That means the residents of Bogor, and the tens of millions of other Indonesians in the $100/month bracket won’t be trading their Pineapples for BlackBerrys any time soon: At RIM stores in Jakarta, the cheapest BlackBerry on sale is the Curve, at about $170. According to Frank Boulben, that’s not going to change: The new line of phones based on the BB10 operating system will include six models across three price tiers, he says, with the marketing “skewed toward the higher end.” The idea of a cut-price BlackBerry wasn’t something Thorsten Heins wanted to discuss while he was here, either. “You have to understand the segment we’re in,” he insisted. “I’d love everyone to have a BlackBerry. But we’re not in a position to build a $30 phone.”
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While local executives like Singh and Bose vie to prolong the shine of RIM’s crown jewel, the bosses back in Waterloo are trying to knock the dents out of some pretty gruesome numbers, partly by axing thousands of jobs. Revenue in the first six months of fiscal 2013 was $5.7-billion, nearly 40 per cent less than the year before; and during the same period, RIM’s almost magical misfortune made a $1-billion profit disappear, while conjuring a $753-million loss. Though RIM has a sizable cash pile of $2.3-billion, that needs to carry the ailing company through an era of austerity that would make Europe blush: more months of slowing sales as RIM’s current crop of aging BlackBerrys look even more rotten compared to the others; then, RIM needs to go on an advertising blitz to launch BlackBerry 10 into a world now dominated by only two smartphone ecosystems, Apple’s iOS and Android. Nokia and Microsoft teamed up to create a third ecosystem called Windows Phone, but even with resources many magnitudes greater than RIM’s, they have so far failed.
In tech, the breakneck cycle of innovation means the titans of today are not guaranteed a tomorrow. It wasn’t that long ago that Nokia’s candy-bar phones were must-haves across Europe and North America; the company found huge success with the original expansion of basic wireless networks in the developed world. Like RIM later did, the Finnish firm missed key industry shifts–in Nokia’s case, to flip-phones; in RIM’s case, to touch screens–and then slunk off, southward and eastward, to do business mainly in challenging, lower-income countries; and like RIM now, Nokia is still around, selling phones far away from Silicon Valley’s sometimes myopic gaze. Heins is a veteran of these types of commoditized technology markets. At Siemens, where he spent most of his career, he battled Chinese network companies that were challenging the German firm’s optical networking business. In that fight, he won. Later, he was told to turn around the company’s mobile phone unit; at that, he failed. Lothar Pauly, former CEO of Siemens Communications, was Heins’s boss for years; he thinks RIM benefits from Heins’s global outlook. “The North Americans tend to see themselves as the centre of the world,” Pauly says from Munich. “They are not.”
RIM’s reluctance to discuss flooding emerging markets with bargain-bin BlackBerrys is understandable. With its technological advantages slowly slipping away and competition getting fiercer, the BlackBerry’s aspirational brand status is almost all that RIM has left in these markets. The average selling price of BlackBerrys has slowly come down for the last several years and is now about $229, even as Apple can sell the iPhone 5 for as much as $900. The last thing RIM wants to do is drag prices lower, debasing its brand and hastening the commoditization that killed the BlackBerry’s popularity in the West. Heins is well aware of the danger, and as RIM’s chief operating officer, was said to have fought to keep RIM’s brand intact by keeping prices up.
With new-found discipline under Heins, RIM has a chance at making a viable, profitable business out of emerging markets. But as the smartphone sector booms in places like Indonesia and Nigeria, RIM’s share of that growth–if recent stats are any indication–is likely to shrink, and the firm may cede its dominant market share, particularly as networks get better, Android phones get cheaper, and even more competition arrives. Apple, which squashed RIM in the West, recently struck retail partnerships in Nigeria.
RIM is scrambling to thicken its presence on the ground in this part of the world, especially as the launch of BB10 gets closer. The new phones, though high-end, will launch in Nigeria, South Africa and Indonesia at the same time as they’re introduced in other crucial markets, such as the U.S., that RIM needs to regain rather than simply reinforce. And there are signs of hope. In early November, when RIM announced that BB10 devices had gone into lab testing at 50 important carriers around the world (a critical, pre-launch milestone), its battered shares rose more than 10 per cent. Analysts, once almost universally bearish, seem to see the potential for a spike in formerly flatlining prospects. Tom Astle of Byron Capital Markets summed up the cautious optimism in research dispatched in early November. “A BUY rating on RIM?” he wrote in a note to clients. “Are we raving mad?”