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RIM signs deal to peddle BlackBerry in China
Published on: 2009-12-08
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Research In Motion Ltd. is betting big on the world's biggest cellphone market.

The Canadian smart phone powerhouse has signed a deal with Hong Kong-based IT firm Digital China to distribute BlackBerrys in China.

"Business partnerships are an important aspect of RIM's strategy and Digital China's extensive knowledge and market presence will further expand the opportunity for RIM in China," RIM co-CEO Jim Balsillie said in a statement.

Investors reacted favourably to the announcement, pushing RIM stock up more than 2 per cent yesterday. The company has scheduled another announcement for today to discuss another deal with China Mobile , the country's largest telecommunications network provider.

As more users leave traditional cellphones in favour of more high-tech mobile devices, smart phone makers have set their sights firmly on international markets such as China. However some big-name brands have had difficulty recreating success in the Chinese market. Apple launched its iPhone, a wildly popular device in North America, in China last month. However Apple's Chinese partner reportedly only sold 5,000 sets in the first week, a disappointing debut in the world's biggest mobile phone market.

Apple's iPhone represents perhaps RIM's biggest competition as the Waterloo, Ont.-based firm tries to shift its focus from business and corporate clients to the consumer space. The transition has posed challenges: Whereas RIM once controlled the market for functionality such as "push" e-mail, such services have become more commonplace. In some areas that tend to matter more to consumers than to business or corporate clients - such as the number of third-party applications available for download on each device - the Blackberry line lags far behind the iPhone.

But in China, both Apple and RIM are miles behind firms such as Nokia Corp., which essentially controls the lion's share of the cellphone market. However, Nokia's dominance in the country is predicated on traditional cellphones, rather than the more powerful, more expansive smart phones, according to IDC Canada analyst Kevin Restivo.

"It's still very early days for China's mobile market; it's still primarily comprised of traditional phones, what we would describe as talk-and-text phones," he said. "But like other more developed nations there'll be a conversion to smart phones, especially in 'tier 1' cities such as Beijing and Shanghai."

RIM's international footprint is still relatively small. According to the company's most recent annual report, 80 per cent of its revenue came from Canada, the U.K. and the U.S. The U.S. market alone accounted for 63 per cent of total revenue.

However Mr. Restivo noted that the U.S. market may remain flat next year, whereas China's market is expected to grow about 8 per cent, presenting an opportunity Western smart phone makers simply can't ignore.

"If RIM is to continue to post growth rates that it did in the past, it needs to sustain growth in developing markets," he said.

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