So when RIM agreed in March to pay US$ 612.5 million for the “full and final settlement of all claims” by NTP, many industry experts viewed the agreement as a relative bargain for RIM.

Following the settlement, Mike Lazaridis, RIM’s president and co-CEO, and Jim Balsillie, the chairman and co-CEO, gleefully wrote their “Message To All BlackBerry Supporters,” which proclaimed, “You can rest assured that BlackBerry is here to stay.” Lazaridis and Balsillie’s optimistic message suggested that the lone threat to BlackBerry’s survival was its now-moot “lengthy and complex patent battle.”

But before we get too giddy with RIM’s US$ 612.5 million bargain by upgrading RIM shares to “strong buy,” as Standard & Poor’s equity research analyst Kenneth Leon did recently, let’s take stock in the real threat facing the manufacturers of wireless fruit. Since it was introduced in 1999, BlackBerry has grown from a company that relays email to wireless devices to...a company that relays email to wireless devices.

Today’s BlackBerry is ostensibly the same as it was in 1999.

Yes, it added a phone, web access, ringtones and even a photo album in the last seven years. But seven years is an eternity in technology time. Seven years ago, flooz.com was hitting its stride, grown men were weeping in their Y2K bunkers, and “The Blair Witch Project” became the first film to successfully leverage the power of the World Wide Web into hundreds of millions of dollars. Gordon Moore, the co-founder of Intel, would tell us that the integrated circuits of 1999 had about 250 times fewer transistors per square inch compared to the integrated circuits of today, but you wouldn’t necessarily know it by comparing my 1999 monochrome RIM 850 to the color RIM 7100t that I use today.

In Lazaridis’ and Balsillie’s bold “here to stay” message, they described the “new” face of RIM in effervescent terms: “Today, BlackBerry is a full-blown platform supporting a wide array of wireless applications for business, government and the mobile lifestyle.” For those who have not taken a P.T. Barnum vaccine, this statement translates roughly as follows: “We are still a company that just relays email to wireless devices.”

While RIM certainly dodged a bullet in its intellectual property suit, the company’s greatest vulnerability can actually be found in its own complacency. RIM was more or less the only game in town in the years following its inception, and it certainly made the most out of its near-monopoly position in the market. But times have changed, and it now faces competition from formidable foes, including Microsoft and its high-profile launch of Windows Mobile.

To fully understand the threat posed by Windows Mobile, it is necessary to unveil the wizard behind RIM’s techno-curtain. Fully integrating BlackBerry handhelds into an organization’s email system requires a software package called “BlackBerry Enterprise Server” (BES). BES utilizes a “push procedure” in which RIM software monitors the user’s new emails, contacts and calendar entries that are “pushed” to the BlackBerry device automatically. Newly arrived emails are instantly forwarded to RIM’s Network Operations Center, then relayed to the user’s wireless provider, and then delivered directly to the user’s BlackBerry device. As long as the user has wireless coverage, the BES can constantly send the most current data, therefore keeping the handheld device up-to-date.

Of course, the wizard of RIM doesn’t work for free. For an IT environment with 20,000 users, the costs amount to roughly $1.5 million. Ten additional Exchange email servers cost US$ 76,000; 40 BES servers cost US$ 180,000; and RIM licensing costs US$ 1.2 million. But the ability to wirelessly email your boss that you’re under the weather and won’t be coming to work is priceless.

And priceless—meaning “free”—is where Microsoft’s attack on RIM enters the picture. Companies that run exclusively on Windows Mobile eliminate the cost of the BES server, reduce the need for Exchange email servers, and forego RIM licensing fees in exchange for free Microsoft Mobile licensing. Pieter Knook, senior vice president of Microsoft’s Mobile and Embedded Devices and Communications Division, explained, “With the RIM scenario … not only do you have to buy some extra Exchange servers because of the load that’s placed on them by the Blackberry front-end server, but each of those additional servers (has) a [RIM] client access license associated with them.” Hammering home Microsoft’s elimination of the RIM middleman, Knook added, “We have a direct connection between the email environment and the device.”

Wireless Watch, a weekly newsletter, described Windows Mobile last year: “Microsoft aims to kill BlackBerry.” It added, “Every corporate type has a BlackBerry, and they all have Outlook. What is the cost going to be to RIM Server when [Windows Mobile] comes out and they’re not priced? Microsoft is giving it away for free.”

In addition, Windows Mobile devices intend to overshadow the email-centric BlackBerry by including the standard Windows Office applications, enabling users to access Outlook, Word, PowerPoint and Excel from their handhelds just as they can on their desktops. Calum Russell, a manager in Microsoft’s mobility business group, explained, “Everybody says wireless e-mail is worth it, but getting the value is tougher…. The big benefits we are seeing are coming from email-plus applications.”

Notwithstanding Microsoft’s assault, RIM has one enormous advantage in this wireless war: an entire army of “CrackBerry” addicts. BlackBerry had two million subscribers in November 2004. Despite slowing sales and trepidation in the face of its patent-infringement battle, the company surpassed five million subscribers in March 2006.

But unless RIM can continue to provide BlackBerry Nation with more exciting applications and greater overall innovation, its stranglehold on the market will certainly soften, particularly in the face of the Goliath that is Microsoft. As gloomy as 2006 started for RIM, it may face even greater adversity in 2007 if it can’t figure out a way to become more than just a company that relays email to wireless devices.

Speed has always occupied a peculiar place in RIM’s history. RIM developed its handheld’s original name—“Strawberry”—in just two weeks in reference to the tiny buttons on its keyboard which resemble strawberry seeds. The company’s naming experts thought “straw” sounded too slow, so BlackBerry was immediately born in its place. Seven years later, quite a bit of mold has grown on our beloved wireless fruit. Let’s hope RIM regains some of its previous breakneck speed, lest it wither on the wireless vine.

Gabriel Stricker is a New York-based marketing and communications expert, and author of the guerrilla-marketing bestseller, Mao in the Boardroom: Marketing genius from the mind of the master guerrilla. He has used a BlackBerry since its inception in 1999.