1. What were some of the challenges that RIM faced to protect its intellectual property, and how did RIM handle those challenges?
Research In Motion is a Canadian design company that was founded in 1984 in Ontario. It focuses on the development of mobile devices and is widely known for its Blackberry wireless platform, which has revolutionized the market by an all-in-one communication device. The industry, where RIM operates, is characterized by a strong focus on intellectual property (IP) rights that is why it is so crucial for the company to protect its intellectual property carefully. An example of a main challenge faced by RIM in the area of protecting their IP was a lawsuit filed by a small company NTP Inc. in 2001. NTP representatives claimed that RIM did not pay royalties on the radio frequency that was patented by NTP. In 2003 the court released the final verdict in favour of NTP and banned the production and sale of BlackBerry devices. RIM tried to appeal to the U.S. Supreme Court, however the appeal was denied. The dispute between the two companies was eventually settled in March 2006 and RIM had to pay $612 million to NTP (Walden & Peg, 2007). In 2006 RIM was accused for patent infringement again, this time by Visto Inc. In this case RIM managed to reach a settlement for $267.5 million and to acquire a full use of the Visto’s patents (Miller, 2009). However, the experience of the two major lawsuits shows the importance and the challenge of protecting IP rights and their significance for the industries that heavily rely on innovation and technology.
2. What were some of the industry factors that influenced RIM?
The main success factor of RIM was its ability to open a new market for wireless devices – the segment of business people. The constant growth of information flow and the necessity to continuously keep track of the e-mails and messages created the need for a device that would offer the functionality of a computer and an ergonomic format. Thus, the smartphone industry started to grow rapidly since BlackBerry entered the market. Today, the competition in the industry is becoming more and fiercer with the main rivals, Apple and Android, offering more features and applications. The target audience for wireless devices is no longer limited to business people, and this fact has not been addresses well by RIM. Most of the non-corporate customers are looking for diversity and extended functionality of their phones, and these features are not the main strengths of BlackBerry devices.
3. Apply as many TCOs as you can to the RIM.
The introduction of Blackberry smartphones in 1999 has revolutionized the wireless device market. RIM has developed a dominant design in the industry, which set a standard for the development of Smartphones in the future. Although RIM texting technology was not originally the most innovative, it managed to capitalize on the existing technology and to develop a product offer that was widely welcomed by the business community.
Smartphone industry is prone to strong network externalities. They particularly refer to the applications developed both by the company and its complementors (Dziri, 2011). Thus, nowadays more and more users switch from BlackBerry to Android due to a large variety of applications that are hardly available for other operating systems. This fact naturally decreases BlackBerry’s customer base and profitability. BlackBerry, however, managed to exploit network effect by emphasizing high security, which is only possible if all or nearly all devices within the network/company are BlackBerry.
Using the network effect and strong IP protection makes it possible to develop a “winner-take-all” market in the smartphone industry by creating strong entry barriers for the competitors. RIM has been successfully exploiting its advantages in order to capture a large portion of the market share. The status-quo in the market dominated by RIM and Apple was only shifted after the introduction of Android operating systems.
Dziri, R. (2011). Avoiding strategic drifts in a hypercompetitive market: Analysis of Nokia’s
position in the mobile phone industry and suggestions. (Master's thesis), Available
from GRIN Verlag. Retrieved from
http://books.google.it/books?id=RF1FeCj38rIC&printsec=frontcover&hl=it&source=
gbs_ge_summary_r&cad=0
Walden, M., & Peg, T. (2007). Battleground: Business. Westport, CT: Greenwood Publishing
Group.
Miller, R. (2009, July 16). Cellphones rim settles with patent holder Visto to the tune of
$267.5 million. Engadget, Retrieved from http://www.engadget.com/2009/07/16/rim-
settles-with-patent-holder-visto-to-the-tune-of-267-5-milli/
