Exchange Email Integration: RIMM's Lifeline in an iPhone World

Includes: AAPL, BB, MSFT
by: Richard Hyde

I have long felt that since the introduction of the iPhone, Research In Motion (RIMM) is a dead man walking (ok, it's walking pretty well for a dead man so far). The iPhone is far too elegant and its software bound to be too rich in breadth and depth for RIMM to compete in the long haul. The internet experience with Safari on the iPhone is a competitive advantage RIMM cannot match along with the software base of OS X.

RIMM, however, understands the business enterprise market and knows how to connect with Microsoft (NASDAQ:MSFT) exchange. Nonetheless, I really don't think that given Apple's (NASDAQ:AAPL) $18 billion in cash it will be too long before Apple figures out how to integrate with Exchange. Once it does, goodbye RIMM.

What then should RIMM do? Take Apple straight on by trying to match iPhone with new hardware and radically revive and extend its specialty OS to compete with OS X? That would be very hard to do.

What if instead RIMM decided to ask itself 'what do we do well?' The answer: enterprise email software integration. So what does the platform matter? RIMM might want to put its software application on the iPhone and charge customers $100 for the application. The new open SDK to be announced on March 6th should make this possible. If there will be 100 million iPhones sold in a few years, that's real money.

They could also continue to sell Blackberries to consumers who want buttons (and to carriers like Verizon (NYSE:VZ) who are on the outside) though that market will likely decrease with time. They might also be able to negotiate a $1-$5 monthly fee for their service along with charging for the iPhone application. In business this is called a win-win. Apple doesn't have to reinvent an enterprise email application, but instantly gains millions of new business customers for the iPhone. AT&T (NYSE:T) laughs all the way to the bank and RIMM leverages its software with minimal risk and remains viable for the long haul, unlike what is happening to Palm (PALM). Clearly this is asking for the sun, stars and moon to align, but business has always made strange bedfellows.

If Microsoft can prosper selling Office for the Mac, I am sure RIMM can see the advantage of providing exchange email integration for the iPhone. In fact they already offer Blackberry Connect for Palm, Symbian and Windows Mobile. Maybe the stars, sun and the moon will align after all.