Is Indonesia BlackBerry’s last market?

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During its peak in 2009 BlackBerry accounted for 20% of the global Smartphone market share, however its market share has dropped to less than 1% of the market share in the second quarter of 2016. Thus, BlackBerry has decided to outsource its production and create a joint venture with Indonesia’s largest telecommunications firm, in order to establish itself in one of the world’s fastest growing smartphone markets.

Editorial

Last month, BlackBerry announced it would give up making its own phones and instead outsource the manufacturing of its phones to Pt Telekomunikasi, an Indonesia telecommunication company.

In light of their decision to outsource their phones, BlackBerry has stated their new products will still have their old look and feel.

The decision to outsource the production of its phones is mainly due to the large losses it has been taking in the last several years.

During its peak in 2009, BlackBerry controlled 20% of the smartphone market; however competitors such as Apple and Samsung have since squeezed its share of the market. Currently BlackBerry has been left with less than 1% of the total market share.

In light of its continued losses in the global smartphone market share, John Chen, Executive Chairman and CEO at BlackBerry has said his company “is no longer just about the smartphone, but the smart in the phone. Working with trusted partners to extend the reach and availability of our secure mobility software remains a key focus for the Mobility Solutions unit and this joint venture is just one of our next steps in making our software licensing strategy successful”.

PT Telekomunikasi, Indonesia’s largest wireless carrier, has agreed with Blackberry to start a new joint venture called PT BB Merah Putih.

John Chen has also stated that “BB Merah Putih is comprised of companies with extensive background in providing innovative mobile services to their customers, making the newly formed joint venture the perfect partner to offer trusted BlackBerry secure mobile software that is available exclusively to Indonesian customers”.

The new venture will take full responsibility for the production, promotion and distribution of all BlackBerry-brand devices in Indonesia.

Aligning itself with the Indonesian market

BlackBerry’s  plan is also “in support of the Indonesian government’s effort to promote manufacturing of locally sourced products”, stated Ralph Pini, General Manager of devices, at the Canadian based smartphone company.

BlackBerry’s decision to corner the Indonesia market coincides with a report by the research firm Euromonitor International, which reports that Indonesia will become the fourth largest smartphone market by 2020. Additionally, smartphone sales are expected to reach $10 billion USD annually by 2020.

Based on the latter expectations, Indonesia’s government launched a new policy in February that requires “local content” in all 4G-enabled tablets and smartphones sold in the country.

Indonesia requires its electronic devices to have to have 20% local content, whether its investment or research and development, and these figures are expected to rise to 40% starting from 2017.

The new venture with PT Telekomunikasi will ensure greater local content in BlackBerry’s future expansion in Indonesia.

Before 2015, Indonesia required all 4G devices to be assembled domestically, and many companies such as Xiaomi, failed to fulfil this requirement and disabled the 4G functions in their smartphones.

Creating a foothold in Indonesia

However, other companies have been successful in expanding into the Indonesian market, such as Lenovo, OPPO, and Samsung, who all have factories in the country. Samsung is currently the single largest smartphone brand in Indonesia, with 26% of the market share.

Nonetheless, new rules released in 2016 will allow foreign handset companies without domestic factories to enter the market with pre-installed apps. Since iPhone does not have pre-installed apps, it is not officially allowed to sell in Indonesia at this time. Thus, all 4G-enabled iPhones in Indonesia are all grey market products.

According to data from BlackBerry, the most popular social app in Indonesia is the latter companies own BBM, as it has 60 million active users in a country with a population of 250 million; by comparison, Whatsapp has 50 million users.

Indonesia is a vital market for the Canadian based smartphone company. Indonesia is one of the largest smartphone markets in the world, and is a country in which BlackBerry devices are gaining increasing popularly.

Therefore, its future will depend on whether they can defend their last market from Samsung and Apple, which has led BlackBerry to work with PT Telekomunikasi, in order to stop its fall in smartphone market shares from sliding further.