Commentary

RIM's Focus Should Be On Phones, Not Advertising

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Does Research in Motion really need its own ad network? The Wall Street Journal reported today that the BlackBerry maker is in talks to buy mobile ad network Millennial Media but is balking at the $400 to $500 million Millennial is seeking. (Neither side has confirmed the negotiations.)

Millennial has often been mentioned as an acquisition target following the purchase of AdMob by Google and Quattro Wireless by Apple. But speculation mostly centered on other major Web players like Yahoo and Microsoft as potential buyers motivated by their efforts to keep pace with Google and Apple on the mobile ad front.

On first blush, the same logic would seem to apply to RIM. With chief mobile rivals Google and Apple trying to capitalize on the growing mobile ad market directly via acquisition, so should RIM. The push into advertising would also fit in with the company's goal of making BlackBerry a bigger player in the consumer smartphone market, with more media-friendly features.

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But for RIM, a foray into mobile advertising looks like even more of a leap than for Google or Apple. Before buying AdMob, Google obviously was already involved in both online and mobile advertising via AdWords and AdSense, making the acquisition an extension of an existing business. Apple's purchase of Quattro was more of a departure since the technology giant hadn't previously been directly involved in the ad business.

But the move was closely linked to its strength in mobile applications, where Apple has a big advantage over Google, and especially RIM. The iAd platform since built by Apple on top of Quattro's platform is focused on in-app advertising.

But with its traditional focus on supplying phones and mobile communications for corporate users, RIM has even less background related to running an ad network. Getting into mobile advertising also isn't going to help RIM with its core problem of losing market share to Apple and Android.

RIM has 17.8% of the global smartphone market, down from 19.1% in the year-ago quarter, according to the latest data from market research firm IDC. In the U.S., Android in the second quarter surged past RIM to become the top smartphone operating system, with 34.1% market share. Much of RIM's hopes for cracking the consumer market are riding on the new BlackBerry Torch smartphone, which debuted to mixed reviews earlier this month.

RIM also lost share in mobile advertising according to monthly ad data released Wednesday by Millennial. This report showed the company's BlackBerry OS dropped a percentage point in July to 16% share of impressions on the ad network compared to 19% for Android and 55% for Apple's iOS.

For now, RIM's focus should be on selling more BlackBerry phones to consumers to keep pace with Android and Apple in its main business as a manufacturer.

Without a large and growing consumer audience for its devices to begin with, RIM won't be able to make much headway in mobile advertising anyway.

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