Pushing E-mail

Say “wireless e-mail” and chances are one company will come to mind: Research in Motion. Its push e-mail solution set the bar for wireless e-mail, and in the six years since it released its first BlackBerry handheld, the name has become almost synonymous with enterprise mobile messaging. But while RIM has enjoyed enormous success within its niche — and few people doubt it won't continue that success — the push e-mail market is fundamentally changing.

The device-and gateway-oriented model the vendor established to attack the high-end business user segment has succeeded in gaining RIM more than 2 million users worldwide. But the market is broadening beyond that initial segment, and a number of new players are entering the market. It's not just messaging solutions providers directly challenging RIM's core e-mail solutions, but handset vendors looking to enable their own e-mail devices and enterprise software giants like Microsoft looking to extend their power in the corporate LAN to the wide area network. And perhaps most significantly, carriers are getting into the e-mail game. Tired of being a reseller of what is essentially someone else's service, carriers are launching their own white-label and network-based push e-mail services, making them a central component of their new enterprise strategies.

The sector is expected to blossom in the next few years, extending beyond the few million corporate execs and users who now form its customer base to a mass market service, pervading the ranks of not only the Fortune 1000, but also small-and-medium businesses and even consumers. Basically, there's an awful lot of opportunity out there for push e-mail and a lot of companies are positioning themselves to take advantage of it.

Though nobody wants to attach the word “generic” to a highly lucrative application, that's exactly what the growing market for push e-mail wants the service to become. Just as wired e-mail service has become generic, push e-mail is evolving the same way, said Sanjay Kamble, vice president of marketing for Visto, a push e-mail provider that has recently landed lucrative deals with Nextel and Vodafone.

“They believe it should be as generic and simple to use as SMS,” Kamble said. “E-mail is becoming a service game rather than a software game.”

Nowhere is the migration to push e-mail as a service more apparent than among wireless operators. Almost every one of them is adding a push e-mail solution to their portfolios to compete with the BlackBerry solution they resell. Nextel Communications has launched its own carrier-branded wireless e-mail service using Visto's platform, which runs off of Java-based clients in any data-enabled phone. Verizon Wireless launched a similar service geared to work on smartphones and palmtops using Intellisync's solutions. Sprint PCS announced it would begin targeting the consumer markets with wireless e-mail, enabling Web-portal access to Yahoo mail through Seven's e-mail platform. And Cingular perhaps now has the most e-mail options of them all. In addition to selling a co-branded version of RIM's BlackBerry enterprise and personal e-mail service, the carrier has a similar relationship with Good Technology to bring push e-mail to a broader range of smartphones, as well as its own branded network-hosted service using Seven's solution.

Mike Woodward, Cingular executive director of mobile professionals solutions, said there is a definite shift toward the carrier in the seller chain for push e-mail. While customers still want specific services offered by RIM or Good, Cingular is positioning itself as a key value provider in the enterprise relationship, not merely as the pipe those messages traverse, Woodward said.

“A year or two ago it was much more common for companies to go to the software provider itself and then go to the carriers for airtime,” Woodward said. “Now companies are coming directly to us.”

Cingular characterizes Good and RIM as its vendors. Both services are co-branded with Cingular's name; Cingular sells their behind-the-firewall servers and software directly to its business and enterprise customers, and Cingular bills for the service, packaging the products with its other voice and data services. But RIM and Good's competitors characterize those deals with Cingular more as joint marketing agreements than carrier services. Cingular is in effect reselling another provider's service instead of offering its own, said Rip Gerber, chief marketing officer for Intellisync, which sells its own over-the-air data synchronization and push e-mail platform and also runs a white-label hosted service for carriers.

“The distribution strategy is to be the brand behind the brand,” Gerber said. “Why would a software company invest millions to create a brand when you have Verizon doing commercials every day and putting up billboards on every corner. Meanwhile, carriers want to have control; they want to push their own brands, not RIM's.”

While Gerber expects carriers to keep their relationships with companies like RIM and Good, he also expects them to start placing more emphasis on their own push e-mail solutions — or at least the ones they can brand or over which they can exert more direct control. Cingular's multi-vendor messaging portfolio already demonstrates this. Good's platform GoodLink is similar to RIM's, it's a software-based solution that can be loaded onto any high-end smartphone or handheld, feasibly giving customers a much wider range of handset choices and carriers the opportunity to promote push e-mail among other data services. While Cingular only sells two BlackBerry devices, it is extending GoodLink to Windows Mobile and Palm-powered devices. Its Seven solution goes one step further. Cingular is offering a network-hosted solution for small businesses and an enterprise server for larger businesses.

Carriers are looking not just to business customers, however. They have their sights on the consumer markets — and some probably imagine e-mail could be as big — and more profitable — an application than SMS, Visto's Kamble said. Visto's most recent deal with Nextel makes it possible to turn any Java-enabled phone into a push e-mail device, which in Nextel's case is potentially every single one of their phones. The Visto solution continuously runs a low-power application in the phone's background, which creates a true two-way push environment in the Java sandbox, Kamble said.

The advantages of this kind of client are obvious. Instead of buying a $200 to $300 dedicated messaging device or upgrading to a smartphone in order to receive push e-mail, customers can merely download an application from their carrier. When push e-mail is untethered from specific devices, it opens up to the wider market becoming not only cheaper but also much easier for carriers to sell, Kamble said.

“Just imagine what you can do if you enable e-mail on a device that costs $19.99,” Kamble said. “You're not just talking about a broader market. You're talking about the mass market.”

The mass market is actually where carriers might feel more comfortable. Despite every carrier's rhetoric of late about going after the enterprise with data services, what most carriers really mean to do is target small and medium businesses, said Jeff Warner, vice president of marketing for Extended Systems.

“Enterprises have an enormous amount of infrastructure invested into their e-mail,” Warner said. “For consumers and small businesses you're talking about providing pop e-mail. That's easy. Even with medium businesses, their [e-mail] infrastructures don't have to be that large. But enterprises will be a challenge for carriers.”

Not only will enterprises demand complex and highly secure e-mail services, they'll also look to diversify. Enterprises will want more than one network to supply the access link and likely they'll want more than one vendor supplying an e-mail solution.

Many people in the industry see push e-mail breaking down into those two camps: a network-driven, carrier-hosted service targeting small and medium business, pro-sumers and eventually consumers; and a highly secure, very robust behind-the-firewall vendor-dominated service focused on the enterprise.

RIM has traditionally dominated push e-mail across the board, but where exactly it will fall in that spectrum as new push e-mail markets emerge is unclear. One thing is for certain: despite all of the competitive challenges the numerous new vendors are bringing, none of them expect RIM to be displaced in the market. RIM's highly secure and dedicated solution has built an enormous loyalty and a significant market share. A recent brand study conducted by Landor Associates and Penn, Schoen & Berland Associates found BlackBerry to be one of the top 20 news-making and recognizable brands in the U.S. RIM has built — as Intellisync's Gerber calls it — “a cult around the device.”

Because of that popularity, no carrier is likely to dump its reseller relationship with RIM anytime soon, no matter how aggressive it wants to pursue its own push e-mail service. And it's doubtful carriers would even want to. There will always be a market for RIM's devices and software, and customers from the largest enterprise to the individual entrepreneur will seek out BlackBerry with or without a carrier's help.

“We really are the complete solution,” said David Werezak, vice president of enterprise for RIM. “That's why carriers are working with us.”

From RIM's perspective, it has only just begun to tap the potential market for BlackBerry. There may, however, be an upper limit to the company's possible growth; RIM earns an estimated 70% of its revenues on BlackBerry device sales, making it more a handset vendor than a software provider. Customers will want more diversity in their handset choices as the market grows, said Gartner analyst Monica Basso. Gartner estimates that by 2008, 80% of all mobile workers who traditionally use e-mail will be using wireless e-mail. Not every single one of those mobile workers is going to want a BlackBerry, Basso said.

RIM launched a licensing program last year in Europe and Asia to port the BlackBerry software module to other vendors' handsets. But so far feedback has been lukewarm, Basso said. RIM is also facing pressure on the software front from companies like Microsoft, which began licensing its ActiveSync software with the release of Windows Mobile 5.0. While security and other features on Microsoft's push e-mail platform may not be up to par with RIM's solution, the cost benefits and Microsoft's cozy relationship with the enterprise present a challenge, Basso said.

“The day RIM decides to put out a device on the market with PocketPC or Windows Mobile will be a good day for BlackBerry,” Basso said.

The many faces of wireless e-mail

Research in Motion — BlackBerry solution approaching 3 million global subscribers. Most revenue comes from sales of messaging devices.

Good Technology — Fully secure and managed behind-the-firewall solution. Software-based GoodLink service has developed client software for smartphones and PDAs.

Intellisync — Added push e-mail to its portfolio. Licenses its Wireless E-mail platform directly to carriers, which in turn can use it to launch their own e-mail services.

Microsoft — Will launch direct support for push e-mail between Exchange and Windows Mobile 5.0. Licensing ActiveSync to handset manufacturers.

Visto — Java-based client that runs continuously in the handset's background.

Seven — Behind-the-firewall server-based solutions for enterprises, operator-hosted solutions and browser-based consumer products.