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Nov 18, 2013 10:00 AM IST | Source: ft.com

BlackBerry, Indonesian Android mobile producers join forces

The troubled Canadian handset maker's decision to release BBM for Android and Apple's iPhone in October was a last-ditch attempt to revive its fortunes at a time when it has been haemorrhaging market share in key countries like Indonesia because of its outmoded operating system and handsets.

BlackBerry, Indonesian Android mobile producers join forces

When Natasha Adhalia discovered last month that she could download BlackBerry Messenger onto any smartphone with the Android operating system, she ditched her clunky Rp4m (USD 350) BlackBerry handset and bought an en-vogue Samsung Galaxy S4.

"My BlackBerry always seized up and, now that I can get BBM on an Android phone, it's better to have a Samsung, with access to lots of games and apps," says the 35-year-old bank worker. "Many of my friends are also stopping using BlackBerry. For a long time, it was popular in Indonesia and people followed the trend. But now the trend is Samsung and other Android phones."

The troubled Canadian handset maker's decision to release BBM for Android and Apple's iPhone in October was a last-ditch attempt to revive its fortunes at a time when it has been haemorrhaging market share in key countries like Indonesia because of its outmoded operating system and handsets.

Industry executives and analysts believe that the rapid take-up of the app, which was downloaded 20m times in its first week, is likely to accelerate the decline in BlackBerry handset sales and provide a big boost to sales of Android phones in markets like Indonesia where BBM is one of the most popular ways to communicate.

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But, as the company tries to restructure under a new chief executive backed by a USD 1 billion cash injection, the app could help to cement BlackBerry's position in the rapidly-expanding new market for universal mobile chat apps.

"With the introduction of the BBM app, they are restricting their mass market of handset customers," says Raymond Tedjokusumo, chief operating officer of SPC Mobile, which sells low-cost, locally-branded Android smartphones in Indonesia. "But it opens up a huge market for us as people abandon their BlackBerry and move their BBM ID to an Android phone."

Between 2010 and 2012, BlackBerry built a seemingly unassailable market lead in this fast-growing nation of 250m people thanks to the popularity of BBM, its free messaging service, and its easy-to-use Qwerty keypad.

However, as touchscreen smartphones became cheaper and the number of apps and games available on Google's Android marketplace soared, BlackBerry lost its top slot in the smartphone market last year.

BlackBerry's share of new smartphone shipments has fallen from more than 50 per cent last year to less than 20 per cent in the third quarter of this year while Android phones now account for nearly 70 percent, according to Sudev Bangah, an analyst in the Jakarta office of IDC, a market research group.

"They tried really hard to push the turnover of BlackBerry handsets but the price put people off and there was not enough innovation on the phone or the operating system to attract the new demographic," he says. "Now, in essence, they're trying to work out how they co-operate rather than go against whole market in order to gain back their prominence."

In Indonesia, BlackBerry has switched rapidly from competition into collaboration mode, working with local Android smartphone producers to pre-install BBM onto their phones.

One local phone brand, Cyrus, is already selling a specially-designed Android smartphone for Rp1.5m with a touchscreen, physical Qwerty keyboard and BBM installed.

Mr Tedjokusumo is working on a similar product that will cost as little as Rp600,000.

With sales of cheap smartphones suffering because lower-income families have been hit by rising inflation, he says that the BBM app has been a godsend, pushing up sales by 15-20 percent.

"A lot of mobile phone users in the middle and lower market know BBM but they don't really know Android," he says. "Now it's much easier to sell our phone as we no longer tell customers it's an Android, we just tell them it's a cheap BBM-enabled phone."

Even BlackBerry's major international rivals are tapping into the BBM app craze alongside these bargain basement producers.

At the Samsung store in Jakarta's landmark Grand Indonesia shopping mall, all the smartphones have a sticker featuring the official BBM logo that says they are "Now ready for BBM".

"We can't pre-install it yet but 90 percent of the customers who buy a phone here ask us to download BBM for them," says a sales assistant.

But although the Samsung Galaxy is the latest smartphone of choice for the brand-conscious Indonesian middle class, the lesson of BlackBerry's rapid rise and fall is that these technological trends can be short-lived in emerging markets such as Indonesia.

"It's like the Roman empire," says Mr Bangah. "It takes a long time to build your dominant position but you can fall very rapidly."

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