Mobile computing boom and competition with iPhone spurring local growth, observers say

For many companies with an Ottawa presence, downsizing appears to be the strategy of choice to save on costs in tough financial markets – but not, it seems, at Research In Motion.

OBJ has learned the Waterloo-based smartphone maker is gearing up for a local expansion, now that renovations have finally been completed on the Innovation Drive building it bought from Cisco Systems about a year and a half ago. A source said RIM has ordered roughly 800 cubicles, which would occupy between 120,000 and 150,000 square feet of space.

RIM currently occupies two-and-a-half floors at 450 March Rd., which has a typical floor plate of 19,500 square feet. The company also has office space at 3026 Solandt Rd., which has a total area of 45,487 square feet, according to the 2008-09 BOMA Commercial Space Directory.

"It's definitely an expansion," the source says.

Calls to RIM and property owner Morguard Investments were not immediately returned.

Industry observers say RIM is ripe for growth in Ottawa because of a lack of space at the company's current Ottawa offices, coupled with a need to compete with the growing threat of Apple's iPhone in the smartphone market.

Outgoing OCRI (Ottawa Centre for Research and Innovation) chief Jeffrey Dale says he's heard the company is so tight on space that it's had to convert meeting rooms and boardrooms to house staff, which numbered around 450 people at the beginning of this summer.

"When co-CEO Jim Balsillie was here a year and a half ago, he said Ottawa was a very strategic location for RIM and that the company could double or triple the size of its employment base here," Mr. Dale says.

"He said they could grow to well over 1,000 people here if they had the space and the people (to hire).

"They're a 10,000-person company now (globally) – they had under 5,000 five or six years ago when I first started at OCRI – and they've always been in Ottawa ... The only limiting factor for growth is them outgrowing their space."

Hamid Rahbar, president of high-tech employment group the Ottawa Talent Initiative, adds RIM will definitely need to grow if it intends to work on third-generation (3G) smartphone technology similar to the iPhone. Recent contracts with big carriers such as Verizon, Vodafone and AT&T also seem to indicate the company is moving in that direction.

"The new consumer sub-market (for smartphones) is growing faster than the general market, and ... if RIM wants a big share of that, they should add staff," says Mr. Rahbar.

He notes that RIM saw its largest-ever share price drop in September following the release of second-quarter results that missed analysts' estimates, and says the introduction of the new Apple iPhone likely played into that.

"(The share price drop) was a warning for RIM," Mr. Rahbar says. "There's been a change to the competitive landscape, and the only way to survive is to grow."

And grow it has – Mr. Rahbar says RIM has added more than 1,200 jobs in the last six months, with roughly five per cent of the additions happening in Ottawa. While the majority of job additions have happened outside of this city and have focused on applications and user interface development, rather than Ottawa's telecom forte, Mr. Rahbar says there's still a good chance for new, local jobs.

"Ottawa's second strength is in software development and ... RIM will need to work on touch-screen technology as well, which needs a combination of software and hardware capabilities.

"There may be a GPS (global positioning system) application layer too, and Ottawa may be a good source for that," he explains, adding that RIM has not been conservative in its growth strategy.

OCRI's Mr. Dale notes: "RIM's had a double-digit rate of growth every year; will all the growth be in Waterloo? No, and although it won't all be in Ottawa either, they're a smart company. They'll grow where they see the talent base is available to keep their competitive edge.

"They've demonstrated a long-term commitment to the city and I see nothing changing ... I think they'll continue investing and growing their operation in Ottawa."