REUTERS/Gustau I do not own a BlackBerry? Nacarino Difficult to say. The PlayBook’s tech specs are certainly impressive (see below), though some have been matched by other devices in the market since its September unveiling. Price will be a bigger

6 RIM march 2011 timeline______Rim, creator of mobile email, faces fresh challenge esearch In Motion is putting the keyboard. Demand explodes. finishing touches to its PlayBook tablet Rcomputer ahead of an expected March or November 2000 April launch. Here is a timeline of major Raises $900 million via share milestones for the Canadian company. issue.

February 1985 September 11, 2001 and co- People trapped in New York’s found Research In Motion as an electronics World Trade Center use BlackBerrys and computer science business based to communicate after cellular in Waterloo, Canada, where Lazaridis networks collapse. studied. Their first big job is to supply wireless message screens to General November 2001 Motors’ assembly lines, for which the firm NTP sues RIM for patent infringement, received $600,000. a legal tussle that lasts five years and brings entire U.S. patent system into 1989 question. Late in the tussle, the U.S. RIM develops software and equipment to Justice Department says a threatened work with the Mobitex wireless packet- BlackBerry shutdown would damage the switched data communications network. public interest due to their heavy use by RIM starts work on a network gateway later government. introduced as RIMGate, a predecessor to its BlackBerry Enterprise Server. 2002 RIM adds voice transmission to the 1992 BlackBerry. Jim Balsillie joins RIM as co-CEO, TOUCHSCREEN: The BlackBerry Torch 9800 smartphone is introduced at a news conference in mortgaging his house and investing New York August 3, 2010. REUTERS/Shannon 2004 $250,000. He is charged with business Stapleton Surpasses one million BlackBerry development and strategy, finding subscribers. investment capital, taking RIM’s phone network via a gateway. RIM issues a technologies to market and building client special warrant that raises $36 million. March, 2006 relations. RIM pays $612 million to settle NTP 1997 dispute. 1994 RIM lists on the Stock Exchange, RIM launches first handheld point of sale raising more than $115 million from January 2007 card reader, which could verify and handle investors. Apple’s Steve Jobs unveils first iPhone, debit and credit transactions directly to the which launches in June. Time names it bank host. January 1999 Invention of the Year. Launches rebranded BlackBerry email 1995 service across North America, offering the October 2007 RIM builds its own radio modem for first wireless device to synch with corporate RIM passes 10 million subscribers. wireless email. email systems. Sales jump 80 percent to News of a China distribution deal boosts $85 million. The next year revenue is $221 shares, making it for a time the most 1996 million. valuable company in Canada by market RIM introduces the RIM 900 Inter@ capitalization. ctivePager, a two-way pager offering peer- Late 1999 to-peer delivery and read receipts. It sends Lists on Nasdaq, raising another $250 November 2007 faxes and leaves telephone voice messages. million. Introduces BlackBerry 850 Google’s open source Android platform is It talks to the Internet, peer users and the Wireless Handheld, combining email, unveiled. It launches in October 2008. wireless data networks and a Qwerty

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May 2008 June 2009 September 27, 2010 RIM introduces the Bold, a major refresh Apple announces and releases iPhone 3GS. RIM announces PlayBook, due to launch in and still one of its top-tier products. The early 2011, which runs on a QNX kernel. new model matches the resolution, but not August 2009 size, of Apple’s iPhone screen. RIM buys Torch Mobile, which provides the December 2010 updated browser seen in the eponymous Acquires user interface company The July 2008 device a year later. Astonishing Tribe. Apple opens App Store and releases iPhone , preloaded with App Store support, in 22 June 2010 February 2011 countries. RIM pays C$200 million for QNX Software Nokia, the world’s largest smartphone Systems, getting an industrial-strength vendor by volume, abandons its Symbian November 2008 operating system used in massive Internet operating system to form alliance with RIM launches BlackBerry Storm, both routers, nuclear power plants and car Microsoft. its first touchscreen and keyboard-less infotainment systems. In same month device. The screen uses a tactile feedback Apple launches iPhone 4. March 2, 2011 technology known as haptics, which allows Apple unveils iPad 2 with dual-core a user to click down to select actions. It August 2010 processor, front and back cameras to ship bombs. RIM launches BlackBerry Torch, a on March 11 in the United States and in 26 touchscreen phone with slide-out keyboard countries by March 25. April 2009 and improved . RIM’s App World goes live. (Reporting by Alastair Sharp; Editing by Claudia Parsons) iPAD KILLER? Research in Motion co-CEO Jim Balsillie discusses the new BlackBerry PlayBook device during an interview with Reuters in New York September 24, 2010. REUTERS/ Lucas Jackson

COVER PHOTO: Mike Lazaridis, president and co-chief executive officer ofR esearch in Motion, holds the new Blackberry PlayBook with a screen projection of the new device as he speaks at the RIM Blackberry developers conference in San Francisco, California September 27, 2010. REUTERS/Robert Galbraith

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