To Blackberry Fans: Blackberry is to be made in Indonesia

To blackberry Fans: Blackberry is to be made in Indonesia
BlackBerry Juices Indonesia’s Plans to Grow Its Smartphone Supply Chain
By Resty Woro Yuniar
Updated Oct. 16, 2016 8:18 p.m. ET
BlackBerry will outsource handset production and license its software to newly formed joint ventures in Indonesia, where the struggling Canadian company is hoping to expand its customer base. Photo: Reuters

The Southeast Asian country will require 4G devices to meet a quota of 30% ‘local content’ next year

JAKARTA, Indonesia— BlackBerry Ltd. ’s decision to license software and outsource handset production globally represents a win for the Canadian company’s biggest market, Indonesia, which is seeking a larger share of the smartphone value chain.

BlackBerry’s new venture signed last month with an affiliate of PT Telekomunikasi Indonesia Tbk, the country’s largest wireless carrier, will see its Indonesian partner produce, promote and distribute all Blackberry-brand devices in Indonesia.

The venture comes as international phone vendors gear up to comply with the latest “Made in Indonesia” regulations to tap growth in what is poised to become the world’s fourth-largest smartphone market by 2020, with total annual sales of nearly $1 billion by then, according to research firm Euromonitor International.

Adopted in July, the latest rules give producers more options when it comes to meeting next year’s 30% quota for “local content”—which previously focused on local manufacturing but can now include software or investment—in their 4G-enabled tablets and smartphones sold in Indonesia, up from 20% this year. The requirement will rise to 40% in 2018.

BlackBerry’s joint venture was “created in support of the Indonesian government’s effort to promote manufacturing of locally sourced products,” said Ralph Pini, chief operating officer and general manager of devices at the Waterloo, Ontario-based firm, which said last month it would stop making phones, and instead focus on software. Mr. Pini declined to disclose details of the investment.

Indonesia is a crucial market for BlackBerry. Its BBM messaging service is the top messaging platform in the country of 250 million people with nearly 60 million monthly active users as of June, BlackBerry said. WhatsApp and Facebook Messenger trail behind with about 50 million active users for each app, according to estimates from U.K.-based social media consultancy We Are Social.

In 2012, Indonesia’s government introduced regulations requiring importers of mobile phones to set up assembly plants in the country by the end of 2015. In 2013, it imposed a 20% luxury tax on imported cellphones to rein in its current-account deficit. In September 2014, the government issued regulations requiring all 4G devices sold in Indonesia to include at least 30% locally-sourced components by 2017.

Foreign technology companies initially expressed reluctance to answer the call of Indonesian authorities, arguing that Indonesia doesn’t have a reliable supply chain to support the manufacturing of consumer electronics.

“Most of the manufacturing plants [in Indonesia] are restricted to assembling due to the lack of a component ecosystem in the country,” said Tarun Pathak, a senior analyst at Hong Kong-based research firm Counterpoint.

Vendors with minor market share in Indonesia, such as Apple Inc. and Xiaomi Corp., are likely to rely on software development rather than manufacturing to meet the local content threshold, analysts said. Xiaomi disabled the 4G network on its Redmi Note 3 Pro phones to get around the earlier legislation. Apple’s 4G iPhone 6S, 6S plus, and SE aren’t officially sold in the country, but they can be found on the black market.

Analysts say the more-flexible regulations passed in July make it easier for handset makers to meet requirements, given that they allow the quota to be reached via other options in addition to manufacturing.

BlackBerry CEO John Chen holds a Blackberry Z3 at an event in Jakarta in 2014. Photo: Reuters

“Vendors like Apple and Xiaomi, who have a strong software side to their mobile business, get the much needed flexibility,” under the latest rules, said Rajeev Nair, analyst with research firm Strategy Analytics. “The challenge though for them would be in finding a sizable base of software professionals and developers as they scale up.”

Indonesian government officials said after a visit by top officials from the nation to Silicon Valley last year that Apple plans to open an R&D center in Indonesia next year. Apple declined a request for comment.

Xiaomi hasn’t disclosed its R&D plans, saying only that “Indonesia is a strategic market for Xiaomi and we are committed to grow” in the country.

Some firms, including Lenovo Group Ltd. , Oppo Electronics Corp., and Samsung Electronics Co. , set up local facilities in 2015 while others tapped existing local manufacturers to assemble their phones.

Samsung is the leader in the Indonesian smartphone market, with market share of about 26% in the second quarter of this year, according to research firm International Data Corp.

The new rules have also created software-development opportunities, say analysts, including games and apps installed on smartphones, in addition to assembling or manufacturing devices. Companies are now required to pre-install on their phones seven locally made mobile apps or 14 games with at least a million active users.

One local game developer poised to benefit is Bandung-based Own Games, maker of “Tahu Bulat” or “Round Tofu,” which boasts two million monthly active users. Co-founder Eldwin Viriya said that phone vendors have approached him to have the game preinstalled. He declined to name the companies.

“I fully support the software scheme because we can really compete,” says Andreas Diantoro, CEO of Microsoft Indonesia. “This is the area where we have a lot of strength. When you’re looking at hardware components…it takes economy of scale to actually do that, I’m not sure that Indonesia has that scale.”

Write to Resty Woro Yuniar at
Why BlackBerry Is a Hit in Indonesia
Feb 29, 2016 11:22 pm ET


JAKARTA–BlackBerry Ltd. may be struggling to regain relevance in the global smartphone market, but its instant messaging is still a hit in Indonesia.

Many Indonesians remain loyal to their curated groups of friends and family on BlackBerry Messenger, known as BBM, even though some of them no longer use their BlackBerry devices.

Take Fredi Ferdianto, a 30-year-old BBM user from the main trading port city of Surabaya in East Java. He says he has four BBM accounts, mainly to manage his online business of selling imported goods from China. Among those four, three run on his BlackBerry devices and one– his personal account– runs on an Android device.

“I choose BBM because almost everyone [that I know in Indonesia] uses BBM rather than WhatsApp or Line,” Mr. Ferdianto said.

While globally, Facebook Inc.’s WhatsApp dominates the messaging market with a billion monthly active users, in Indonesia, it’s a different story. BBM has over 55 million monthly active users, BlackBerry said in January, making it the dominant messaging app in Indonesia. WhatsApp and Facebook Messenger trailed behind with around 50 million active users for each app, according to estimates from U.K.-based social media consultancy We Are Social. Facebook, which owns both platforms, doesn’t break down number of users by country and only said that more than 800 million people worldwide now use Messenger. The social network had 82 million monthly active users in Indonesia as of fourth quarter last year, of which 77 million access it through mobile devices, a Facebook spokeswoman said.

Companies and professionals in Indonesia are also still embracing the BlackBerry for its secure ecosystem, making the Southeast Asian nation BBM’s top market, followed by Nigeria and South Africa.

Seeking to boost revenue, BlackBerry launched features in 2014 such as an in-app shop that offers stickers and other virtual items, mobile payment, and advertising tools for brands in the form of public channels and sponsored contents. More than 750,000 channels have been created in Indonesia alone, BlackBerry said, including those created by major online retailers who use it to promote their goods and services and engage with consumers. BBM also enables users to pay for goods and virtual items and also works together with multiple mobile wallets. Stickers are also popular among the country’s trend-conscious Internet users: over 1 billion stickers were sent and received each month, BlackBerry said.

The Waterloo, Canada-based company said that it aims to combine e-commerce, advertising, and chat in Indonesia, much like what Tencent Holdings Ltd.’s WeChat has achieved in China.

“We have seen WeChat in China lead the way in creating an ecosystem around chat in China, Line has also achieved this in Japan and KakaoTalk in Korea,” says Matthew Talbot, senior vice president at BlackBerry in charge of BBM. “But none of these players have reached the scale in Indonesia that we have with BBM.”

Still, analysts warn that BBM’s dominance could be threatened this year as other messaging platforms offer superior features. Some analysts say BlackBerry should decide what kind of platform it wants to be—a pure chat application like WhatsApp or a multi-function messaging platform like WeChat—and focus on it, in order to maintain its lead in Indonesia.

“It may be too late for BBM to start trying to do a Facebook Messenger style evolution,” says Jason Mander, director of research and insight at London-based market researcher GlobalWebIndex, referring to more than 700 additional apps specially tailored for Messenger. “In fact, it should probably concentrate on its pure messaging function which prominent in the first place.”

Some consumers agree.

“I use Line to make a free call and send stickers to friends,” says Irfan Mulya, who uses BBM, WhatsApp, and Line. “I only use BBM to chat.” The 34-year-old office worker is among many Indonesian lured by Line’s call and sticker features that make it the fourth biggest messaging app here with 30 million users.

Still, BlackBerry remains confident that it can still uphold its top position in Indonesia, the only market in the world where the app is still winning over other messaging apps.

“I don’t believe there is anyone today in Indonesia that can compete with the ecosystem we are developing, particularly when combined with the scale of our user base,” Mr. Talbot said.
The Fast and Fleeting Times of the BlackBerry
Sept. 28, 2016 5:43 p.m. ET

The once-essential communication tool was outpaced by its competitors

TORONTO—From an office above a bagel store in Waterloo, Ontario, BlackBerry rose to become one of the world’s leading brands, a must-have status symbol that addictively changed how people communicate.

Its ascent would be fleeting. The company that once dominated the global smartphone market was sidelined by rivals it underestimated.

After hitting a peak of 52.3 million handset sales in 2011, it is barely on the radar with 3.2 million in handset sales in the most recent fiscal year, and on Wednesday, BlackBerry Ltd. gave up on designing and producing its smartphones, outsourcing that work instead.

BlackBerry’s woes were in many ways a product of its rapid and improbable success. The small company catapulted into the big leagues in the early 2000s after launching the world’s first hand-held email communicator, after languishing for years in Waterloo as its founder and chief engineer, Mike Lazaridis, tinkered with a variety of mobile devices.

Success came so quickly that it overwhelmed the one-plant company, which raced to keep up with global demand and open new facilities. In some quarters, sales grew as much as 20% from the previous quarter, fueling a frantic pace of hiring new staff, who often arrived in busloads for “new hire Monday” orientation sessions.

Those pressures distracted the company’s leaders from a brutal technology marathon that allowed little margin for error.

Mr. Lazaridis and his team scored their initial success by devising new techniques to conserve bandwidth on rickety data networks. Their other hit: a function-loaded keyboard that made it easy for novices to navigate mobile email communications.

But as they focused on keeping up with surging demand for the popular device, dubbed CrackBerry, Mr. Lazaridis and his co-Chief Executive Jim Balsillie took their eye off bigger Silicon Valley competitors, who quickly surpassed them.

When Mr. Lazaridis conducted an autopsy on Apple Inc.’s first iPhone in the summer of 2007 he was stunned to find so much computing power inside the sleek phone. The phone was nonsensical, he told his team. There was no way the networks could manage the videos, photos and other internet traffic Apple was promising iPhone users.

Mr. Lazaridis and other executives didn’t grasp that their ambitious new competitor had changed the rules: By signing an exclusive agreement with AT&T, Apple gave the carrier an enormous incentive to upgrade its networks.

Those upgrades allowed iPhone users, who had been initially aggravated by dropped calls, to play “Angry Birds” and download apps that the BlackBerry wouldn’t be able to offer its customers for years.

The stakes changed again in 2007 when Google announced it would license its Android operating system free to handset makers, clearing the way global phone makers such as Korea’s Samsung Group to siphon away BlackBerry customers with lower cost phones.

By 2012, Samsung was the world’s leading smartphone maker.

With the company’s woes mounting and its market capitalization and market share plunging, by 2013 Mr. Lazaridis and Mr. Balsillie had both exited.

BlackBerry’s stumbles were so serious that even Mr. Lazaridis realized a few years ago that the once-ubiquitous phones were bound for obsolescence. He grew so concerned that BlackBerry phones would cease to be produced that in 2013, he bought the entire stock of BlackBerry’s from an electronics retailer near the company’s head office.

The man who pioneered the hand-held device in 1998 said he stocked up on the phones that day because “the most frightening thought…was that I wouldn’t have a BlackBerry.”

BlackBerry’s share of the global smartphone market has now slipped below 1%, a tiny share fed by loyal users who refuse to give up its iconic keyboard.

Like Mr. Lazaridis, Mr. Balsillie is a committed BlackBerry user. His phone of choice is a BlackBerry Classic.

“They will have to pry it from my cold, dead hands,” he told a Toronto audience in 2015.

Write to Jacquie McNish at