AOL slashes price of its e-mail pager

August 16, 2001

Price wars in the e-mail pager market intensified yesterday after AOL Time Warner Inc. reduced charges for its Mobile Communicator by more than two-thirds and doubled the service fee on the device, which is manufactured by Waterloo, Ont.-based Research in Motion Ltd. America Online, the biggest Internet access service, said it lowered the price to US$99.95 from US$329.95 and raised the monthly service fee to US$29.95 from US$19.95. Officials at RIM and New York-based AOL said the reductions should have no impact on prices for the RIM BlackBerry, which retails between US$349 and US$499 and accounts for about 65% of RIM's sales. RIM charges a flat US$40 per month user fee. The AOL device is a basic e-mail pager aimed at the consumer market. The "always-on" BlackBerry has features that include two-way e-mail using a small keyboard and gives users access to their list of contacts. It is popular with financial analysts, lawyers and other professionals who need to remain in touch with their offices. Analysts, who said the AOL device had been overpriced, note that RIM has so far resisted any pressure to reduce charges for its BlackBerry line of products. As the market grows crowded with the arrival of new entrants such as Compaq Computer Corp. and Toshiba Corp., leaders Palm Inc. of Palo Alto, Calif. and Mountain-View, Calif.-based Handspring have cut prices on some of their most high-profile devices. Amid a worldwide decline in shipments of hand-held computers in the second quarter from the first, Hewlett-Packard Co., also of Palo Alto, almost doubled its market share to 69%. Handspring, meanwhile, saw its shipments fall by almost half. But RIM sales more than doubled from the three months ended June 2 of this year over the same period in 2000. The company has maintained its financial outlook despite what it calls "some areas of weakness" among BlackBerry resellers. RIM sells its pagers through companies including AOL, British Telecommunications PLC and IBM Corp. RIM chairman James Balsillie said in June that the company had not received new orders from AOL. "We're not counting on that in our model," he added, noting that the company began selling the BlackBerry outside of North America for the first time last month through BT's Cellnet unit.