By Andy Reinhardt Until recently, sending and receiving e-mail on a handheld wireless gizmo was a privilege reserved for corporate execs, investment bankers, and top-tier traveling salespeople.
Case in point: For all the buzz it generates, Waterloo (Ontario)-based Research in Motion (RIMM) has only about 3 million users for its iconic BlackBerry. That's roughly the number of mobile phones Nokia (NOK) sells in four days.
HUGE CONSEQUENCES. Smelling a big opportunity, newcomers have tried to worm their way into the business pioneered by RIM. Startups such as Good Technology, Visto, and Seven have rolled out software that lets all manner of portable devices connect to corporate e-mail systems.
And now the battle has suddenly gotten much hotter. On Sept. 13, Finnish giant Nokia announced an e-mail package, called Nokia Business Center, that it hopes will "bring mobile e-mail to the corporate masses."
This isn't Nokia's first foray into mobile e-mail. The company's Communicator line of phone/PDA hybrids already works with a host of third-party packages, including offerings from the mobile e-mail startups and a version of the software in RIM's BlackBerry. But this marks the first time Nokia itself has waded into the e-mail software business -- and the repercussions could loom large.
What sets Nokia's product apart is its dramatically lower price. In an attempt to kick-start mobile e-mail by spreading it as widely and quickly as possible, Nokia will give away unlimited free downloads of a basic version of its e-mail client software to customers who buy a copy of the Nokia Business Center e-mail server.
CARRIER COST BURDEN. The server sells for $2,200 for every 400 users. The basic client lets users read, reply to, and delete messages via a small selection of Nokia smart phones -- with all the actions synchronized back to a Microsoft Exchange mail server in the office. Nokia will add Lotus Notes and Domino support later. And because the client comes written in industry-standard Java software, dozens of other handsets from a range of makers should gain access to it soon.
Important in the equation is that Nokia's technology also cuts operating costs. RIM has won the affection of mobile carriers by bringing them lucrative clients -- high-usage, high-margin mobile junkies who sop up bandwidth on an expense account. But carriers pay a price for it: RIM charges $7 to $10 per user per month to route all e-mail traffic through its centralized network operation center.
The approach used by Nokia does away with the outside center, letting mobile operators charge less for carrying e-mail traffic, while still keeping more of the lucre. "We are focused on changing the economics of mobile e-mail adoption," says Mary McDowell, executive vice-president of Nokia's Enterprise Solutions unit.
LOVING RELATIONSHIP. Nokia's e-mail thrust gets more profitable for the company if users elect to upgrade the client software. The "professional" version -- which goes for a one-time fee of $68, or $86 for a perpetual license -- has a more graphical user interface and supports file attachments, Microsoft Outlook scheduling, and access to corporate e-mail directories.
"Nokia is betting that customers will take the basic version, become comfortable with it, and then upgrade," says Jeremy Green, an analyst with London-based telecom researcher Ovum.
At first blush, the biggest loser in this scenario looks like the already-embattled RIM. But, curiously, Nokia and RIM have a strong and enduring partnership. Nokia was the first company to license the rights to re-create the Blackberry experience on a device not from RIM.
SMALLER FISH. The joint effort comes late to market, but RIM co-CEO Jim Balsillie sounds exultant about its potential. He says as many as 30 carriers have lined up to sell the new Nokia Communicator 9300 handheld with BlackBerry technology built in, set to ship this quarter. "It will shoot out of the gate," he says (see BW Online, 9/15/05, "With Friends Like Nokia").
Balsillie says Nokia is going down-market in search of mass volume. But he argues that the move leaves RIM plenty of room with big corporate customers who trust its years of experience. Nokia's product, he says, "lends itself to an individual in a corporation or a small group."
But Nokia clearly has a wider audience in mind. "We're going after the full 650 million corporate e-mail in-boxes," says McDowell. "We want to knock down the barriers to mobilizing the entire corporate e-mail market."
IN NOKIA'S PATH. Along the way, Nokia could topple a few upstarts that up to now have put up a valiant fight. Redwood Shores (Calif.)-based Visto has 200,000 users and recently announced new deals with Nextel and No. 2 French carrier SFR, an affiliate of Vodafone Group (VOD).
Rival Seven Networks of Redwood City, Calif., which recently merged with Finnish competitor Smartner, has signed up 5,000 corporate accounts and struck e-mail deals with 67 mobile operators around the world.
Still, both Seven and Visto could take a hit from Nokia's entry. Perhaps better protected is Good Technology of Santa Clara, Calif., which has surged in popularity by offering e-mail through Palm's Treo handhelds. Good has a deal with Nokia to collaborate on e-mail software for demanding, high-end corporate clients.
MICROSOFT'S STAKE. Danny Shader, Good's CEO, welcomes Nokia's entry as a boost for the mass market. "The more volume they do, the better they can compete with RIM in hardware," he says. Meanwhile, he thinks big corporate customers will prefer Good's technology -- which uses an outside service center, just like RIM -- for its predictability and security.
The biggest question mark is what Nokia's move means for Microsoft (MSFT). The software king announced last June that it would provide an upgrade to its Exchange Server tuned to support mobile e-mail. The software will ship this quarter.
The so-called Service Pack 2 will enable exchange users to send and receive e-mails on mobile devices, with full synchronization as well as access Outlook calendars and other data. Microsoft is taking the same approach as Nokia, eliminating the external network operations center, but its software is optimized to work with Windows-based mobile devices.
"BLACKBERRY TAX." Microsoft found some comfort in the fact that Nokia's approach so closely mirrors its own. "There's a big opportunity now," says John Starkweather, product manager for mobile and embedded devices at Microsoft. He especially sanctions the idea of eliminating outside operations centers.
"Carriers are looking for ways to do away with the BlackBerry tax," he says. But at the same time, Starkweather faults Nokia for requiring a separate server to handle mobile e-mail, instead of running the whole shebang on Microsoft Exchange. "If you really want to open up mail to the masses, you need to reduce complexity," he says. "Organizations don't want to have to pay to use and manage another piece of software."
Nokia defends its approach as the only way to give customers complete choice. The Nokia Business Center server will swap e-mail with servers from Microsoft or Lotus, including earlier versions of Exchange, and manages phones in the field, even downloading new versions of the client software automatically. Thanks to Java, it works equally well with handsets from any manufacturer.
DRAMATIC TURNING POINT. And Nokia can upgrade features, such as support for voice messages, in its own time frame, rather than waiting for the next Microsoft update. "This is the architecture everybody else is using," says Scott Cooper, vice-president of mobility solutions in Nokia's Enterprise Solutions group.
With high-speed mobile networks coming online all over the world and more e-mail software options flooding the market, it would appear that now is the long-awaited golden moment for mobile e-mail. British market researcher Quocira finds that 60% of businesses are contemplating wide-scale rollout of mobile e-mail access for their employees. It looks as though Nokia has arrived just in time.
Reinhardt is a correspondent in BusinessWeek's Paris bureau
with Heather Green in New York and Cliff Edwards in San Mateo