RIM Outpaces Rivals to Lead Fortune Fastest-Growing List

For two Canadian guys who've spent the past 17 years together building one of the world's most important tech companies, Research in Motion co-CEOs Jim Balsillie and Mike Lazaridis have surprisingly little in common.

Blackberry.com

Balsillie, 48, is tall, sinewy, and bald. He likes to spend his free time doing triathlons or jetting off to Europe to ride his bike up the Tour de France's toughest mountain climbs. Lazaridis, also 48, is stout and unathletic with a thick shock of white hair. He laments that by the time he could afford to drive a Porsche, his posterior was too big to fit in the seat.

The extroverted Balsillie is a freewheeling conversationalist who will talk your ear off about his quest to buy the Phoenix Coyotes hockey team and bring the NHL franchise to Canada. The reserved Lazaridis would rather not discuss his personal life but admits that at age 12 he won a prize for reading every science book in the Windsor Public Library.

Balsillie is the financial whiz who drives corporate strategy. Lazaridis is the engineering genius who spearheads product development for the BlackBerry maker.

The two don't socialize outside of work. Their offices in RIM's headquarters in Waterloo, Ontario, about an hour's drive southwest of Toronto, aren't even in the same building. But the lack of personal connection doesn't hinder their effectiveness. Quite the opposite, in fact. They say it just makes them more efficient.

"We each know what we're good at," says Lazaridis. "We don't even have to ask."

Individually, Balsillie and Lazaridis may not be the equal of a certain black-mock-turtleneck-and-jeans-wearing consumer-product-design genius in Cupertino, Calif., who just happens to be their biggest rival. But together the pair is pretty darn formidable.

Do two collaborative Canadians match up to one Steve Jobs? For the moment, at least, they're more than holding their own.

Despite the incredible success of Apple's

AAPL loading...

Quote  |  Chart  |  News  |  Profile

[AAPL  Loading...      ()   ] iPhone, Research in Motion

RIMM loading...

Quote  |  Chart  |  News  |  Profile

[RIMM  Loading...      ()   ] retains a dominant position in the ultra-fast-growing smartphone business—the combo phone/e-mail device category that Balsillie and Lazaridis essentially created.

Over the past decade RIM has sold some 65 million phones to its now 28.5 million subscribers, increasing its stock market capitalization from $96 million to $42 billion in the process. (Balsillie and Lazaridis each have a 6 percent stake, good for roughly $2.5 billion apiece.)

RIM has a commanding 56 percent share of the $12 billion U.S. smartphone market. And its sales are still accelerating. In fact, according to industry tracker IDC, the bestselling smartphone in the U.S. so far this year by units is not the iPhone but the BlackBerry Curve.

Thanks to those booming sales, Research in Motion ranks No. 1 on Fortune's 2009 list of Fastest-Growing Companies, with a three-year average earnings-per-share growth of 84 percent and revenue growth of 77 percent. Even after last year's stock market meltdown, shares of RIM have a three-year annualized total return of 45 percent. Apple, which is three times the size of RIM in both sales and market value, checks in at No. 39.

Once considered mostly a business tool, of late the BlackBerry has made huge gains as a consumer product. RIM launched its first television ad campaign targeting a mass audience in 2008, and last quarter 80% of its new subscribers came from the nonbusiness crowd. Teens, for instance, love BlackBerry Messenger, RIM's proprietary instant messaging feature. Then there's the influence of a certain e-mailer-in-chief.

• Wednesday on CNBC: An In-Depth Look at the Fastest Growing Companies List

"President Obama carrying a BlackBerry was a tremendously sexy marketing tool," says analyst Philip Cusick of Macquarie Research Equities. "It keeps my nephews thinking it's cool."

The good news for both RIM and Apple is that the overall smartphone market is growing faster than ever. In 2008 a total of 1.19 billion mobile phones were sold worldwide, according to IDC, of which some 155 million were smartphones, or 13 percent. In 2013, IDC predicts that 20 percent of the 1.4 billion phones sold will be smartphones, or 280 million.

The competition, though, is getting increasingly stiff. New entrants like computer manufacturers Acer and (if rumors are true) Dell

DELL loading...

Quote  |  Chart  |  News  |  Profile

[DELL  Loading...      ()   ] are rushing into the market. A revitalized Palm has taken aim at the iPhone with its Pre, which debuted on the Sprint network in June and will be available on Verizon next year.

And Google

GOOG loading...

Quote  |  Chart  |  News  |  Profile

[GOOG  Loading...      ()   ] is pouring resources into its Android smartphone operating system and training its sights on the enterprise portion of the market that Research in Motion currently dominates. Motorola

MOT loading...

Quote  |  Chart  |  News  |  Profile

[MOT  Loading...      ()   ] is poised to debut two new devices running Android this fall. "There are going to be more smartphone launches in the next couple of months than we've ever seen before," says Gartner analyst Ken Dulaney.

While BlackBerry is making inroads with consumers, the iPhone is winning over an increasing share of business customers. According to ChangeWave Research, as of May Apple had 20% of the enterprise market, up from 6% just a year ago. (Much of the gain came at the expense of Palm's Treo.)

Over the same period RIM's share dipped slightly from 76 percent to 74 percent. Apple also makes more on each sale. According to Sanford Bernstein analyst Toni Sacconaghi, Apple currently has an operating margin of 40 percent on its iPhones vs. RIM's average per handset of 20.7 percent. (The industry mean is 9.7 percent.)