BlackBerry users pick alternatives

NEW YORK - Research In Motion may dodge a shutdown of its United States BlackBerry service, part of a patent fight with NTP, but some of its clients aren't taking the chance.

United Parcel Service and FedEx are talking to RIM competitor Good Technology and others in case a US district court judge follows through with a threat to halt service as early as February.

The move would cut off the e-mail device favoured by about 2 million US customers from Wall Street bankers to Silicon Valley venture capitalists.

"They will likely come up with some way around it," said UPS vice-president John Nallin, whose Atlanta company uses about 2000 BlackBerries. "But we've taken other measures too."

Even if Ontario-based RIM wins a four-year battle with Virginia-based NTP over the technology on which BlackBerries run, the company is vulnerable now that clients are exploring alternatives.

"The problem is the lawsuit is holding them up from answering the competitive threat," said Richard Williams, an analyst with Garban Institutional Equities in Jersey City.

Williams expects BlackBerry's US service to continue or at worst face a brief disruption.

Customers, once tethered exclusively to their BlackBerries, have a choice of products from Good, Palm, Seven Networks and Microsoft. Nokia and Motorola will begin selling BlackBerry-like devices in the first quarter, eyeing RIM customers.

As many as half of BlackBerry users who have models with built-in phones also carry a separate phone, creating a market for a device that's good at voice and e-mail, Connecticut-based researcher Gartner says.

RIM co-chief executive officer James Balsillie said that while few clients had dumped BlackBerries amid the litigation, customer wariness had hampered subscriber growth.

RIM will add 700,000 to 750,000 new users this quarter, down from a prediction of 775,000 to 825,000.

"People may have paused to consider but we haven't heard of any competitive shift," Balsillie said.

Balsillie and co-CEO Michael Lazaridis had been calling UPS, FedEx and other customers to reassure them that RIM had a feasible alternative technology that would permit service to continue even if US District Judge James Spencer ordered the halt.

The so-called "workaround" wouldn't violate NTP's patents - the root of the litigation.

NTP, which has no employees, convinced a jury in 2002 that RIM had infringed patents related to wireless e-mail.

The two companies reached a tentative agreement in March 2005 for RIM to pay US$450 million. That deal fell apart three months later and the companies have failed to reach a settlement with the help of a mediator.

While RIM navigates the patent dispute, Nokia and Motorola are cranking out new products. Nokia's E61 has a so-called Qwerty keyboard similar to the BlackBerry's while Motorola's competing device is the Q.

"You will see a larger number of competitors in this market going forward," said Benjamin Bollin, an analyst at FTN Midwest Securities in Boston. "It's an attractive market. The growth opportunities are strong."

UPS is bracing for a BlackBerry blackout. It outfits its field engineers, who support the drivers and workers in retail stores, with a choice of either BlackBerries or Palm's Treo devices.

Nallin said if Research In Motion suffered a long-term shutdown, UPS would switch the BlackBerry users to Treos.

- BLOOMBERG