Total Pageviews

Wednesday, January 23, 2013

RIM Still Unable to Clarify Its Fee Structure

For their maker, Research in Motion, BlackBerrys have always been the gift that keeps on giving. Until now, every BlackBerry handset has continued to generate monthly service fees for the company until it falls apart or is stuck in a drawer.

In preparation for next week’s debut of the BlackBerry 10 phones, on Wednesday the company will release software that corporate and government users will employ to manage those phones. And as comments made last month by Thorsten Heins, the company’s chief executive, revealed, that software release may raise concerns about the future of RIM’s lucrative service business.

BlackBerry 10 is an all-new line which RIM hopes will revive its fortunes. But the attention is also being focused on the service fees that accounted for about 36 percent of RIM’s revenue in its last quarter. Unlike its handset business, RIM’s service operation remains proftable, perhaps even very profitable, many analysts agree.

So there was some alarm among analysts in late December when Mr. Heins said during an earnings call that sweeping changes coming in the BlackBerry 10 operating system mean that consumer BlackBerrys and even some phones used by corporations and governments will no longer generate monthly fees for the company.

All data sent to and from current BlackBerrys is run through RIM’s own global network. It compresses Web pages and e-mails to boost the speed of browsing and lower the amount of wireless data users consume. That service will vanish on consumer BlackBerry 10s and, with it, those fees to RIM.

Corporate and government users add special BlackBerry Enterprise Servers to their networks and gain, among other things, high levels of security. On Wednesday, RIM will allow those users to download a new BlackBerry 10 version of its server software, one that will also allow companies to manage employees’ iPhones and Android-ba! sed phones.

The price of that server software and the associated monthly fees, which are levied through cellphone service providers, have become an issue at some cost conscious corporations. In an apparent bid to address that concern, Jeff Holleran, the senior director of enterprise product management at RIM, said that the company has dropped license fees for the server software. Corporate users will, however, continue to pay license fees for every phone they connect to their BlackBerry servers. (In a promotion, those device license fees will be waived until December for companies currently using BlackBerrys who switch users to BlackBerry 10.)

Despite repeated questions, Mr. Holleran would not say what BlackBerry 10 means for the second half of the cost equation: the monthly charges to business and corporate customers for RIM’s network services. Before a spokeswoman ended the line of questioning, Mr. Holleran said he would “defer” queries about fees to the company’s financial side. Asked later by e-mail for clarification, the spokeswoman, Kim Geiger, said the company’s only comment remained Mr. Heins’s remarks from last month. In investor notes, many analysts faulted Mr. Heins for his lack of clarity. At the time, Mr. Heins said that companies would be able to pick and choose which services they use which will affect their monthly bills. But he offered no specifics.

“It’s a little bit of a menu thing that you can choose and pick and that then will basically govern the pricing,” he told analysts.

When Ehud A. Gelblum, an analyst with Morgan Stanley, followed several other analysts in pushing for details about service charges during that conference call, Paul Carpino, RIM’s vice president of investor relations, stepped in before Mr. Heins replied.

“You’ll have to wait until we start to launch some of these services to get more detail,” he told the analyst.