Will Xobni Help BlackBerry Take On the iPhone?

RIM's $3.2 million investment should give the BlackBerry a smart app for managing e-mail in its war with Apple

By Arik Hesseldahl

In an effort to make the BlackBerry (RIMM) stand out further from the pack, Research In Motion's investment arm announced plans to invest in startup Xobni, which makes an e-mail search tool.

The BlackBerry Partners Fund, a $150 million venture capital fund aimed at encouraging development of software for RIM's popular handheld devices, is investing $3.2 million in a round of funding for Xobni that's being led by Cisco Systems (CSCO), which invested about $7 million.

The move marks the fifth investment so far for BlackBerry Partners, a joint venture of RIM, Royal Bank of Canada (RY), and Thomson Reuters (TRI), and reflects the rising stakes in a game of smartphone one-upmanship. RIM, like other smartphone makers, including Palm (PALM) and Nokia (NOK), are trying harder than ever to infuse their devices with compelling tools, games, and other applications after Apple (AAPL) roiled the smartphone market with its iPhone.

The Xobni investment comes the same day Nokia said it will invest in Obopay, a Redwood City (Calif.) startup that makes mobile payment software. Terms were not disclosed.

Mastering Your Inbox

The biggest investment so far for BlackBerry Partners was an $8 million stake in Worldmate, which makes a travel-assistant application for the BlackBerry. Its other investments include $5 million in Digby as well as stakes in buzzd and Neuralitic Systems.

Xobni—inbox spelled backward—creates a tool that works with Microsoft's (MSFT) Outlook and lets users quickly search the contents of e-mail messages, extract contact information, and track down attachments. Microsoft founder Bill Gates is said to be a fan of the application and praised it in a speech last year. The software has been downloaded some 2 million times, Xobni says.