The Hindu Business Line : ‘As we move on…

As a brand, Blackberry doesn’t sound exotic any more. It’s commonplace to see CEOs using the mobile phone that allows you access to e-mail and the Internet. (It’s not like your PC. You don’t have to ‘pull’ e-mail from your inbox. You get an alert for every e-mail you get.) But did you know that the BlackBerry software powers not only handsets that go by that name, but also Nokia and Sony Ericsson’s smart phone range?

Norm Lo, vice-president, Asia-Pacific Research in Motion (RIM) (which owns the BlackBerry brand), revealed this and more, in a chat with eWorld. Excerpts:

When it hit the market in 1999, BlackBerry was one of its kind. In the last year or so, competitors have emulated or improvised on what you have done. The Nokia’s E-series is an example. How do you maintain your ‘uniquenessR 17;? All of you offer the basic features that a business traveller needs.

Back in 1999, we effectively created the business and mobile data and mobile e-mail. New players are following on. It’s a huge opportunity. That’s great. From our view of point, we did all the hard work on awareness and getting partners and customers on board. New entrants help us in creating awareness in the marketplace – Microsoft, Nokia... That’s all positive.

Is there still some more to be done on awareness?

Of course. We are in single-digit penetration — we are still scratching the surface. Be it corporate e-mails or databases, individual e-mails… whatever category you look at, we are starting the ramp-up in the growth of those segments.

We are extremely comfortable in our position. Also, we are here to innovate. We are not staying at the same place.

What you see in our competition now, we did that years ago. We now have compelling products and services — driving more value in terms of applications. Now mobile users have access to e-mail and the Internet but now also the intranet. For instance, the sales force now has access to its customer relationship management applications.

Wasn’t this possible earlier?

All this was available then. But now, it is more enriched. Our applications are java-based, and are on open standards. Over the years, we have continued to strengthen the ecosystem. It’s about partnerships with very rich, third-party applications.

How does that work in a market such as India? If users are used to a certain phone — be it brand or ease of use of that maker’s software — they prefer sticking to the same make, even if they graduate to a smart phone.

That’s okay. We want to offer choice in the market. There is a small segment, (relatively small that might do what you say) among users of smart phones and mobile messaging.

We have had these features for several years now, with BlackBerry Connect. We work with players such as Nokia and Sony Ericsson. They embed our stack in their handsets.

For over two years, we have worked with them in India, and a number of Indian users have used Nokia handsets but access our service. It’s more or less transparent. The relative feature sets are a little bit different.

If you want the full feature set, you’d have to use the Blackberry handset.

Why do we get only a diluted version of your software on a competitor’s handset? Is it because of technical constraints or because you decide to keep the best for your product?

Both. It’s a roadmap issue. We are working with Nokia and others on this to bring them up — in terms of software, the 4.0 series. It’s all happening. From the user’s perspective, by and large, it’s transparent.

What is the size of the smart phone market — given 6.3 million new mobile connections May 2007.

It’s a small percentage of that.

Would it be 5-10 per cent of the total size?

About that much. But even that is huge. And with awareness on smart phones increasing, those numbers will increase.

Also, we have others (competition) coming on board. They are bringing to the table only one part of the solution. They are not direct competitors. That’s where we offer the full enhanced solution – the handsets, software, applications, partnerships, middle ware solutions for the enterprise…, we do the end to end solution, that sits behind the firewall and the BlackBerry infrastructure that allows the efficient ‘push’ architecture — we do compression and a whole bunch of things — we have a reliable network.

What’s interesting here is that most people see the handset. That is only the visible part of the blackberry solution. The power is in the software and on the network and all the technology we extract and simplify so that user experience is both rich and simple.

People like Nokia’s understand this and their shortcomings. It has bought Intellisync, MS is coming up with pseudo push tech. A bit of a hotch potch solution.

You work with Hutch and Airtel in India. Why not with more carrier operators?

We don’t restrict it. We are carrier-, network- and technology-agnostic (i.e., we work with both GSM and CDMA). We offer choice. I am in Hong Kong, where we have five operators, all of them offer BlackBerry.

Then why not more here?

It’s all a matter of time.

Do they, the operators, need some convincing?

Things have to come in play. Globally, we have 270 operators across 110 countries offering the BB. We have a pipeline of another 100 carriers. We have people banging down our door for this. It gives low ARPU, high lifetime, etc.

So, is there a supply side issue?

There is no issue. It’s a timing issue. We are extremely busy and happy working with Hutch and Airtel in India.

I understand Reliance is next in the line to offer the BlackBerry to its consumers.

Could be. I can’t comment on that. Reliance has said something publicly about launching the BlackBerry soon. That’s a possibility, for sure.

I see on your Web site that you offer only some products in some countries. If you already have marketing and distribution costs sunk in some countries, why not sell all your products there? Any income goes to your bottom line.

Interesting. It’s a timing thing. The network could be a constraint.

Across the range of products we have, we don’t offer every single one in all markets. A bulk of our products are in GSM/GPRS/EDGE, in CDMA, (another PTT tech that Nextel comms uses), legacy products in paging text, wideband CDMA, UMTS.

In India, we off the GSM/GPRS/EDGE based products, not the ones in 3G, wideband CDMA. That network is not in here yet. We don’t offer the CDMA products because we don’t yet offer our services through CDMA operators.

How many units do you sell in India?

We can’t tell you that. Not even percentage at the India level. Here’s a flavour, though: Overall, we still have 70 per cent of our revenues from North America and 25-30 per cent from Europe and Asia-Pacific (APAC).

We had 8 million subscribers worldwide at the end of March quarter. Of these, 2 million are outside of North America. We don’t break it down to Europe numbers and APAC numbers.

It’s relatively small compared to the US. The growth rates are higher since the base is smaller. The potential is immense.

Please elaborate on your manufacturing and research and development capacities.

In software we have in excess of one thousand developers. All of them are in Canada, where we are headquartered, but some are in California — that came from the Ascendant acquisition. We don’t yet have plans for an India development centre. Our own manufacturing unit is in Canada, right next to our R&D centre. We outsource manufacturing to partners in Eastern Europe and Mexico.

What is it with your company and litigation? There has been a long history of lawsuits by or against RIM.

It’s an old story. Early last year, we paid off NTP $ 600 million out of court. It’s not news anymore. We decided not to fight out. Otherwise, it is a drag on the business. Since then, we have been rocketing, business-wise.

bharatk@thehindu.co.in

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