Grilled by iPhone's Shining China Launch, BlackBerry Eager to Partner Up with ChinaTelecom

• Comments
• Print
• Email

The hot sales of Apple iPhone in China has RIM restless.

 

Gregory Shea has been shuttling constantly between Beijing, Shanghai, Guangzhou and Shenzhen since he took over as RIM's President of the Greater China last month. "RIM's business in China is not a simple buyer-seller relationship. We hope to become a strategic partner of China's telecom operators," he says.

 

Officials of RIM Greater China have disclosed that negotiations between RIM and China Telecom are entering final stages on details, and the concrete forms of cooperation are expected to be announced before the end of this year, and that telecommunications and mail services may be introduced early next year.

 

"Obviously, RIM needs to deepen its relationship with Chinese telecom operators, launching its war against Apple iPhone," an official from China Unicom told a CBN reporter at the iPhone kickoff ceremony on October 31 in Guangzhou. He added that though RIM is popular in developed countries such as the United States and in Europe, whether it can adapt itself to the Chinese market will depend on its business strategy.

 

"Seizing the leading marketing right of iPhone brings corresponding future control of WCDMA," says Gao Jiqun, general manager of Guangzhou Gome, a major electrical appliance retailer. Gome got the right to sell iPhone first, and on October 26, Guangzhou Gome introduced three ways to buy iPhone: by telephone or website, or at a store. Over 1000 iPhones were sold over the first two days. Gome buys iPhone 3G from China Unicom through a "week purchasing system." Last week, it purchased 2,000 iPhone 3G units, and will buy another 3,000 this week.

 

The popularity of iPhone in China does not daunt Gregory Shea, for he sees the opportunities for Blackberry in China through the China Unicom marketing strategy for iPhone and the high 5,000 yuan price. Still, BlackBerry services are not cheap. Monthly service charges for the BlackBerry package introduced by China Mobile have been at least 398 yuan.

 

 "It is good to have competitors," Shea says. He says RIM's strategy in China will not copy the successful European and American models and that it will feature Chinese characteristics. He did not disclose specific details.

 

An insider says the biggest challenge RIM faces in the Chinese market is selling its company clients on the idea that BlackBerry's high-cost e-mail service will bring high efficiency and high returns. According to RIM's international experience, investment returns on the BlackBerry solution are as high as 238%.

 

In fact, BlackBerry has other problems. Focusing on company clients, BlackBerry has a single function, and its full keyboard mode of operation is not suitable for Chinese users. By contrast, iPhone's entertainment range is readily accepted by China's consumers.

 

RIM feels the threat from iPhone. BlackBerry's August 29, 2009, financial performance report shows users now total 32 million, up 3.8 million in the second quarter. But data from Gartner, an information technology research and advisory firm, shows that while as of June 30 Blackberry's global market share was 18.7%, up 1.4 percentage points over its 17.3% last year, iPhone's global market share hit 13.3%, a surge of 10.5 percentage points compared with its 2.8% over the same period last year.

 

At the end of August RIM acquired TorchMobile, a web browser manufacturer, in order to change its no-too-popular browser functions. In addition, RIM is planning to introduce a variety of BlackBerry models into China, including the latest touch-screen, and handwriting mobile phones to meet the needs of the Chinese market. Entertainment features, SNS social networking software, and real-time communications as well as energy-saving "push" technology will be added in the newly introduced mobile phone.

 

The insider also revealed upcoming personal customer service for individual customers who are interested in real-time e-mail service and willing to pay for it. Another reason RIM is optimistic about China is that China is becoming the world's fastest-growing smart phone market. iSuppli, a technology value chain research and advisory service, estimates that China's smart phone production in 2010 will reach 30.2 million compared 21.2 million in 2009, an increase of 42.5%, almost triple the 15% growth rate in the global market.

 

These would seem to be good reason for RIM and ChinaTelecom to join forces. Insiders point out that such a co-operation would clearly be a win-win choice. ChinaTelecom needs an end product with global influence to promote its new 3G communication services, while Blackberry can increase channels to develop company and individual users.