I have been complaining about how terrible Verizon Wireless phones are for a long time. And they really do stink. GSM phones are far superior. Of course I am referring to the selection and features of GSM phones not the quality of the GSM network. Not in the US anyway. Thankfully the company succumbed to customer pressure to get the Treo on its network meaning at least one great smartphone is now available. There have been other improvements in the Verizon Wireless device arsenal but as a former GSM user I miss SonyEricsson phones.

The more recent news of Verizon coming together with Microsoft and Palm to make a smartphone powered by Microsoft’s Windows Mobile 5 operating system is huge news.

These alliances are generally not done from a position of strength. We know Palm is getting a beating from RIM and Microsoft wasn’t doing too much better. The two companies together can really hurt RIM whose Blackberry devices are the de facto standard e-mail access device.

But I think many people hate their Blackberries or at least they would gladly switch if they could. You see where the Blackberry is a great e-mail device, e-mail is changing and the need to see graphics and browse web pages and see Excel spreadsheets grows daily. Blackberries are just terrible at anything that involves advanced functions beyond text.

Browsing the web on a Blackberry is actually a painful experience that should only be attempted in a life or death situation where some bit of critical information lives on the web that can save you from a disease. Other than this scenario there is no reason to surf the web on a Blackberry.

Attachments on a Blackberry are just awful as well. Sure a plain text document in Word or Acrobat may be readable via the Blackberry server but forget Excel or graphics. The device is just not designed for anything but text.

Worse, Blackberries are too slow. The have a need for speed.

What RIM needs to do to fight back is come up with faster devices and continue working with PBX vendors to integrate presence and VoIP. I have heard a compliant from one PBX CEO that RIM can be quite arrogant and at the time of a meeting a year or so ago they were even rude. In my opinion RIM cannot afford this sort of behavior as Palm and Microsoft will hurt them if they aren’t careful. Blackberries need to become full-functioning PBX extensions as soon as possible.

But RIM servers are already in many corporations and they work well. Can Microsoft and Palm come in and take it all away? The answer is yes. Microsoft already owns the server and Exchange so integrating with devices is easy for the company to pull off without a middleware server. Furthermore, with IMAP4 you really don’t nee a central server.

It is important to note the service providers in the US hold the keys to the kingdom. In other words Microsoft and Palm are at the mercy of Verizon Wireless, Sprint, T-Mobile and Cingular. With a major Verizon Wireless announcement in their cap other providers will likely jump on the Palm/Microsoft bandwagon.

What RIM has going for it is momentum. Lots and lots of it. The Blackberry Server is everywhere but it is little more than a crutch that allows you to access large documents on slow networks by enabling the server to take out the crucial text and send just that to you. But as networks speed up do we need a server to help us in any way? It can take longer for the server to open and analyze a document than it takes to just send the document over EVDO in the first place.

So RIM’s advantage comes down to familiarity with the brand and device. So if a better device comes along what is the reason to stay loyal to RIM? I just can’t see one. So then the question becomes will Palm build better devices than RIM can? Certainly many people prefer the Treo to even the new Blackberry smartphone. But that isn’t the point. What is important to realize is that the smartphone market is just the PC market reliving itself.

Think of the Blackberry as the Apple IIe as the Microsoft operating system starts to find its way on lots of different computer systems. Unless RIM has an operating system on their devices that is as flexible and robust as Microsoft they will lose out on the market. It is familiarity with Windows desktops will enable Microsoft to keep getting more and more share of the mobile market. That and the fact that the Microsoft OS can be easily licensed by any company to build devices meaning a slew of Asian companies are continuing to come out with better and better designs. How can RIM compete effectively with all these manufacturers?

So Just as the PC market had Apple competing against a slew of hardware providers from IBM, COMPAQ and others, the smartphone market may soon standardize on Windows Mobile 5.0. When this happens and it seems inevitable at this point how will the Blackberry be differentiated from these devices?

There is just one other viable option I can think of and that is a partnership or merger between RIM and Apple. Certainly the design team at Apple is unmatched and an Apple designed Blackberry would be a huge hit. I guess it would be the new Apple iBerry. Barring this happening I see a tough road ahead for RIM.