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Analysis Research in Motion may finally have put its legal battles behind it, but it still faces the biggest challenge of its career, finding a survival strategy for its famous push email devices.

RIM has faced increasingly intense challenges to its market lead in corporate email-oriented mobile products for the past two years, and its responses so far - notably its licensing of its server and client architectures to third parties - have kept its stock buoyant but have had limited impact on the market.

With only a few percent of enterprise workers actually using mobile email, the potential customer base is huge, and increasingly being lured to new products such as the Motorola Q.

The giants offer the corporate buyer various low cost deals, advantages such as close integration with Microsoft Exchange, and none of the risk that hangs over RIM. They also have greater ability, through their existing channels and designs, to cross over into the high end consumer, or prosumer, space and so boost their volumes even further.

Despite all this, RIM is not giving up, and while its best option in the medium term remains a close partnership with, or acquisition by, a major - preferably, perhaps, Nokia - it has made a bid to keep up with the larger device makers with the launch of its most high profile product in years, the well priced Pearl.

However, any improvement to RIM's fortunes that this offering makes are likely to be short term, since the company needs to keep up with Motorola and Nokia in terms of overall performance, and this will almost certainly entail a change of operating system, or an expensive rewrite.

Like Palm, RIM faces the dilemma of whether to retain the system that originally gave it differentiation, but which will be expensive to upgrade and carries relatively low volumes; or adopt a mainstream architecture and potentially lose competitive visibility.

Palm is shifting away from its own PalmOS, with the recent launch of its first Windows smartphones, while Access, which acquired rights to the operating system when it acquired spin-off Palmsource, is merging the Palm interface into a new Linux-based platform.

If RIM decides a rewrite of its BlackBerry OS would be counter-productive, its most likely options are to adopt Linux too, or Symbian OS. Linux would give it some strengths in east Asia, where the open source system is gaining ground in the mobile world, and some leverage against rival Microsoft in its heartland, the US enterprise.

With European expansion a key current goal, however, it could do well to adopt the dominant smartphone system for that region, Symbian, which is also the most mature OS for this product category. The main objection to Symbian, in the eyes of many commentators, is that the system is heavily controlled by Nokia, whose enterprise offerings, particularly the upcoming E62, will challenge the BlackBerry and Pearl.

However, we still see future potential for the two companies to cooperate rather than compete. Nokia still licenses the BlackBerry server software, although in the past year it has focused mainly on its home-developed offerings, but in its urgent quest to dominate the mobile enterprise, it could still benefit from closer ties with RIM.

Nomura Holdings is one analyst firm that believes RIM will adopt Symbian once its inhouse OS runs out of steam, which is likely to be within two years or less for high end devices, as users start to demand features such as editing. This means that the Canadian vendor needs to make a choice within a year of whether to rewrite or license.

Either way, increased competition means it will have to sacrifice its accustomed margins, which have been as much as 50%, and this fact will also drive RIM towards using a readymade operating system, especially one with a measure of volume - Symbian-based smartphones enjoyed a 71 per cent global market share in this category in the second quarter, compared to three per cent for RIM. Its showing is about the same as that of Microsoft and PalmOS, while Linux models take 19 per cent.

The Pearl represents one attempt to increase market share and stretch into the prosumer world with a lower cost device - the product costs $200, undercutting Nokia's newly launched E62, which is $250 and the first of the Finnish giant's much vaunted enterprise smartphones to ship in North America (initially with Rogers Wireless in Canada, with Cingular also testing the product).

The E62 is a mobile email device with Qwerty keyboard but does not have the Wi- Fi connection of its European cousin, the E61. Meanwhile, the Motorola Q looks set to dominate this subsector with a fashionable design that appeals to prosumers as well as enterprise email features and some key partnerships, such as the key one with Microsoft, which will include the Q in its mobile enterprise platform.

Copyright © 2006, Wireless Watch

Wireless Watch is published by Rethink Research, a London-based IT publishing and consulting firm. This weekly newsletter delivers in-depth analysis and market research of mobile and wireless for business. Subscription details are here.

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