As Wall Street looks for double-digit growth when RIM reports its fourth quarter results on Thursday, the company has reportedly picked one of the first big fights in the boom area of mobile payments.
According to the Wall Street Journal, RIM is “locking horns” with operators over control of data as smartphones take on electronic wallet functions.
The carriers and RIM have different viewpoints on where the user's payment credentials - the data held in the magnetic strip of a credit card - should be stored on a handset. The carriers believe 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.
The dispute highlights the fight among different players in the m-commerce chain to take pole position, and own the main customer relationship.
If the data is stored in the SIM card, it can be transferred between devices and the customer is related mainly to the operator, while in RIM's vision the user is tied to the gadget itself.
WSJ says that large cellcos - the biggest distribution channel for handsets in western markets - are already telling RIM and other vendors that they will only sell phones with credentials in the SIM card.
However, some operators are saying privately that they expect vendors with closed platforms, notably Apple and RIM, to try to build the m-payments security and identity features into the handset.
Meanwhile, double-digit growth in sales and earnings are expected for RIM's Q4, even though analysts remain nervous about its prospects later in the year, and especially the likely performance of its upcoming Playbook tablet, which runs its new operating system.
The analyst consensus is that profit will rise by 30% year-on-year on a 38% jump in revenue to $5.64 billion, with international sales of the 8520 BlackBerry the most important factor, offsetting rising competition in its north American heartland.
By contrast, RIM should take advantage of Nokia's struggles in Europe. RIM shares have fallen about 13% since peaking just above $70 mark in mid-February.
Some are less convinced that RIM is building international business sufficiently quickly to compensate for north American declines.
"We do not believe the Street is appropriately modeling RIM's ASP and margin decline as its business shifts from the more lucrative north America market - which is characterized by heavy enterprise users and carrier subsidies - to the emerging markets where enterprise use and carrier subsidies are low to non-existent," Simona Jankowski of Goldman Sachs wrote in a recent research note.
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RIM in war with operators over m-payments data