Research In Motion's Berry Good Quarter
By Carlo Longino, Fri Oct 01 20:30:00 GMT 2004

RIM reported a huge jump in sales and profits for its second quarter, and its embrace of the phone form factor should prove a wise one.

The company earned $70.6 million in the quarter on revenues of $310.2 million in its fiscal second quarter, up from $2.1 million in profits on $125.7 million in sales a year ago, adding 317,000 subscribers in the quarter, taking the total number of users to 1.7 million. The company now gets around 70% of its revenues from device sales, compared to just 53% last year, calling into question the wide speculation the company's future is as a software company rather than a device maker, though it continues to aggressively license its technology to other manufacturers.

For the current quarter, RIM gave a conservative update, which disappointed some investors, but the company's embrace of the phone form factor will stand it in good stead moving forward -- contrasting the outlook for PalmOne, which is moving very slowly from the dying PDA business to smartphones. Only 273,000 Treos were sold in the quarter, again not matching sales of BlackBerry devices.

One thing RIM could emulate about Palm, however, is how the company has fostered the growth of a large and loyal developer community. Most people probably don't even realize applications can be downloaded to BlackBerrys, with much of the current development for the Java-based platform happening in the area of custom corporate internal applications. The move to a more traditional handset design will help sell the devices to individual and small-business users, and having a good number of third-party applications available to these users will help sell them on BlackBerry rather than Symbian- or Microsoft-powered devices.

While having a viable platform for corporate developers is every bit as valuable as one with people making a million different calculators and alarm clocks, encouraging some developer interest in BlackBerry applications -- and creating an ecosystem that allows them to thrive -- will help assure success, particularly as RIM licenses the BlackBerry technology to other platforms with more developers and available applications.