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RIM and Microsoft Alliance: Who Wins?

Microsoft stands to gain from the alliance

RIM introduced an unexpected guest speaker at BlackBerry World yesterday - Microsoft CEO Steve Ballmer. Ballmer unveiled a new partnership between the two which will have Microsoft's Bing replace Google as the default search provider on BlackBerry mobile devices. Microsoft stands to gain from the alliance, but it's hard to see what value is there for RIM.

Ballmer told the BlackBerry World audience, "We're going to invest uniquely into the BlackBerry platform." There is no further explanation about what "investing uniquely" looks like, but many analysts note that Microsoft essentially bought its partnership with Nokia for $1 billion, and speculation suggests that Microsoft is probably contributing heavily to RIM's coffers as well.

Microsoft seems to be tackling the mobile market through a combination of internal solutions - like Windows Phone 7, and ostensibly developing Windows 8 with tablets in mind, and a team approach - building a coalition of rivals with a sort of "the enemy of my enemy is my friend" strategy.

Bing is obviously the default search provider on Microsoft's Windows Phone 7 platform. There was speculation at the beginning of 2010 that Apple might make Bing the default search provider on the iPhone, but that never seemed to pan out.

Default or not, Bing is available on rival mobile platforms, though. There is a Bing app for Android, and a Bing app for the iPhone.

Microsoft recently introduced a Bing app designed specifically for the iPad which received kudos and has been proclaimed by many to be a must-have killer app for the Apple tablet.

But, in each of those cases, Microsoft relies on the smartphone or tablet owner to be aware enough, and care enough, to download and use the app. Many users aren't really that invested in whether Google or Microsoft provide search results, as long as when they search they get results. So, there is value to being the default.

RIM, on the other hand, doesn't have anything obvious to gain. Google is the leading search provider, and it seems reasonable to assume that many users would prefer to stick with Google. RIM might actually annoy some customers by changing the default to Bing. But, it probably won't matter enough to negate whatever financial incentive Microsoft is throwing at RIM.

Mobile search is the next great battleground, and Microsoft is the only rival search provider capable of taking on Google...at least right now. Bing "competes" with Google Search about as much as Mac OS X "competes" with Windows - occupying such a distant second place that it's hardly worth noting. But, just as the Mac is gaining ground, so is Bing, and it is enough to cause some concern for Google.

Microsoft alone has less than 10 percent of the smartphone market in the United States. But, once RIM starts rolling out BlackBerries with Bing as the default search, and Nokia starts cranking out Windows Phone 7 smartphones with Bing as the default search, Microsoft may be able to snag a much larger piece of the mobile search pie.

So, to answer the question. It seems that Microsoft has the most to gain from this partnership, while RIM will get some undisclosed "investment" to buy its loyalty.

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