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RIM and Nokia: Carrier-friendly smartphone alternatives

CEOs from Research In Motion and Nokia say that, though beset by Apple's iOS and Google's Android, they will win over wireless operators by helping them make money.

BARCELONA, Spain--Research In Motion and Nokia share a similar vision for success: help wireless carriers avoid becoming a dumb pipe.

RIM co-CEO Jim Balsillie and Nokia CEO Stephen Elop shared the stage here today at the Mobile World Congress as part of a keynote panel. Competition is heating up between the two handset makers after Nokia's announcement last week that it will team up with software maker Microsoft.

Jim Balsillie, co-CEO of Research In Motion, speaking at Mobile World Congress 2011.
Jim Balsillie, co-CEO of Research In Motion, speaking at Mobile World Congress 2011. Stephen Shankland/CNET

Since the announcement last Friday, Elop has been calling the Nokia-Microsoft pairing the "third horse" in what today is shaping up to be a two-horse race in the mobile industry between the Apple iOS and Google Android platforms. While Nokia and RIM still rank No. 1 and No. 2, respectively, in terms of worldwide smartphone sales, their market share has been giving ground to the Apple and Google platforms.

But where Apple and Google are often seen as a threat to wireless operators because they offer value-added services, such as music, navigation, and even language translation, RIM's Balsillie said he wants to help wireless operators extract value from their networks. And Nokia's Elop agreed.

"The tricky dilemma is that there are 900 different carriers," Balsillie said. "How do you enable these different carriers so that they are not hijacked [by someone else's services]?"

Balsillie said he sees RIM first and foremost as a hardware and e-mail service provider, offering the most network-efficient push e-mail service on the market. He claims that RIM's BlackBerry devices consume about half the network resources that similar products from competitors consume. The company also provides an added layer of security to its services that make it less vulnerable to attacks.

One of the important aspects of RIM's app store, Balsillie said, is the fact that it allows carrier billing for apps as well as within apps. This not only provides a more convenient way for customers to purchase apps or services within apps, but it also allows the carrier to extract some value from the transaction as well.

"We are not an app company," he said. "What we want to do is plug into what the carriers are already doing."

Stephen Elop, CEO of Nokia, speaking at Mobile World Congress 2011.
Stephen Elop, CEO of Nokia, speaking at Mobile World Congress 2011. Stephen Shankland/CNET

Elop said that when carriers talk about Apple and Google there is a sense that they are enabling services thorugh which profits are going in another direction. He said that it's important for the "third ecosystem" in mobile to help carriers retain a lucrative stake.

"The philosophy of this third ecosystem and what Nokia has done for many years is to find a balance with carriers," he said. "There needs to be an operator-friendly player. And we aim to be the most operator-friendly platform out there."

Carriers around the world are embracing devices running iOS software and Android, mostly because these are the devices and services that consumers want. But there is a real fear among wireless operators that the services and capabilities developed as part of these platforms will make the carrier itself irrelevant. It will be Google and Apple that offer all the value to consumers via applications and app store services, while the carrier will only provide basic connectivity. In other words, carriers will become a mere conduit.

"What is most important is how we can avoid being reduced to a 'dumb pipe,'" said Ryuji Yamada, CEO of Japan's NTT DoCoMo, who also participated in the keynote panel today. "We are susceptible more than ever to becoming this dumb pipe because of smartphones. And we are determined to avoid it by all means."

China Mobile CEO Wang Jianzhou in his keynote presentation yesterday expressed similar sentiments and advised carriers to continue innovating to avoid falling into this trap.

But some providers say that it's too late.

"Mobile carriers are becoming dumb pipes," Masayoshi Son, CEO of SoftBank, said during a keynote session earlier today. "That's the depressing reality."

Indeed, NTT's Yamada described a service his company could offer that provides automatic translation for people speaking different languages. For example, a Japanese person could talk to his friend who speaks Spanish by using an NTT service.

But Google is already offering this exact service. In fact, the Web powerhouse showcased the Google Translation application at Mobile World Congress a year ago. Yamada acknowledged that the battle to stay relevant will not be easy. But he said it's a battle that carriers must win.

"Theoretically, we could offer [this translation] service as part of a carrier cloud service or through a third party," he said.

"It's a race between the camps," he continued. "But as a network operator, we are in the best position to know what the network is capable of. And we are determined not to lose this race."

CNET's Elinor Mills and Stephen Shankland contributed to this report.