Wireless carriers overpricing BlackBerry service: RIM’s Kavelman

Research in Motion Ltd.’s CFO Dennis Kavelman suggested recently event that some wireless operators are perhaps overcharging for BlackBerry devices and services, which could be hindering a broadening of RIM’s user base. He made the comments during a session at Scotia Capital’s Telecom & Tech 2007 event in Toronto on November 7 regarding a greater push from RIM into the consumer space. There is still room to grow in the business sector – even though the vast majority of the approximately six million BlackBerry users in the world are business users – but the consumer segment also represents a significant opportunity for Waterloo ON-based RIM. The introduction of the Pearl on October 3 marked the first official foray of the company into the consumer space. Kavelman said success in the consumer market doesn’t rely solely on the device. "If you have priced it too , you’re not going anywhere. If you don’t have the right applications on it, you’re not going anywhere. If you don’t have people in the stores trained and knowledgeable on how to use it, sell it and teach people how to use it, you’re not going…anywhere," he explained, adding the company believes all of those requirements are now in place. The BlackBerry service is also very profitable for the carriers, according to the RIM CFO. "The amount of bandwidth a BlackBerry user uses on the network is one, two, three MBs of data, so you don’t need to charge $45 a month, $50 a month to be ," Kavelman said. "That’s not making a margin, that’s making a multiple." While he didn’t directly point the finger at Canadian wireless carriers for the inflated BlackBerry service prices, Kavelman noted that in countries where the competitive environment is less vigorous, prices will be higher. "I think that in certain countries you get operators holding pricing up higher because they can," he said, noting that in others where the competitive dynamics are more spirited, aggressive pricing plans are more likely to appear. "So certainly will hold back the market at that consumer level if you don’t get attractive pricing," he added. In some countries, operators are pushing hard to bring the BlackBerry to the masses by coming to market with low-cost packages. Kavelman highlighted plans that range from $5 or 5 Euros per month for unlimited email up to $20 per month in the United States for an all-you-can-eat, everything-in package encompassing not just email but also Internet browsing. There are also operators introducing pay-as-you-go packages – music to RIM’s ears. "It just means that more and more people will try it," Kavelman said, adding that the BlackBerry should no longer be considered a "prohibitive $50-a-month, $400-device – that’s what’s perceived in the business . You grab it off the shelf, it’s provisioned by the time you walk out of the store with 10 email addresses, it’s got IM, it’s got browsing and a bunch of games." At this point, RIM doesn’t appear to be picky about the type of users it gets: whether they be from the enterprise segment, consumer or prosumer, it’s all about adding more BlackBerry users, plain and simple. "We’re all about adding a couple of zeros to the numbers of users we have and if that means some intro-level pricing plans, then I think that’s a good way to do it," Kavelman said.

Wireless carriers overpricing BlackBerry service: RIM’s Kavelman

News | November 17, 2006

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