India’s huge and fast-growing wireless sector is an alluring market for Research In Motion Ltd. as it tries to mount a comeback with a new lineup of smartphones, but shifting dynamics on the subcontinent reveal the fragility of the Canadian tech company’s crucial overseas empire.
BlackBerrys account for as much as 60 per cent of smartphone sales in some emerging markets, where there are few Apple stores and RIM’s data-compression technology works better on less advanced wireless networks.
And as wireless markets in Africa, Latin America, Africa and India shift from regular cellphones to smartphones, international markets have come to account for 65 per cent of RIM’s global sales. That helped to soften the blow in recent years of the company’s market share losses to Apple Inc. and Samsung Electronics Co. in developed countries such as the United States.
But the smartphone battle in India, where RIM last month launched its new BlackBerry Z10 model, is worrying for RIM’s chances at future success in emerging markets around the world.
It’s an echo of what happened in the West: RIM is now capturing a shrinking share of the developing world’s expanding smartphone market as competition gets more intense in a space that RIM has often dominated.
RIM’s share of smartphone shipments in India slumped to just 5.9 per cent in 2012 from 12.8 per cent 2010, according to the global research firm IDC.
During that time, Samsung soared from 4.9 per cent of India’s smartphone shipments in 2010 to 42.5 per cent in 2012.
India is particularly attractive for smartphone players: The mobile-obsessed country has almost no land lines and the sector is officially estimated to have around 900 million mobile subscribers – although urban users carrying multiple SIM cards and inactive accounts greatly inflate that number. Still, only about 5 per cent have smartphones.
The BlackBerry Z10 is designed to take on high-end iPhones and Samsung Galaxy smartphones.
But analysts say RIM faces a tough road in India with the Z10, since it is in an awkward spot with its typical price of more than $800: It’s more expensive than lower-priced devices, but not as trendy as some of the top-selling high-end smartphones.
BlackBerry is clearly “in the soup right now” and won’t make much headway beyond its core global base of corporate clients, says Amit Goel, a Bangalore-based technology consultant with analysis firm Knowledgefaber.
“If you have money, you’ll go for iPhone,” Mr. Goel says. “If you’re a geek who doesn’t like Apple, you’ll go for Samsung, and the remaining people who want a smartphone are going for local manufacturers like Micromax, where you can get almost all the specs of the Z10 for R14,000 [14,000 rupees, about $260].”
RIM, which has enjoyed momentum since launching the Z10 to positive reviews in late January, thinks otherwise.
Last Wednesday, RIM’s managing director for India, Sunil Dutt, said in an interview in his office on the edge of the Indian capital that the first Z10 shipments sold out in days. He spent an hour extolling the ways that BlackBerry was going to conquer this critical market.
But 48 hours later, Mr. Dutt quit the company, a spokesperson confirmed.
“A whole lot of Indian retail customers are ones who see BlackBerry users as being very successful in life, looked-up to, people to emulate,” Mr. Dutt said in the interview. “We don’t have to do any rebuilding – it didn’t reach the stage where people thought it was uncool to have a BlackBerry.”
Mr. Dutt insisted the Z10’s high price – in a market where most customers buy phones without subsidies – wouldn’t hurt sales. “Everybody felt that was way too high – but now everyone is asking for more supplies and we haven’t covered half the market we targeted.” (That was 2,000 stores in 50 cities.)
RIM’s executive office in India is surprisingly low-key. It has an unmarked door, tiny cubbyhole offices and is flanked by rooms with empty desks. A local RIM spokesperson said Rick Costanzo, RIM’s executive vice-president for global sales, will oversee India in the interim.
Meanwhile, local manufacturer Micromax is eating RIM’s market share at the low end – going from 0.5 per cent of the smartphone market in 2010 to overtake RIM with 7.7 per cent market share in 2012 – as Apple and Samsung take share at the high end.
RIM has seen much greater success in other large, developing nations: In Nigeria and Indonesia, for instance, more than half of all smartphone users are still using BlackBerrys. But there, too, things are changing as Samsung and Chinese manufacturers, such as Tecno Telecom Ltd. and Huawei Technologies, have gained market share.
“Each market is unique, but in price-sensitive markets, you will see similar dynamics,” says Chetan Sharma, a U.S. wireless consultant. RIM’s many delays in launching its new lineup of BlackBerry 10 smartphones only made matters worse.
“BlackBerry has more runway in India than it does in many other countries as 3G networks are in their infancy and the vast majority of Indians are still feature phone users,” says Kevin Restivo, a mobile analyst with IDC.
But despite vast opportunities, challenges are mounting. RIM’s “global issues, namely brand equity, app development momentum and overall competition against Samsung and other tech titans, still factor prominently as it tries to grow in India,” he said.