RIM avoids SIM in battle for control

In April 2009, RIM’s fledgling BlackBerry App World virtual storefront offered PayPal as its sole billing mechanism. RIM co-CEO Mike Lazaridis said back then, to the great relief of telcos, that it was working to introduce carrier billing options sometime in the future. Then, only last month, Vodafone announced at Mobile World Congress that it had entered into an agreement with Research In Motion (RIM) to provide operator billing for BlackBerry App World sometime later this year. Vodafone’s company blog proudly boasted that “with so many interesting announcements during the course of the show last week, we wanted to highlight this as it will no doubt be of interest to the community.”

“With 'Charge to Bill' for BlackBerry App World, consumers will have the flexibility of charging the cost of their app, or a payment within the app, directly to their bill. It also has the added benefit of not interrupting the user experience in the same way that credit card or PayPal payments can. This added layer of convenience makes it easier for consumers to purchase content and services, and has potential to increase the number of paid-for downloads on the platform.”

According to a recent story in the Wall Street Journal, the fleeting romance and impending engagement with mobile operators may never reach the altar. It seems a tiff is developing over electronic wallet functions and where the users’ payment credentials will be stored. The operators have been espousing for the longest time that this data should be encrypted and stored in the SIM card, which they control, while RIM says it should be in a secure area of the phone.

If SIM-based the customer will be able to use it in different devices and the operators will have ultimate control over who can use the SIM features. They have also been hammering the issue of security offered via the SIM for which they would charge a nominal ‘rent’. The RIM plan is to store the same info on the device itself. When you think of the potential of the m-payments and m-banking markets it is easy to see why everybody wants a piece of the action, especially the control part.

The Wall Street Journal says that large operators are already telling RIM and other vendors that they will only sell phones with credentials in the SIM card.For RIM, it may be a fight it should avoid at all cost. The very same operators it is riling are also its largest handset distribution channel and critical partners in its email revenue chain. It may be flying high just now, with analysts expecting double-digit growth and a considerable increase in profit when Q4 figures are announced later this week.

The market is still waiting on the release of RIM’s Playbook announced in September but operators may have second thoughts in supporting it if RIM becomes a competitor instead of partner. It also highlights the tenuous business ecosystems in place and how far players might go to get control of potential future business. This is one fight RIM may want to shy away from.