BlackBerry maker RIM in push to tap China market

By Reuters
Posted July 9, 2010 at 4:06 p.m.

Research in Motion, maker of BlackBerry smartphone, said it is preparing to launch an applications store and consumer Internet services in China as part of its push into the world’s top mobile market. The upcoming Chinese App World applications store would follow RIM’s May launch of BlackBerry service in China through China Telecom, one of China’s three major carriers. RIM is also developing service for the homegrown third-generation (3G) mobile standard used by leading Chinese carrier China Mobile.

Shares of Waterloo, Ontario-based RIM jumped 7.8 percent Friday, and analysts said the gain could reflect the company’s push into China, among other factors.

RIM’s applications store and consumer Internet service were just two of the initiatives the company was undertaking to tap into China’s 700 million-plus subscriber mobile market, the world’s largest, said Greg Shea, head of RIM in China.

In other initiatives, RIM is also working with top Chinese Internet content providers and site operators, including search leader Baidu, online games leader Tencent and online commerce leader Alibaba Group, to create versions of their popular sites to work on BlackBerrys.

“We will soon be launching the Internet service” for consumers, Shea told Reuters in an interview. “We will also launch an App World China — that will be soon as well. We think sometime after we put in Internet service and these other initiatives, we’ll see that magic moment when we see that acceleration” in sign-up of new customers.

Before its recent China Telecom tie-up, RIM offered BlackBerry services mostly to corporate customers in China through China Mobile, the world’s largest carrier by subscribers.

But many observers said China Mobile was slow to promote the service, in part because RIM has no BlackBerry models compatible with TD-SCDMA, the homegrown 3G wireless standard that China Mobile is using for its high-speed services.

China Mobile said earlier this year that RIM had agreed to make BlackBerrys based on TD-SCDMA but gave no details. Shea said that effort was ongoing, but declined to give specific dates for the launch of new TD-SCDMA models.

“It’s in active development,” he said. “You’re going to see that product come to market, and more after that.”


Stock gains Friday may reflect growing investor confidence that RIM’s efforts in China could soon see a payoff, said Mackie Research Capital analyst Nick Agostino. They could also be linked to short covering, he said.

There is also speculation that RIM, whose stock tumbled nearly 11 percent after disappointing quarterly results on June 24, has begun a share buyback program and that is lifting the stock, said Avian Securities analyst Matt Thornton.

An NTP Inc patent infringement lawsuit against RIM rivals Apple, Google, Microsoft and Motorola is also good news for the Canadian company, MKM Partners analysts Pablo Perez-Fernandez and Terro Kuittinen said in a note.

If NTP is successful, it could be a “big hit” to the mobile phone companies’ operating margins. NTP won a $600 million settlement from RIM in 2006 after a long legal battle.

RIM officials declined comment on Friday, when its shares rose as high at $53.65 before closing up $3.87 at C$53.33 on Nasdaq.

That compares with its June 24 closing price of $58.58, minutes before it posted quarterly results, and the 52-week high of $88.08 reached last September.

In Toronto, RIM shares closed up C$3.62, or 7 percent, at C$55.23 on Friday.

China Mobile’s current service with RIM is over its older 2G network, based on widely used GSM technology.

China Telecom has high hopes for its BlackBerry service, which it officially launched in May after signing an agreement with RIM earlier in the year. China Telecom, which entered the wireless space less than two years ago following a broad industry restructuring, said it would initially offer BlackBerry services over its own 3G network, based on CDMA 2000 technology, in 16 Chinese provinces.

Shea said only one BlackBerry model was available for China Telecom services, but more would come soon.

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