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Slideshow Analysis: In Asia, BlackBerry's RIM sees a glimmer of hope Tweet Share this Email Print Related News Mobile operators unconvinced by Nokia's revival bid Tue, Apr 17 2012 Huge quakes off Indonesia stir panic, but no big tsunami Wed, Apr 11 2012 Nokia shares tumble after loss forecast Wed, Apr 11 2012 RIM to launch updates of popular BlackBerry apps Wed, Apr 11 2012 DBS sees risks but no legal bar to Danamon deal Wed, Apr 11 2012 Analysis & Opinion Cameron urges Muslim Brotherhood, other Islamists to learn from Indonesia Instagrammatical man Related Topics Tech » Media » By Jeremy Wagstaff, Asia technology correspondent JAKARTA | Wed Apr 18, 2012 12:27pm EDT JAKARTA (Reuters) - The launch in India of a new BlackBerry by Research In Motion Ltd is not just a nod to its lower-end users who love it less for its security, push email and seamless roaming than for its simplicity and its Messaging. It's a strategy the Canadian company hopes will help fill both a hole in its balance sheet and a half-year wait for its next big thing — the BlackBerry 10 platform. But will it work? The handset itself won't impress devotees: its main selling point is a dedicated side button that lets users chat over its BlackBerry Messenger (BBM) and a built-in FM radio, which lower-end Nokia phones have had for a decade. It works only on the slower 2G networks, and the camera isn't that great. But, RIM says, that's the point. RIM calls it a parallel approach: building the high-end next generation platform and devices, while coming up with cheaper phones that can prod some of the vast majority of its users to trade up. "We're really trying to build on and help those people who are moving from feature phone to smartphone. We believe we can be successful in that," Patrick Spence, RIM's global sales chief, said in a telephone interview. It's a smart move, some analysts believe, given RIM's position. Adam Leach, principal analyst at research company Ovum, said there is a misperception that RIM's bruising experience in North America will be repeated elsewhere. RIM's strength, he said, is being able to offer lower-end users a better experience on a slow connection than the equivalent Android handset. RIM launched its new handset, the Curve 9220, in India on Wednesday, with other markets to follow. A RIM spokesman said the company would launch in Indonesia, one of its most lucrative markets, in the coming weeks. "Their success in Indonesia shows they have other attributes and capabilities in the BlackBerry platform globally that appeal to different markets rather than just the high-end, mature markets (like North America and Western Europe)," said Ovum's Leach. RIM doesn't break down its sales by region, but has reported that sales outside the U.S., Britain and Canada accounted for 68 percent of total revenue in its fourth quarter, up from 61 percent in the previous three months. Those markets include India, South Africa, Nigeria and Saudi Arabia, which RIM says are all targets for this year's sales blitz. But understanding why a market like Indonesia works — and then applying those lessons elsewhere — is not straightforward. Slamet Riyadi, a 30-year-old office boy in Jakarta with a wife and two young children, shifted to BlackBerry from Nokia two years ago. He owns a Gemini 8520 which he bought new for about $200 — about two months' salary. He keeps his old Nokia to communicate with his family by voice and SMS, but loves his BlackBerry for staying in touch with friends and colleagues. He dreams of owning an Onyx 2, which would cost upwards of $350, but the reality is that he must soon sell his BlackBerry to pay for his daughter's schooling. Therein lies the rub for RIM. SUCCESS STORY? On the surface, Indonesia looks like an extraordinary success story in a gloomy narrative of failures elsewhere. While RIM slashed more than $750 million from the value of its inventory in each of its last two quarters, BlackBerry sales to Indonesia have boomed, with industry experts saying BlackBerrys account for around half of smartphone sales. Joy Wahjudi, director of marketing of operator XL Axiata, said there could be as many as 7 million BlackBerry users in Indonesia, the world's fourth-most-populous country. According to Harry Sasongko, CEO of cellular operator Indosat, Indonesia is RIM's largest market outside the United States and Britain. And, with smartphones accounting for less than 25 percent of phone users, it's not hard to see why RIM believes in Indonesia. When RIM offered half-price handsets at a Jakarta mall in November, 5,000 people surged through barriers, knocking several unconscious and prompting a police investigation. Still, the reality is more nuanced. Interest in smartphones is growing — nearly 10 times as many smartphones were sold in Indonesia last year compared to 2009, according to IDC. And in a country starved of land-lines and fixed-line computer connections, the phone has long been a key communications tool. RIM's success in Indonesia is down to a number of things, not all of them replicable outside Indonesia. Indonesian operators started early, among the first in the world to adopt RIM's experimental stripped-down pricing plans which offered basic services at a fraction of the usual enterprise prices. Now plans start at as low as $5 per month. This nurtured a vast ecosystem before RIM had even set up office in Indonesia in 2010. Take for example Hendrik, a 20-year-old who has worked as a phone repair man for the past three years, mostly fixing BlackBerrys. From a small stall in a down-market mall in Jakarta, Hendrik installs apps, upgrades software or replaces parts. One recent customer had dropped his device in the toilet. Despite burying the device in a pile of rice to try and dry it out, it still wouldn't work. Hendrik replaced the power supply and some chips from another machine. Total cost: $50. As demand has risen, so have opportunities for smuggling in handsets from countries where they are subsidized — pushing down prices. Retailer Devandi Nugroho, for example, offers two versions of the same device: an official one for 1.8 million rupiah ($200) and another for 200,000 rupiah less. Second-hand BlackBerrys can be found for as little as $75. All this has fuelled a perception that RIM has done little to make Indonesia a success and so doesn't understand how best to leverage it. "Part of RIM's issue is that they have had successes in areas they haven't exactly planned," said Ovum's Leach. WHAT PRICE LOYALTY? RIM acknowledges it could have done things differently in Indonesia. "Every company has to figure out how to deal with globalization and that's what we've really been trying to do," said Spence. Despite a raft of local initiatives, there's no guarantee BlackBerry users will remain loyal. There is already a feeling that Indonesians are beginning to tire of the device. While smartphones have grown as a share of the overall phone market in the past year, RIM's share has slipped while Samsung Electronics' has tripled, industry data show. Indonesians with long memories worry they've seen it before. Indonesia was the world capital of the bulky Nokia Communicator until it suddenly fell from grace. Prasetyo Andy Wicaksono, community leader for Indonesia's largest BlackBerry developer group, said doubts over RIM's future were denting interest among developers. "If RIM isn't careful, they can lose their loyal customers here. This phenomenon must be understood by RIM to prevent the same thing as happened to previous gadgets." More importantly, are poorer Indonesians going to bite? RIM believes it can persuade some of those millions of users of the more basic feature phones to upgrade. But Slamet, the office boy, illustrates how thin the line is between those who can afford one and those who can't afford to keep one. "The biggest challenge for RIM is price," said Sarwoto Atmosutarno, CEO of one of the largest cellular operators, Telkomsel. "Indonesia, like India, is a volume game industry." RIM said the Curve would sell in India for 10,990 rupees ($210), and about the same in Indonesia. Also, the key attraction of the BlackBerry for many - its Messenger function — is less of the unassailable citadel it once was. The growing popularity of messaging services such as WhatsApp that use a cellphone's data connection offer a cheap alternative to SMS — as well as a way to build BBM-like groups without having to own a BlackBerry. WhatsApp has recently released versions of its software that work on even the lower-end Nokia phones running the Symbian operating system — which still account for up to two-thirds of Indonesian cellphone users, according to StatCounter, a traffic monitoring service. Graham Hills, Indonesian general manager for travel start-up Wego, said that when he arrived in Jakarta last year everyone would ask for his BBM PIN number. "Now people ask whether you have WhatsApp on your phone," he said. Nor are all Indonesian operators big RIM fans. While nearly all offer BlackBerry packages, some do so only because it is popular — not because it is a great money spinner for them. One industry insider, who declined to be named, said at least one operator was not paying for any promotion because BlackBerrys weren't a profitable line and it didn't believe the device would remain popular. "The numbers are good, but I doubt it will continue," he said. "It's a fashion thing and it's going to die." RIM says it is confident it can overcome all these issues, both in Indonesia and beyond. "The reality is that only 15 percent of people have a smartphone," said RIM's Spence. "It's still quite early." ($1 = 9180 Indonesian rupiah) ($1 = 51.5650 Indian rupees) (Additional reporting by Andjarsari Paramaditha in JAKARTA and Devidutta Tripathy in DELHI; Editing by Ian Geoghegan) Tech Media Related Quotes and News Company Price Related News Tweet this Link this Share this Digg this Email Reprints We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/ Comments (0) Be the first to comment on reuters.com. 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