Tuesday, June 07, 2005

Microsoft vs. RIM

I saw a brief news entry on Microsoft's entry into the wireless pager space. They're taking on RIM. This move is interesting. RIM has a number of allies in the telephony space but Microsoft has partnerships with… well, everyone.

Some good background for this move is Microsoft's Windows CE product. CE was initially designed as a small foot print version of Widows for mobile devices. First released in 1996, v.1 was a dog. So was v.2. Now at v.3, Windows CE has finally found commercial success with Pocket PC devices. In the early days, Microsoft lost market share to PalmOS and its associate devices. One reason may have been because Palm was basically able to create the portable device form factor through the tight integration of hardware and software.

Palm's dominance is gone. Microsoft now owns half of the PDA market and Palm's road-map is fractured; they are lacking clear product roadmaps for both telephony and productivity appliance! It seems that Microsoft will continue to apply margin pressure and gain greater market share as devices become increasingly commoditized.

Flashing forward to RIM and Microsoft we see a very similar scenario. This time, it's not going to take Microsoft nine years to gain dominant market share. Similar to Palm, RIM's advantage came through their dominance of the form factor. Given the marked similarities between Palm's Treo and RIM's 7100 series, this advantage seems to be slipping. Perhaps more damning is the jarring absence of a product roadmap for the BlackBerry. With nowhere to go technologically, the device is destined to be commoditized. And nobody commoditizes with the efficiency of Microsoft and its sundry hardware partners (i.e., everyone).

Is their a future for RIM? Sure. It will take Microsoft five years to reach parity in market share. Most of these gains will come from the consumer- and mid-market. RIM will remain entrenched in the choice verticals of finance and law.

Lesson: The scent of a fizzling product roadmap brings very large predators.


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