Thorny issue: The rise of smartphones has left one major player seeking to adapt

The rise of the smartphone has dealt a blow to the fortunes of BlackBerry globally, and it has been hit especially hard in Indonesia. The country was traditionally one of the best markets for the company. BlackBerry’s market share in the country went from less than 10% to almost half the market in two years to 2011. It has now dropped down to about 20%, and is still falling. While the collapse was sudden, it was a long time in the making. The Indonesian tech market has become far more competitive, consumers are more technologically oriented and prices have dropped. BlackBerry declined as the market advanced; the product held on primarily because the BlackBerry Messenger (BBM) was used by many people, and a BlackBerry device was for a time the only way to be connected to that group.

COMMUNICATIONS TO COMPUTING: What is happening is not just a company being caught out by a change in the market. For years, Indonesia’s communications market has been dominated by text and chat. Now, customers want to do more with their terminals: they want the internet and apps, and they want to customise. Handsets now have to be computers, which is why Android-based devices have done so well. In October 2013 the company released BBM for Android, allowing people who liked BBM but wanted the extras of a smartphone to have both. The strategy seemed to be successful, at least in terms of maintaining their customer base. It appears that most Indonesian users would at least download the new BBM application. In a Games in Asia poll, 87% of those asked said they would try the BlackBerry Android product. The makers also seem to be buying into the strategy. Cyrus, an Indonesian maker of phones, tablets and pads, is selling a phone with BBM preinstalled, and with some of the popular BlackBerry features such as the QWERTY keyboard, for Rp1.5m ($150). The company has been especially focused on retaining the loyalty of Indonesians. In late 2012 BlackBerry – then known as Research In Motion – opened an innovation centre in Bandung with Bandung Institute of Technology, with BlackBerry offering 30 students one-year scholarships in mobile computing. The price of BlackBerry products has also been dropping. While the newer models remain expensive – the Z30, introduced in October 2013, came out at Rp8m ($800) – lesser models are cheaper. The BlackBerry Curve 9320 was recently quoted at Rp1.95m ($195).

COMMITMENT: BlackBerry is also reaffirming its commitment to the country. It has promised to keep all its employees in Indonesia even as it sheds workers elsewhere. In addition, in December 2013 the company announced a five-year deal with Foxconn to manufacture devices in Indonesia and Mexico. The first product offered by the new partnership – a 3G phone based on the BlackBerry 10 – will be out in 2014.

However, it is as yet unclear whether BlackBerry can succeed; smartphones offer everything available on a BlackBerry, while messaging has become a robust and highly competitive subsector of tech. BBM is very popular, but it has serious challengers. Line, Viber, WeChat and KakaoTalk are all making efforts to build popularity and take market share. In October 2013 Viber introduced a local language version of its product, and KakaoTalk is on an advertising blitz.

OTHER FACTORS: BlackBerry has faced other issues in Indonesia. The product’s performance has been wanting and its reputation has been damaged. In the first half of 2013 customers suffered at least three service outages, and regulators considered a Rp1000 ($0.10) per customer fine on the company. Observers said the regulator’s response was related to the country’s ongoing dispute with BlackBerry over local hosting of data. In 2011 the government said Research In Motion would have to set up a data centre in Indonesia so that customer information would be held onshore. The company also had a dispute with the regulators over the establishment of service centres. However, despite its declining market share, the company still has a sizeable base in the country – approximately 15m users, or 18% of the product’s global market.