18 December 2012

Africa - the Answer to Blackberry's Woes?

As it prepares to release more moribund figures, RIM is looking to Africa for insulation

Research in Motion is set to unveil a third straight quarter of losses on Thursday, and as well as touting the launch of its BlackBerry 10 smartphones as the solution to falling market shares in the US and UK, the Canadian group is looking for regional growth pockets. It seems to think it has found that in Africa.

The company does not publish revenue from Africa, but RIM's performance in the region, where it is the number one smartphone vendor, has been strong. South Africa, where it holds a 45 percent market share, is the company's fourth biggest world market, after the UK, Indonesia and the US, according to Canalys, the research group; and in 2011, buoyed by preferential tariffs, BlackBerry shipments to the country grew 523 percent. In Nigeria, where huge mobile market growth rates recently prompted RIM to open its first retail store in the country, BlackBerries account for half of all 4m smartphones subscriptions, Informa Telecoms & Media says.

As one of the few regions in which RIM is still dominates, the continent is clawing its way up the group's priority list. When it releases BlackBerry 10 - the next-generation devices it hopes will revive its fortunes - on January 30, South Africa and Nigeria will receive the new phones in the first sales wave.

Robert Bose, RIM's regional managing director for Africa and Middle East, tells This is Africa that there are a number of reasons for the group's good fortune in the region, including the huge popularity of BlackBerry Messenger, which allows users to message for free.

The brand has also managed to cultivate the modish reputation it has lost elsewhere: "In Africa the BlackBerry is a very aspirational device, which comes with a lot of success attached to it", Mr Bose says. In Nigeria, the smartphones have become popular enough to warrant the launch of their very own Nollywood movie: 'BlackBerry Babes'. They are still a favourite with the South African youth too, winning 'coolest brand' accolades for two consecutive years.

But whether RIM will be able to edge out the growing competition from the likes of Samsung, Nokia and Huawei, is another question. Mr Bose says that BB10 is going to "build on the momentum we have established" in high-growth markets. He points out that, "we are working hard to make the devices more available in places like Nigeria", and is bullish on the possibility of developing ground footprints outside Nigeria and South Africa.

"The way you keep the brand cool is by making sure you always have the innovative devices and innovative applications," he argues. So RIM is also working to develop relevant local content. Like Google, the company is building relationships with application developer communities. It recently launched the BlackBerry Academic Programme, which teaches mobile app development, in Nigeria; and has opened apps labs at the University of Pretoria and in Cape Town over the last eight months. The group has already developed some local services - including a mobile health application in Kenya and a constitution app in Nigeria - but it will have to do more if it is to keep up with its competitors.

And unfortunately, the story is probably not quite as impressive as RIM would like us to believe. The company may already have seen the back of its most impressive growth in South Africa, with shipments to the country contracting 1.7 percent in the first three quarters of 2012 relative to the same period last year, according to Canalys. The analysts expect further contraction next year, forecasting that RIM's volumes will be down 2 percent on 2012, although it will still lead the market with a 40 percent share. RIM can expect low single digit growth in South Africa subsequently, Canalys predicts.

So does RIM face the same fate in Africa as its home market? Not quite yet. "I think we are dealing with something totally different here," said Nicholas Jotischky, principal analyst at Informa. "They have the first mover advantage; they are seen as being a good quality experience; and unless something goes wrong with the new operating system that will be maintained."

Africa might not be enough to save BlackBerry over the long-term, but the group is not going anywhere just yet. Not in those markets, at least.

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