BlackBerry More Profitable For Carriers?

By Bla1ze on 6 Apr 2009 09:16 am EDT
BlackBerry More Profitable For Carriers?

As we reported last week, there is nothing wrong with RIM when it comes to profit margins these days. Somehow, despite the current state of the economy they are not not only showing no sign of slowing down any day soon, but seem to be growing and thriving. But one question was raised over at Seeking Alpha which is something I have been really wondering for a while now. What about RIM makes it so profitable to carriers to constantly push products? Thankfully, co-CEO Jim Balsillie was able to answer this question to Seeking Alpha in an interview with them. The answer in one word is Bandwidth... it's Bandwidth makes RIM profitable for carriers.

To market that you are most of the network consumption of a carrier I don’t think is a very good marketing plan. Because what you’re seeing is, in this capex environment, when there is scarcity—when you have call performance issues, most of the time it’s a capacity issue. And that’s what happens. You just get stung on capacity.

So, you’re running a 5kbps voice stop and somebody’s trying to stream a TV show for a 100 kbps or a 80 kbps, I mean, you’re taking away 10 to 20 voice calls of capacity.

Time and time again in interviews and speeches such as Mike Lazaridis' one at CTIA most recently, "network optimization" has come up "creating applications that use minimal network resources" is another quip often heard, so overall it costs carriers less to run BlackBerry devices on their network then some other devices out there, due to the network optimization that is built into BlackBerry devices. Great, so this must be why my browser is limited to approx a 5MB download then, huh? Lets hope as networks evolve (LTE anyone?) that we can at least have the ability of downloading podcasts on our devices without jumping through hoops. So umm... any questions why we hear so many complaints about AT&T's network?

[ BerryReview ]

Topics: News & Rumors

Reader comments

BlackBerry More Profitable For Carriers?


I knew it! That $30 data plan that the carriers force you to have is making them a killing. I bet it only costs them $10 or so. I'm not complaining though. I love my blackberry and have no issues with my service plan.

Did you read the article? He just said one data application can take up the bandwidth of 10 to 20 voice calls. Yet, the data costs about 1/3 of what a voice plan costs.

Oh yea, Jim Ballseyseal... the one that got RIM fined 250 million for Stock Option fraud and had to repay the largest personal sum for illegally profiting from said scheme... that guy?


Simple math many of us pay the plan versus going to a Win Mo device. So if I were a carrier why should I lower the cost if people are still buying it.

Jim Balsillie's comments in this interview are in stark contrast to Mike Lazaridis' keynote at CITA. Unlike when Mike got up to speak, I don't feel like Jim is trying to snow me. He gives it to me straight. Jim sounds like he knows his stuff and is firmly grounded in reality. Bravo Jim, bravo.

Maybe these two guys balance each other out :)

But add WiFi into the mix, such as TMO BBs often do, and you use even less bandwith than a regular data plan BB. Perhaps the reason TMO still doesn't require a data plan? Or are theey just that smart that not everyone will use a BB to it's potential, but wants the clout of owning one...?

Well it is a hype down here in venezuela, everybody is screaming for a BB (you name the model)... and the carriers makes ridiculous profit of the DEVICE and The data plan. they sell devices starting at 1.100 USD for a Curve 8310/20/30 and 8220 and 2000 USD for a 8900 or Bold. And data plans attached starting at 35 USD/ per month + your voice plan.
Wondering why we are on the top BB users worldwide!:...