Is RIM the next Palm?

Research In Motion shares fell as much as 14 percent as analysts said a reduced profit forecast hurts management’s credibility and raises pressure on the company as it heads into an annual trade show next week…

“This further damages already low credibility, making them the ‘poster boy’ for a show-me story from here,” Mike Abramsky, an analyst at RBC Capital Markets in Toronto, said in a research note…

RIM is struggling to compete against Apple and Google in the smartphone market. The company, which will host the BlackBerry World conference starting on Monday, has to update its BlackBerry lineup and provide some evidence its products can do better against Apple’s iPhone and devices that run Google’s Android operating system, said Paul Taylor, chief investment officer at BMO Harris Private Banking in Toronto.

“Management needs to deliver on the product side,” said Taylor, who manages about $14.5 billion including RIM and Apple shares. “That includes competitive next-generation smartphones and building out the app library.”

Apple offers more than 350,000 software applications, or apps, and Google’s Android Market has more than 150,000, compared with more than 25,000 in BlackBerry App World…

At least four other analysts — Jefferies & Co. Inc.’s Peter Misek, Cormark Securities Inc.’s Richard Tse, Gleacher & Co. Securities’ Stephen Patel and National Bank Financial’s Kris Thompson — reduced their ratings on the stock…

The sales on their existing devices must have fallen off a cliff,” said Matt Thornton, an Avian Securities LLC analyst in Boston who has a “neutral” rating on the stock. “They are getting hit by a combination of a stale portfolio and heated competition on devices.”

Complacency, dealing with the most dynamic marketplace in the world of commerce as if it’s the railroad business in 1890 never delivers stability and long-term confidence.

I can recall emailing folks I knew inside Palm about the potential for building their OS into a fully functional operating system – keeping it small and adding needed potential while resisting bloat. Just like RIM they said, “Hey – we’re doing just fine as we are.”

The real Tablet Wars will have to wait until next year

Even with the much publicized release of the Galaxy Tab this week, it looks like the real battle to upend the iPad won’t happen until next year. Lenovo’s chief executive confirmed that its LePad tablet won’t hit the market until 2011. LG also pushed back the release of its tablet until next year. Both are waiting to launch their tablets with Android Honeycomb, the upcoming release that is designed for tablets. Meanwhile, those who want RIM’s BlackBerry PlayBook or a webOS-based tablet will also have to wait until early next year.

This isn’t to say that competitors aren’t lining up offerings right now. Samsung is predicting it can sell 1 million Galaxy Tab devices running Android 2.2 by the end of this year. Acer is expected to unveil new tablets running Android later this month. And Dell has released the 5-inch Streak, which runs an older version of Android.

But Google has said that, currently, Android isn’t designed for tablets. And it looks like Gingerbread, the update that is scheduled to be released any day now, won’t be optimized for tablets. So Android tablets, even if they’re released this year, probably won’t hit their stride until Google releases Honeycomb.

Right now, manufacturers are torn between moving forward and trying to get some traction like Samsung is attempting to do, or waiting until the platform matures, but risk Apple zooming ahead again with the iPad 2. That some like LG and Lenovo are sitting it out suggests they’d rather nail it the first time with the right software rather than put out something that initially disappoints…

The iPad will surely get serious competition and will undoubtedly lose its 95 percent share of the tablet market. But it looks like we’ll need to wait for next year when Android tablets, along with a BlackBerry PlayBook and a webOS tablet from HP, can make a real run at the iPad.

Many of these firms make it sound like they’re getting better at responding to Apple’s R&D opening new marketplaces. I’m not as convinced. It takes a great deal of process management to accomplishment a complete rollout for a breakthrough product like the iPad. It also helps to have an infrastructure like the App Store + apps + designers ready and willing to design for the new platform.

The only product I see stealing market share from the iPad is this. My wife’s arrives Monday.

Right paperwork? U.S. authorities can tap BlackBerry messages

The BlackBerry — renown for the security of its messaging — doesn’t offer 100 percent protection from eavesdropping. At least not in the United States. Law enforcement officials said they can tap into emails and other conversations made using the device, made by Research in Motion, as long as they have proper court orders.

RIM’s willingness to grant authorities access to the messages of its clients is a hot-button issue. The United Arab Emirates claims it does not have the same kind of surveillance rights to BlackBerry messages as officials in the United States. It has threatened to clamp down on some services unless they get more access…

The ability to tap communications is a part of surveillance and intelligence and law enforcement all over the world,” said Mark Rasch, former head of the computer crimes unit at the U.S. Department of Justice.

RIM is in an unusual position of having to deal with government requests to monitor its clients because it is the only smartphone maker who manages the traffic of messages sent using its equipment. Other smartphone makers — including Apple Inc, Nokia, HTC and Motorola Corp — leave the work of managing data to the wireless carrier or the customer…

Rasch said that RIM may feel uncomfortable granting such access to officials in UAE. There may be concern authorities could abuse that access, he said.

“You reach a point where a company feels uncomfortable from the client perspective with what a government is asking them,” Rasch said. “It may be a function of what they are being asked to do, or it may be a function of which government is asking.”

U.S. rules that govern wire-tapping are designed to avoid abuse of power.

Har! I suppose Reuters had to include the paper description of U.S. avoidance of abuse of power.

In practice, abuse of power is perfectly OK [1] if no one finds out about it; [2] the government has enough tame judges who will overrule any objections; and [3] Congress will make the abuse legal if citizens complain about the abuse.

UAE ready to suspend Blackberry service

More than a million BlackBerry users may have key services in Saudi Arabia and the UAE cut off after authorities stepped up demands on smartphone maker Research In Motion for access to encrypted messages sent over the device.

BlackBerry’s Messenger application has spread rapidly in the Gulf Arab region but because the data is encrypted and sent to offshore servers, it cannot be tracked locally.

Certain BlackBerry services allow users to act without any legal accountability, causing judicial, social and national security concerns,” the United Arab Emirates’ Telecommunications Regulatory Authority (TRA) said in a statement.

The UAE said it would suspend BlackBerry Messenger, email and Web browser services from October 11 until a fix was found, while industry sources said Saudi Arabia had ordered local telecom companies to freeze Messenger this month…

India raised similar security concerns last week, and Bahrain in April warned against using BlackBerry Messenger to distribute local news. As far back as 2007, France cautioned officials about using the services…

Users of the device said that could mean disruptions for companies and individuals who rely on the services, including almost 700,000 in Saudi Arabia and some 500,000 in the UAE.

Frankly, it sounds as much a problem of government officials distrusting RIM – as much as simple censorship.

United Arab Emirates say BlackBerrys pose a security risk


“Who’s in charge of translations from the Gulf, today?”

The United Arab Emirates (UAE) has said that it could move to restrict or monitor BlackBerry mobile phones, as they pose a “national security risk“.

The region’s telecoms regulator said “BlackBerry operates beyond the jurisdiction of national legislation” as it stores its data offshore. It said it was concerned that misuse may have “serious social, judicial and national security repercussions”…

The UAE’s Telecommunications Regulatory Authority has taken issue with the encrypted networks used by Research in Motion (RIM) – the makers of the Blackberry handset…

“Currently, BlackBerry operates beyond the jurisdiction of national legislation, since it is the only device operating in the UAE that immediately exports its data offshore and is managed by a foreign, commercial organisation,” said a statement from the regulator.

“As a result of how BlackBerry data is managed and stored, in their current form, certain BlackBerry applications allow people to misuse the service, causing serious social, judicial and national security repercussions.

“Like many other countries, we have been working for a long time to resolve these critical issues, with the objective of finding a solution that operates within the boundaries of UAE law.”

In other words – it ain’t especially easy for the government to keep an eye on folks using Blackberrys in the UAE.

There are interesting facets to any discussion of censorship. Is a government trying to maintain secrecy for political dealings, business dealings? After all, some governments own and deploy the most significant assets in their economy.

In some cases, governments are in the middle of changing from a state economy to something utilizing portions of market economics.

Some governments are run by fear-driven politicians who simply don’t trust democracy or the enfranchised electorate to support their wishes – and try to keep the truth from affecting their agitprop.

Blackberry update from UAE Telco turned out to be spyware

An update for Blackberry users in the United Arab Emirates could allow unauthorised access to private information and e-mails.

The update was prompted by a text from UAE telecoms firm Etisalat, suggesting it would improve performance. Instead, the update resulted in crashes or drastically reduced battery life…

Etisalat is a major telecommunications firm based in the UAE, with 145,000 Blackberry users on its books.

In the statement, RIM told customers that “Etisalat appears to have distributed a telecommunications surveillance application… independent sources have concluded that it is possible that the installed software could then enable unauthorised access to private or confidential information stored on the user’s smartphone”.

It adds that “independent sources have concluded that the Etisalat update is not designed to improve performance of your BlackBerry Handheld, but rather to send received messages back to a central server“…

The update has now been identified as an application developed by American firm SS8. The California-based company describes itself as a provider of “lawful electronic intercept and surveillance solutions”…

Etisalat issued a brief statement calling the problem a “slight technical fault”, saying that the “upgrades were required for service enhancements”.

RIM has issued a patch allowing users to remove the application. Phew!

Blackberry executives pay 7-figure fine for backdating stock options


“Look at my handset – not my stock options”
Daylife/Reuters Pictures

The co-CEOs and two other executives at BlackBerry maker Research in Motion have been charged by the Securities and Exchange Commission with tampering with stock options to enrich themselves and other workers.

The charges, filed by the SEC in U.S. District Court for the District of Columbia and announced with a simultaneous settlement of the case, allege that the executives pulled down millions of dollars in compensation that was not properly disclosed to investors.

The practice, known as “backdating,” has been investigated at hundreds of companies. It involves tweaking the paperwork so option awards look like they were issued earlier than they actually were, usually on a date when the stock was trading lower. That makes it cheaper for the recipient to cash out the options, and boosts the potential windfall…

Together, the executives have agreed to pay more than $1.4 million in fines and give back more than $800,000 in profits to settle the SEC’s case, the SEC and RIM said Tuesday. The executives had already paid back the profits to RIM.

Har. Got caught, eh?

Motorola blocking RIM job offers for workers they laid-off. WTF?

BlackBerry maker Research In Motion Ltd sued Motorola Inc over claims the mobile-phone maker is improperly blocking it from offering jobs to laid-off Motorola workers, Bloomberg said.

RIM, in a complaint filed in state court in Chicago, asked for an order invalidating an agreement the companies reached this year not to solicit each other’s employees, the agency said.

The agreement expired in August and is no longer enforceable, the agency said, citing the complaint.

Motorola is improperly trying to expand the agreement “to prevent the RIM entities from hiring any Motorola employees, including the thousands of employees Motorola has already fired or will fire,” RIM was quoted as saying in the complaint.

Ah, the holiday spirit in Silicon Valley.