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BlackBerry, Treo Add Color, Features to Speed Up Consumer Sales

By Ville Heiskanen

March 27 (Bloomberg) -- Research In Motion Ltd.'s BlackBerry and Palm Inc.'s Treo, the best-selling so-called smart phones in the U.S., are shedding their corporate colors to pursue consumers.

Once aimed at business clients and available in black or gray, BlackBerry and Treo are challenging traditional consumer phone makers such as Motorola Inc. amid record demand for the e- mailing handsets. The latest models come in crimson, copper and white, and double as music players and video recorders.

``We've seen a huge run-up of sales'' to consumers, said Michael Woodward, a director in charge of advanced phones at San Antonio-based AT&T Inc., which started selling crimson Treos and ruby BlackBerrys this month.

Sales of phones offering e-mail and advanced features will soar 43 percent this year to almost $6 billion in the U.S. alone, according to Strategy Analytics, a Boston research company.

Motorola and Nokia Oyj, the two biggest mobile-phone makers, have failed to extend their dominance into e-mail phones, giving Waterloo, Ontario-based Research In Motion and Palm a chance to push their products to consumers as an alternative. Samsung Electronics Co. also has made strides with its BlackJack.

Keynote Speech

This week provides another example of the shift, when Michael Lazaridis, co-chief executive officer of Research In Motion, gives a keynote address at the CTIA Wireless trade show in Orlando, Florida. He replaces Motorola CEO Ed Zander, who dropped out, citing an ``unforeseen scheduling conflict.'' Last week Motorola forecast a loss for the quarter because of price cuts.

The show, which opens today, is the wireless industry's largest.

Sunnyvale, California-based Palm plans to introduce more products aimed at the ``average consumer,'' CEO Edward Colligan said in an interview. ``More and more people will be compelled to look at smart phones, and we have got to do something to make them simpler, easier and more accessible.''

Research In Motion had 45 percent of the e-mail phone market in the fourth quarter, while Palm had 18 percent, Framingham, Massachusetts-based researcher IDC said. Schaumburg, Illinois-based Motorola was third with 12 percent. Nokia, based in Espoo, Finland, didn't crack the top five.

More Than Double

Shipments of the phones may more than double to 18.4 million units this year from 8 million in 2005, Strategy Analytics said. While figures showing the breakdown by businesses and consumers aren't available, consumers are fueling the growth, analysts and executives said.

``Previously the consumer channel for these devices was gravy on top of what we sold to enterprise,'' AT&T's Woodward said. ``Now it's a substantial portion of our business plan.''

As many as 20 percent of customers buying a new mobile phone will get an e-mail-capable device, he said.

AT&T advertises Samsung's BlackJack with spots that focus on music and feature artists including the Pussycat Dolls. Palm in December started a $25 million marketing campaign for the Treo 680, its newest phone, and runs joint ads with companies such as Google Inc., the most-used Internet search service, to appeal to an audience beyond business users.

The interest in advanced handsets has helped fuel speculation Palm may be bought by Motorola or someone else, Oppenheimer & Co. analyst Lawrence Harris in New York said last week.

Carrier Revenue

The advanced phones boost revenue at carriers. A subscriber with a smart phone spends $6.31 on data services such as e- mails, instant messages and Web browsing, compared with 89 cents for customers who don't have the devices, according to Port Washington, New York-based market researcher NPD Group Inc. AT&T's data revenue rose 69 percent last quarter.

The silver-and-black BlackBerry Pearl came out in September, followed by a white version in January and now the ruby model. The Treo 680, introduced in October, debuted in four colors: crimson, copper, arctic and graphite. Samsung, based in Suwon, South Korea, added the BlackJack in November.

Nokia, the world's biggest mobile-phone maker, introduced its silver E62 e-mail phone last year. No. 2 Motorola started selling the all-black Q, also an e-mail phone, in June for $199.99 with a service contract. It now sells for as little as $79.99.

Never Go Back

Motorola spokesman Chuck Kaiser declined to comment, citing a ``quiet'' period ahead of its earnings release. Research In Motion officials also declined to comment for the same reason.

Nokia spokeswoman Laurie Armstrong said the company sells several e-mail-capable devices aimed at consumers. She declined to discuss the E62, saying the company doesn't comment on sales of individual devices.

Samsung spokesman Kim Titus said BlackJack sales exceeded the company's expectations and that it is working on new e-mail devices.

Tyrone Chee bought a BlackJack for $270 this month to get his AOL and Google Gmail e-mails. Chee, who once owned a Motorola Razr, also used the new phone to watch video of auditions from Fox's ``American Idol'' TV show while he waited at a restaurant.

``The BlackJack has the most incredibly crystal-clear screen I've ever seen on a mobile device,'' said Chee, a 46- year-old information technology supervisor from Maplewood, New Jersey.

``I love it,'' Chee said. ``I don't think I'll ever go back.''

To contact the reporter on this story: Ville Heiskanen in New York at [email protected] .
Last Updated: March 27, 2007 00:13 EDT