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Research In Motion CEO Thorsten Heins discusses features of the BlackBerry 10 during his keynote address during the BlackBerry Jam Americas in San Jose, Calif., Sept. 25, 2012. (Robert Galbraith/REUTERS)
Research In Motion CEO Thorsten Heins discusses features of the BlackBerry 10 during his keynote address during the BlackBerry Jam Americas in San Jose, Calif., Sept. 25, 2012. (Robert Galbraith/REUTERS)

How RIM hopes to stoke hot 'CrackBerry' market in Southeast Asia Add to ...

While BlackBerry-maker Research In Motion claws for a diminishing market share in North America, the smartphone maker maintains a reputation in Southeast Asia that in some places harkens back to its glory days.

It’s sometimes hard to remember that RIM was once the darling of the tech industry, with legions of addicted fans dubbing the device the CrackBerry.

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For a reminder of those heady times visit Siam Paragon, the biggest mall in Bangkok and one of the largest in Asia. There the BlackBerry retail store is just steps away from outlets selling designer labels like Prada, Dolce & Gabbana and Lamborghini.

Indonesia is also a bright light, having become RIM’s biggest market in Southeast Asia. The company holds roughly half of the local handset market and has been ranked the top-selling smartphone there for the past two years.

The BlackBerry also ranks as the No. 2 smartphone in the Philippines, and the No. 3 smartphone in Thailand and Malaysia.

But it is Indonesia, the world’s fourth most populated country, that will likely play a key role in RIM’s future as it struggles to launch its new BlackBerry smartphones in the fickle North American and European markets.

At the same time, the company aims to sell its older device inventory at a discounted price in countries that are just starting to adopt smartphone technology.

One of the unique characteristics of Southeast Asia is that, for many in the region, buying a low-priced smartphone is the only reasonable option, said Melissa Chau, a technology analyst for research group IDC based in Singapore.

“In general, in these emerging markets you’ve got a strong polarization of the really rich and the really poor,” she said.

“Everyone who lives in the urban areas already has a smartphone. But how we bring phones to cities in more rural areas — especially with more affordable handsets — that’s going to be the next frontier.”

Indeed, RIM has proven it already has its finger on the pulse of emerging markets and has successfully marketed BlackBerrys as exclusive yet affordable in countries like Nigeria, where it is ranked as the No. 1 smartphone.

In Asia, executives believe that a similar opportunity is being mined by the company, particularly in Indonesia.

“It’s quite a warm feeling walking around Jakarta because it’s probably like New York five years ago in the sense that everyone is walking around with a BlackBerry,” said Hastings Singh, managing director of RIM’s south Asia operations.

“If you can afford a BlackBerry you have one. It almost is at that point.”

In a perfect world, RIM’s business model would have all of its current customers in Southeast Asia eventually graduate to its new premium-priced models that will run on the BlackBerry 10 operating system.

There’s still plenty of space for smartphone competition in Southeast Asia, especially outside major cities where a notable portion of the population doesn’t own a phone capable of Internet and e-mail.

“The dynamics here are different from the western world, and I think that’s something that is absolutely fantastic for us,” said Urpo Karjalainen, senior vice-president of RIM’s Asia-Pacific operations.

As RIM prepares to launch the new BlackBerrys in higher end markets — including countries like Thailand — the company is expected to move ahead with aggressive discounts for its older devices which it hopes could maintain or grow its subscriber base further.

A price cut would likely gain favour with local carriers because keeping the price of smartphones down in Southeast Asia is a priority. Hardly any telecom companies offer the type of subsidy programs that help North American consumers finance their higher priced handsets like the iPhone and Samsung Galaxy S3.

“The cost of the device is actually a pretty big deal here,” said Mr. Chau.

“I think that’s why RIM has been able to hold on in that area.”

Selling older phones to smaller markets proved to be a temporary fix for RIM in 2012, as it tried to cut its losses amid the two delays of its latest devices, which are now expected to debut in the coming months.

The company kept its overall subscriber base growing for longer than many analysts anticipated, but even those numbers are starting to slip. In the third quarter, about one million users shifted away from the BlackBerry, and the company reported its subscriber base fell to 79 million.

BlackBerry subscribers anywhere in the world are valuable to RIM partly because each pays a lucrative monthly service fee to operate on the company’s networks.

For RIM’s investors, it will be important for the company to maintain its existing subscribers in emerging markets, as it makes a case to North American and European customers with its new line of devices, due early this year.

In its outlook, RIM said it expected continued pressure on operating results in its fourth quarter, which ends in February, and expects to post another quarterly loss.

In the meantime, the company is launching a feature on its BlackBerry Messenger chat program that allows BlackBerry users to transfer money between each other. The peer-to-peer banking system is called BBM Money and will be first tested in Indonesia.

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