BlackBerry aims to reverse emerging market slump with budget handset

BlackBerry aims to reverse emerging market slump with budget handset

5:41am EDT

By Randy Fabi and Euan Rocha

JAKARTA/TORONTO (Reuters) – BlackBerry Ltd launched a low-cost touchscreen device in Jakarta, the Z3, as the embattled smartphone maker looks to revive sales in emerging markets like Indonesia where its once-fervent following has shriveled.

The handset, unveiled at a glitzy launch event in the Indonesian capital on Tuesday, is the first in a line of devices being made with FIH Mobile Ltd, a unit of the giant Taiwanese Foxconn Technology Group best known for assembling gadgets like iPhones and iPads for Apple Inc.

The success of the handset retailing for less than $200 could well decide the outcome of both BlackBerry’s tie-up with the contract manufacturing giant and its own future in smartphones. The Z3 Jakarta Edition will hit store shelves on May 15.

“If this device allows them to grow again, even if it’s just small, steady growth, that’s a success in itself. That says there is still room for BlackBerry in Indonesia,” said Ryan Lai, market analyst at consultancy IDC.

The Z3 is the first phone to be launched by BlackBerry since new Chief Executive John Chen took the helm late last year. After Indonesia it will be gradually introduced in six other countries including the Philippines, India, Vietnam and Malaysia.

Waterloo, Ontario-based BlackBerry hopes that the device and others to follow will help it claw back some of the collapse in its market share, ceded to Apple’s iPhone and Samsung Electronics Co’s line of Galaxy devices powered by Google Inc’s Android operating system.

“If the market doesn’t receive this product well, then we definitely have some negative issues to deal with,” Chen said at the launch at Jakarta’s Ritz-Carlton hotel. BlackBerry said it doesn’t have an official sales target for the device, but Chen said he expects to sell millions of Z3 handsets around the world, without disclosing further details.

FROM 40 PCT TO 4 PCT

Just two years ago, the Canadian firm had a 40 percent share of the Indonesian market, shipping more than 600,000 handsets per quarter in a country once known as “BlackBerry Nation”.

But the launch of the premium, high-priced BlackBerry 10 last year failed to attract buyers in a country where nearly 40 percent of the population live on about $2 a day. The company’s market share has slumped to just 4 percent, with shipments of around 100,000 devices in the first quarter this year, according to IDC.

Indonesia is now dominated by Samsung, which sells about one of every three smartphones in Southeast Asia’s largest economy.

Chen hopes that the Z3 and other devices to follow spark a change in the company’s fortunes. The Z3 is being launched at a price point below $200 to address one of the big turnoffs for consumers in emerging markets – BlackBerry 10 devices being too pricey.

“From conception to delivery, the BlackBerry Z3 Jakarta Edition was designed specifically with our Indonesian customers in mind,” Chen said in a statement. The device will allow users to type in Bahasa and come with a special set of BlackBerry Messenger, or BBM Stickers featuring local characters.

Later this year, BlackBerry will launch a new, non-touchscreen device dubbed the BlackBerry Classic in partnership with Foxconn. The handset will see a return of the command keys that include ‘Menu,’ ‘Back,’ ‘Send’ and ‘End’ buttons, along with a trackpad. BlackBerry hopes the move will address the concerns of those users who found their new devices hard to navigate.

For Foxconn, the tie-up fits with plans to set up a manufacturing plant in Indonesia to build smartphones and other electronic devices. The Taiwanese company’s ambitions have been on hold since 2012 due to drawn-out talks over tax breaks, property and import restrictions.

 

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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