Is RIMM's Unite Platform Really “The Holy Grail”?

As someone who never pulls his punches, Research In Motion (RIMM) Co-CEO Jim Balsillie told a room filled with portfolio managers (”Scotia Capital Tech/Telecom Conference,“ November 20, 2007) that his new “Unite” platform is “The Holy Grail.” Unite, was first discussed in early October during the Q2 financial results process and Mr. Balsillie advised that the new home server platform was in beta testing with Spain’s Telephonica. Before you run out and buy more RIMM stock, Mr. Balsillie also allowed “that we just have to get the beta done and get it into production.”

But, don’t expect a huge uptake in the next few months.

At the 2005 Consumer Electronics Show in Las Vegas, giants such as Dell (DELL) and Microsoft (MSFT) put much of their marketing spend into showcasing the “home server” concept, whether it be for entertainment or communication. RIMM’s approach is more manageable, and involves turning your home computer into your family’s personal server. There is no need to run out, and buy a media server to get it up and running.

“This is the Holy Grail to half the carriers out there, we just have to get it done.” He almost sounded a bit frustrated that it still was in beta mode, but if anyone knows RIMM’s Co-CEO, he isn’t someone who gets frustrated.

Unite will be a free software download and work on Windows, courtesy of RIMM’s carrier friends. It’ll reside on the home PC, and turn “even a $200 or $300 PC” into a home server. It is an Enterprise BES for the home. Families will be able to share calendars, log telephone calls, upload photos and store/share music. All you need is a broadband hookup, and constant connectivity, which unfortunately flies a bit in the face of energy consumption trends.

Whether it be for SOHO or family use, Balsillie promises that consumers will be able to get many of the benefits of an office BES, without the large licence fees. And the good news for people who already have a Blackberry hooked up to an Enterprise BES, is that the two will be able to interface with each other. Or perhaps, your RIMM will be able to talk to both servers.

It sounded pretty exciting, and is a new angle to push RIMM’s products into hands of consumers. If one assumes that the beta software works to Mr. Balsillie’s satisfaction, then there’s no way that Apple (AAPL)can top this.

Unfortunately, despite all the talk of Holy Grails, there were no sightings of John Cleese, King Arthur, the Black Knight or the Nights Who Say “Ni!”

Disclosure: The author owns RIMM.

Comments

[HAYWEED]

Constant connectivity means computer will need a static ip which costs a few extra dollars a month and is what most people do not have at home. Apple already has .mac which does the calendar share and can be used to share photos. So I give this a big yawn.

Lazardis when asked why consumers should buy a pearl said, people who use and like the blackberry will tell their friends and family members to buy a pearl or curve. That is great marketing.

This stock is way overvalued and will sell in the 60's next summer

[John Lazerow]

Hayward, you continue to dislike this stock and be absolutely wrong about it. Have you looked at their growth rates and compared that to their current PE multiple? I bet not. First call consensus 2007 and 2008 EPS are $2.17 and $3.26, or 50% growth!!! The current multiple to 2007 is 51x earnings and 34x 2008 earnings. Doesn't look over priced to me - actually looks about right.

Now how do I know they'll hit those numbers (even though I think they'll be higher)? Let's suppose I told you there was an industry that would see units shipments grow by 4-5x over the next five years. Then let's suppose that one of the companies in that industry has a better value proposition than the other players. Would you be interested? Of course you would. Well, this is exactly where RIM is today in the context of the global smartphone business. You should get in board.

Also, you have no idea how the home server will work. I don't know either, but I would bet it doesn't not need a constant connection to the home computer, but rather only a connection from the handheld to RIM's servers which would ostensibly sync up with the home server when prompted. All the sharing could be done through RIM's existing infrastructure.

To compare this to .Mac is misguided. The purpose of .mac is not to "share", it's to sync up data stores on multiple computers so that a user has the same info on their office and home computer for instance. I don't know anyone who uses .mac for that purpose.

Last, their marketing is great (I assume you were being sarcastic). Just create a great product that people actually like using because it is extremely reliable and just works (kind of like your Mac) and they will evangelize and tell their friends. That's the absolute BEST marketing a company could have and it's FREE!!!

So, if you believe this stock will have a 60 handle on it next summer, then this is a great short - I'll lend you my shares.