COLUMN - Blackberry's biggest rival may be itself: Eric Auchard

By Eric Auchard

LONDON (Reuters) - Research in Motion officials do their best not to laugh when asked if they fear the rise of a Blackberry-killer, some theoretical device that does everything its coveted e-mail phone does, only better.

But Blackberry's biggest threat may come from itself. As the company's latest quarterly results suggest, there is a gulf between its pricey corporate phones and price-sensitive consumer models that are cutting into margins.

When a loyal Research in Motion (RIM) customer such as a corporate IT manager discovers he's paying more than twice the price at work that his 16-year-old daughter is paying at retail, he feels ripped off. That in a nutshell is the crisis RIM faces.

Of course, RIM's crown jewel remains its corporate business. Its franchise there stems from the thousands of company network managers who rely exclusively on RIM's e-mail management software to ensure corporate communications are securely delivered to their intended recipients. Companies pay a premium for this reliability. Those investments lock customers into Blackberry services and prevent other competitors from breaking in. However, this is changing.

After years of failures, Microsoft and Nokia now have secure e-mail systems that offer credible alternatives. They give these away to corporate clients, putting longer-term pressure on Blackberry's corporate franchise.

The success RIM has achieved in consumer markets has defied all analyst predictions. But consumer success has come dearly in terms of profit margins and falling average selling prices.

Eighty percent of its new users in the quarter ended in May were non-enterprise, retail customers rather than mainstay corporate clients. The key difference between corporate and consumer markets is that RIM lacks the customer control over consumers it has had in offices.

Ben Wood, an expert on the worldwide handset market at U.K.-based market research firm CCS Insight, says Blackberry has made huge inroads with teens and young adults by working with operators to market affordable, prepaid phones.