After winning over executives throughout most of the world with its BlackBerry e-mail device, Research In Motion Ltd. is now poised to woo the Russian corporate elite.
Cellphone carriers Mobile TeleSystems OJSC and Vimpel Communications revealed Tuesday that they will be the first to bring the wireless device to Russia next year.
Considering Russia's population of 140 million and booming economy, observers believe the market holds plenty of potential. But the BlackBerry will have to settle for a small start. The wireless companies will only be allowed to import about 2,000 of the e-mail devices in total in the first year.
In order to do even that, they had to get the blessing of none other than the successor to the KGB, the Federal Security Service, or FSB. Regulatory concerns about data encryption had reportedly kept the BlackBerry from moving into Russia.
Russia is one of just a few populous countries left on RIM's to-do list. Last month, the Waterloo, Ont.-based company entered into an agreement to sell the BlackBerry in China. It took eight years to receive the green light there.
RIM will need to remain patient as it expands into these promising new markets. While North America and other established territories will continue to account for the bulk of RIM's revenue, observers say demand in China and Russia should pick up in coming years.
“The Russian opportunity is powerful, but I think it's going to take a couple of years before people kind of go, ‘wow,'” said Robert McWhirter, president of Toronto-based Selective Asset Management Inc., which holds RIM shares.
RIM's comment on the Russian carriers' announcement was to say that it “is committed to expanding the availability of the BlackBerry solution in regions around the world including Russia.”
The company added that it “will continue to share updates in conjunction with our regional partners as commercial activities unfold.”
A VimpelCom spokesman in the United States didn't return a call seeking comment. Mobile TeleSystems couldn't be reached for comment.
Breaking into new markets such as Russia or China isn't easy, whether it's easing regulatory concerns or adapting the system to a new alphabet.
VimpelCom is set to sell 1,050 BlackBerrys, and Mobile TeleSystems told Bloomberg News it will import 1,000 of the devices for “experimental use.”
Those numbers may be small, but observers believe they could form a devoted customer base to spread the word about the notoriously addictive “CrackBerry” device.
“You're planting 2,000 seeds – maybe 1,000 of them will die,” explained Allyn Hall, director of the consumer markets practice at Arizona-based market research firm In-Stat. “The ones that take off will be everywhere … and the next year it will be 20,000 or 200,000 units.”
Russia's economy may not be growing at China's pace, but it's expanding a lot faster than RIM's home market. The International Monetary Fund predicted Russia's gross domestic product would grow 6.5 per cent next year, more than double Canada's rate.
As wealth spreads, more Russians are buying cellphones. VimpelCom saw its operating revenue jump 43 per cent in the second quarter in Russia. And third-quarter revenue at rival Mobile TeleSystems gained 26 per cent.
RIM's move into Russia should open other doors for the BlackBerry in Eastern Europe, Mr. Hall believes.
