Interview: RIM founder and CEO, Mike Lazaridis

This year, Research In Motion celebrates its 25th anniversary and the 10th anniversary of the Blackberry device.

RIM has sold 50 million Blackberrys worldwide, with a whopping 26 million of those sold in the last 12 months.

The company's founder, president and co-CEO Mike Lazaridis likes to take credit for anticipating the "inevitable" convergence between the phone and PDA, and says his company is now reaping the financial rewards.

But there is significant competition on the horizon - with Nokia, the ever-popular iPhone, open source alternatives and the big spend of Microsoft bearing down on RIM's turf.

Today iTnews editor Brett Winterford stepped into Lazaridis' penthouse at the Wireless Enterprise Symposium in Orlando, Florida to discuss how RIM will attempt to stave of the competition.

It's been three years since RIM entered the mainstream consumer market with the Blackberry Pearl. How has RIM fared in this space?

Of the sales in our last quarter, nearly 60 per cent were to non-enterprise customers. So I'd say we've had a very successful transition from enterprise to consumer.

IDC projects that the real winners in the smart phone market during this economic crisis will be those that offer slightly less functional products at lower prices. Is a poor economy bad news for RIM? Does RIM have any price cuts or less sophisticated models in mind?

When there are economic challenges, there is a need for trusted brands and experiences. The Blackberry has become what we call a lasting, trusted brand. People prefer Blackberry, we have a growing brand presence. When you look at celebrities and pro athletes and business leaders and thought leaders, they are all carrying Blackberrys. They rely on it.

Would you still consider a Blackberry a high-end device, with a price tag to match?

Right now Blackberrys are very affordable. If you take a look at most of the plans in Europe, for example, you can get Blackberrys at very attractive prices.

And it is not just about low cost but best value. If you want an enterprise solution that is easy to deploy and maintain, it has to be Blackberry.

Your competitors have of late introduced a lot of new features that really step on Blackberry turf, if not improve on it. With iPhone 3.0, for example, Apple has enabled third party application developers access to the types of push technologies that have always set Blackberry apart. Is this going to erode your market share?

I think we'll have to let the consumer space decide that.

What I can say is that it has been very difficult for others to replicate the unique Blackberry value proposition and experience.  They may try and copy what we do, but the fact is we provide a unique experience.

There will be lots of opportunities for innovation in this space. On the one hand the yearly cell phone market is more or less a billion devices, which has been pretty stagnant. But on the other hand, the number of those that are smartphones has been growing steadily. So this is a very attractive market.

But I would argue Blackberry has a lead on global, push technology.

What makes Blackberry different at the end of the day?

You have to remember that Blackberry has been in the market over a decade. We design our own radio code, our own 3G stack, we have our own operating system, we have the most number of security credentials in the world, the most advanced mission-critical servers for Microsoft, IBM and Novell. Plus we provide a push-based consumer platform for all the different mainstream applications like Facebook, Gmail, Myspace etc.

When I introduced the Blackberry 10 years ago, I couldn't explain it, people didn't understand it. People didn't know what we were trying to do. But you know what? That gap gave us the opportunity to get it right - to develop it and perfect it over a decade.

Now everyone has realised the smartphone market is the future, that convergence is inevitable. And they also realise the wireless space is not going to follow the traditional wireline space, because of the issues of battery life, mobility, small form factors, network capacity, network speeds and coverage, it's a much more challenging environment.

Read on to find out how an old, two-way paging system will kill the iPhone

In what way does RIM answer that challenge?

The most important thing we offer is our relationship with carriers. We work very hard to make sure they are successful and to make sure none of our products or applications put an unnecessary or detrimental load on their networks.

Consider the sheer number of devices that get put on these networks every year, and the different characteristics of voice traffic vs. data traffic, and you can see why that is important. Voice calls can only grow in terms of numbers of minutes. But data consumes all the available capacity of a network if you're not careful.

The amount of digital code space we need for a voice conversation has always been the same. There are only three things growing voice - cost, battery life and coverage. If you can talk for less cost, you might talk more often, but it is still limited - there are only so many minutes in a day, only so many days in the week. If you talked 24 x 7, that's the maximum you can consume.

For years, the cellular industry has built its forecasts, its models, its finance, its network capacity, on this voice equation, plus a little bit of data for SMS.

Blackberry was designed to work within those constraints. It was designed to scale very carefully for the carriers.

With data, you can go from an 8kbps voice channel to a 1Mbps data channel very easily - that's a very big discrepancy in capacity utilisation.

I think what the carriers are now discovering now is that as they bring widespread general purpose Internet applications onto the networks, the explosion of data use - which may appear exciting in the beginning - presents some very serious downstream issues.

So the carriers are starting to realise that while the Blackberry offers a very compelling experience, it is also a technology that very carefully conserves their precious network resources.

How does a Blackberry conserve network resources?

It's because we designed this system to work on a two-way paging network. Everything we do is deliberately designed to minimise waste.

That provides two big benefits - as a user it conserves your battery life. Every time you send information to the network from a mobile you drain the battery. Once you exceed a certain level of packet usage, just like a certain number of hours of calling time, your battery is dead. And that's a fact, that's physics. You can't get around that.

If you drain the device battery before the end of the day, the device is not very usable, not very compelling.

At RIM we are very careful about how the Blackberry sends and receives information. So for example if you take HTML email, much of it is spam. With the Blackberry, you at least have a choice of whether you want to read part of it or not. Even if you choose to open it, the device gives you more of the email as you start reading it.

Let's say you were to receive 10 or 20 emails you aren't going to read - with HTML, pictures, PDF attachments included - If I download those messages to any other device, it will drain my battery, use up network capacity, increase my bill - especially if you are roaming. If you have unsolicited download of information to the device in a full download capability, you're basically wasting battery, network resources and money.

That's why the only device consultants recommend or IT shops will even let you use when roaming is the Blackberry, because it minimises that data usage.

That might explain I guess, why carriers are getting so many new subscribers with the iPhone, but are actually sustaining losses on their bottom line?

I don't know why more people aren't noticing that.

The Blackberry can access a lot of data hungry consumer apps from the web, just as the other new devices too. How do these apps fare in terms of network utilisation on the iPhone, say, compared to the Blackberry?

With the Blackberry, we designed it such that the individual apps don't have to maintain their own TCP connection, their own presence database, their own push pipe. All the applications can register to the operating system, and the operating handles these tasks.

That means the apps can go into standby and wait. When another device or gateway sends a message that is pushed directly to the device, the operating system decodes that message - decides whether it goes to Facebook, to Instant Messaging, to SAP, to email.

And that's the most efficient way to do it.