Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Research In Motion CEO Thorsten Heins bonds with BlackBerry users in Jakarta, Indonesia. (Kemal Jufri/Panos Pictures)
Research In Motion CEO Thorsten Heins bonds with BlackBerry users in Jakarta, Indonesia. (Kemal Jufri/Panos Pictures)

ROB MAGAZINE

Where the BlackBerry still reigns supreme Add to ...

But resting on laurels when the domination of its signature product seems absolute is precisely what, in the past, screwed RIM so completely. Where it once roosted atop the mobile industry, RIM–and its share price–are now plumbing brutal lows, as the company deals with setback after setback. If some events seemed comic, as when two incredibly drunk RIM executives were restrained on an Air Canada flight, others were tragic: The company started laying off 5,000 people while it was simultaneously trying to ramp up for the Jan. 30 unveiling of BB10, the Hail Mary effort to arrest RIM’s long slide into Nortel territory.

On the ground in Lagos, as in Jakarta, the story is much more positive: There’s a genuine enthusiasm for the BlackBerry that would shock the legions of RIM detractors back home. Here, RIM is scrambling to keep up with demand.

Nigeria is a classic emerging market. Like other giants of the developing world, it has a huge, growing population that is slowly getting wealthier. Although 70 per cent of the population remains below the poverty line, per capita GDP climbed from less than $450 in 2001 to about $2,600 by 2011.

There is almost no landline infrastructure across the developing world, so mobile growth is explosive once state-owned phone monopolies have been torn down and private companies are allowed to build out wireless networks. Nigeria is no exception: Its 170 million people have about 100 million mobile subscriptions. But because the still-growing networks are congested, many people carry multiple SIM cards to ensure that they can connect. And businesspeople often carry two phones, which means the total number of people with mobile phones is likely much lower.

That’s a lot of room for growth, especially since there are only about four million smartphones in the country, roughly half of them BlackBerrys. Those buying smartphones for the first time typify the leapfrogging of technological phases that takes place in the global south. “It’s not only that you get your e-mail on the go,” says Thecla Mbongue, senior Africa analyst with Informa Telecoms and Media. “It’s access to the Internet, when computers are still really expensive.”

Of course, Nigeria is also an oil-soaked core sample of emerging market risk. RIM has bought into a country riven with deep-rooted problems. The billions in revenues extracted from the mangrove swamps of the southern Niger Delta fuel a disconnect between an untaxed populace and politicians who are often dependent on corrupt networks greased with misappropriated oil funds. In the mainly Muslim north, the extreme Islamist sect Boko Haram is detonating car bombs and blowing up churches, prompting a crackdown by the state’s Joint Military Task Force; together, the two opposing forces have killed roughly 2,800 people since 2009, according to Human Rights Watch.

The conflict has a direct impact on the telecom industry. Like most of Lagos’s buildings, cell towers in the country not only have their own security guards, but also run on diesel generators for 22 hours of each day, because the electrical grid is so unreliable. Since diesel has to be stored on site, it’s easy for Boko Haram to torch the installations. The imposing towers often survive, but Nigeria is still an expensive place to run a network; that translates, of course, into higher per-minute call costs in Nigeria than in India or other African countries.

The challenges of the market don’t end with economic and religious conflict. Like many poor countries, Nigeria has an immense informal economy–street vendors and unlicensed businesses–that is estimated at roughly two-thirds the size of the formal economy. Handset vendors like RIM must contend with a vast “grey market,” somewhere between legit and illegal, that includes second-hand BlackBerrys imported from the United Kingdom and “refurbs” banged back into working order. Needless to say, phones sold this way–60 per cent of the market by one knowledgeable estimate–aren’t exactly helping sales targets back in Waterloo, even if they might count toward RIM’s global subscriber count. Of course, since RIM runs a proprietary global messaging network that requires a “service access fee,” even second-hand BlackBerrys, once registered on a network, will kick something into the company’s coffers. But many people simply treat the BlackBerry like the Nokias they traded up from: as simple cellphones. (An executive at a wireless carrier in another African country reports that of 40,000 BlackBerrys on the network, only about 6,000 are activated for e-mail.) If customers aren’t paying full freight and the only upgrade they value is in cachet, how on earth are emerging markets like these going to save RIM?

When I bring up the grey market with Robert Bose, RIM’s Paris-based managing director for the Middle East and Africa, he talks about campaigns to emphasize official devices, and then shows me a BlackBerry with an “Original BlackBerry smartphone” picture set as the home display screen. This is apparently a safeguard against Nigeria’s desperate entrepreneurs.

Single page

In the know

Most popular videos »

Highlights

More from The Globe and Mail

Most popular