On a conference call last week, Research In Motion Ltd. chairman and co-chief executive Jim Balsillie played down the competitive threat from Microsoft, saying that only 12% of Microsoft Exchange users have upgraded to Exchange 2003, the latest version of the corporate email server.
However, in an interview Wednesday, Microsoft’s Scott Horn took issue with Balsillie’s figures. Citing data compiled by The Radicati Group Inc., Horn, senior director, mobile and embedded devices group at Microsoft, said 40% of the overall Exchange user base, which numbers 126 million email accounts, now use Exchange 2003. That translates to 50.4 million accounts, far more than what Balsillie indicated on last week’s call. The 12% figure cited by Balsillie translates into just 15.12 million accounts, according to the Radicati data.
The number of Exchange 2003 users is important because it is indicative of the addressable market for Microsoft’s upcoming “push email” service. Push email allows wireless device users real-time access to email. Other wireless email services, such as the one currently used by Windows Mobile, update email intermittantly. Research In Motion was the first company to provide push email, which helped catapult its BlackBerry device to the top of the wireless email market.
But competition is heating up, as upstarts like Good Technology Inc., SEVEN Networks Inc. and Visto Corp. now offer competing push email services. Many industry watchers consider Microsoft the most serious threat to BlackBerry because its push email offering, expected to launch later this year, sends emails directly from a corporate office to a BlackBerry. Research In Motion’s system uses a network operating center, or NOC, located at its head office in Waterloo, Ont., to relay messages from a corporate office to a BlackBerry device.
Concern That Monthly Service Charge Could Face Pressure
Research In Motion charges its carrier partners, such as Cingular Wireless Inc. (CIW.XX), a monthly fee estimated at $7-$10 per month per BlackBerry subscriber to manage the NOC. With Microsoft’s direct push email set to hit the market, some industry watchers believe Research In Motion’s monthly fee could come under pressure.
While Microsoft is clearly stepping up efforts to gain a bigger share of the wireless email market, its initial efforts did little to halt Research In Motion’s momentum. The BlackBerry maker recently surpassed the 3-million subscriber mark, and it took just six months to add the latest million. Microsoft, on the other hand, has never said how many people use its email service.
Still, Microsoft’s shadow looms large and Research In Motion is invariably forced to field questions about the potential threat on earnings conference calls.
On last week’s call, Balsillie suggested that carriers will charge more per month for data plans that use Microsoft’s direct push service than they do for data plans that use BlackBerry service. Not surprisingly, Microsoft’s Horn begged to differ, saying carriers set the price of monthly data plans and they don’t have a more expensive plan for devices that run on a Windows operating system. “The implication that there is a more expensive data plan in Microsoft’s case just doesn’t hold water,” he said.
Michael Woodward, executive director of mobile professional solutions at Cingular, said it’s too early to say how much carriers will charge for Microsoft’s direct push service, as it isn’t available yet. However, he did say that competing services tend to be competitively priced. “Most enterprise customers choose unlimited plans, including whether that’s BlackBerry or something else, and that pricing is all very similar,” he said.