Blackberry makes smart, Bold move to HSPA

This week, Blackberry entered the HSPA smart phone game, launching the very impressive Blackberry Bold. First reactions are that RIM has launched both a highly desirable, well functioning device. The handset has a strong feature set including HSDPA, WiFi, GPS, a new vivid display, extra storage and software upgrades. It is faster, more powerful and very multimedia friendly.

Rather than compare the Bold to any future 3G iPhone (which grossly misunderstands the market) or discuss shelf position ahead of an Apple 3G iPhone launch at AT&T, we will briefly comment on an issue in the smart phone market that the Bold raises: HSPA is the future and EDGE-only smart phones will increasingly struggle to compete.

RIM (like Apple at the iPhone launch) has long been an advocate of EDGE. However, arguments about the user-experience, battery life and so on are inconsequential when carriers and end-user are demanding HSPA. It is clear that although EDGE and its evolution have significant prospects the technology will predominately be a fallback for HSPA in RIM's key markets - not a substitute.

Many operators have not deployed EDGE, instead focusing on 3G, which means that for applications apart from email, GPRS provides a very poor user experience. Also, as RIM has positioned the Bold wisely, usage will be increasingly around multimedia and other data-hungry applications for which HSPA is the logical technology.

Although it varies from market to market, 3G migration is well under way in RIM's core, developed markets. In many, national 3G coverage is already in place, with 2G/EDGE confined to legacy device support only. Here, 2G is quickly becoming a discount graveyard - far from the place RIM should position its market leading handsets. As in other areas of its business, although it is still clearly its largest market, RIM must not allow a North-American-centric perspective to blur its potential global prospects.

No doubt the 8707 Blackberry has been achieving some success, but it was always a stopgap before the launch of a 3G multimedia-centric device of the Pearl or Curve's standard.

Although RIM seems to have exceeded expectations, it has taken considerable time, with delays resulting in losses to 3G smart phone competitors and growth of competing push email solutions. It will make sense for operators to continue to range numerous Blackberry models. but Bold significantly improves RIM's position. The device will also help 3G-only operators succeed, especially in markets such as Korea and Japan where RIM has failed to gain much traction.

As with Pearl and Curve, the Bold has the potential to be a worldwide hit. However, unlike those handsets, the device supports tri-band HSDPA, which along with its impressive features see it positioned in the increasingly large HSPA-dominated market.

Nathan Burley, Analyst

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