AMRITA SCHOOL OF BUSINESS

BLACKBERRY SERVING
GLOBALLY

INTERNATIONAL BUSINESS

BY

Ravi Kumar Gupta

AMBUP2MBA09035

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 Declaration

I, Ravi Kumar Gupta, second year MBA student of Amrita School of Business,
Amritapuri campus, hereby declare that the report titled, “Blackberry Serving
Globally”, has been done by me during the month of September 2010.

I hereby declare that this report has not been submitted, fully or partially for the award
of any other degree, diploma, title or recognition earlier.

Name: Ravi Kumar Gupta

Date: 18th September 2010
Place: Amritapuri, Kollam

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 EXECUTIVE SUMMARY

In this fast moving world the information is the key and to get ahead in this competitive
age, business demands to be connected always. Smartphones serve these working class
peoples and managers worldwide. Research in Motion Ltd is one of the leading
innovative mobile manufacturer and service provider based at Canada. Its Blackberry
mobile is the largest selling smartphone in the world.

Recently India has put radar on all internet based communication service providers
including Research In Motion's (RIM) BlackBerry services, Skype and Google. The
decision stems from India's concerns that terrorists will use encrypted communications
to co-ordinate attacks similar to those in Mumbai in 2008. Indian authorities insist law
enforcement agencies should be able to access any communication through the telecom
networks.

The government is demanding that all service providers should set up local servers to
enable intelligence agencies to monitor e-mail and chat conversations. Since RIM has
more than 11 lakhs customers and huge growth potential in India, they don’t want to
loose the business so the negotiation with government is on. The issue is so current that
daily new updates are coming.

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 Contents

Introduction 5
Scope of the report 5
Smartphones and its business implications 5
Blackberry – a need of the hour 6
Research In Motion RIM 7
Growth Strategy 10
Porter five force model 11
Semi Globalization- CAGE Model 13
Blackberry in India 14
Conclusion 15
Appendix A 16
Bibliography 17

Word count 2964

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INTRODUCTION

The case deals with the Research In Motion, a Canadian telecommunication MNC well
known for its innovative smartphone Blackberry. It tells us about the communication
revolution and its business implications. Report also talks about How Research In
Motion (RIM) dealt with competitors through different strategies and describes about
the constraints with the help of CAGE model suggested by Prof. Pankaj Ghemawat.

SCOPE OF THE REPORT

This report provides a clear picture about the Research In Motion (RIM), a Canadian
telecommunication and wireless device manufacturer, its global business, competition,
patents, patent litigations and other security issues with different Governments
including India. At the same time it doesn’t cover all the influencing aspects of the
businesses run by Research in Motion.

WIRELESS MESSAGING AND ITS BUSINESS IMPLICATION

Wireless is the one of the hottest markets and is expected to continue to grow as
support for new services keeps growing. The cellular phone market is a classic example
of how a small market limited to frequent travelers has grown so much in the last 5
years to appeal to almost the entire population. The driv ing forces behind it is the
technology and how far it has come, the industry standards that are in place, and the
affordability of the services. Most cellular providers now support some form of text
messaging

Wireless LANs that allow people to carry their laptops and get wireless Internet access
at conventions, conferences, airports and coffee shops (e.g. Starbucks) is another
example of the popularity of wireless products. Wireless WANs connect buildings
through wireless devices and save organizations money on network extensions.
Another aspect of the Wireless Market was reinforced by the huge market of Personal
Digital Assistants ( PDAs) that have become so popular for many people especially with
the application support they received over the last few years.

Wireless Consumers have been demanding more functionality as they have become
accustomed to relying on their services.

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The advantages of Wireless products are obvious: convenience, Less restrictive (no
cables), anywhere and everywhere Internet support for Wireless products has
contributed to their attractiveness with services for web banking and up-to-the-minute
news updates powered by Wireless services (based on WAP and other standards) for
handheld devices.

Business Intelligence Benefits

The Research In Motion provides many Business Intelligence benefits for corporate
world:

 Quickly access sales, product and organizational data in any database

 Access Key Performance Indicators (KPI) while on the go
 Remove the requirement to be near a desktop to view critical data
 Support decision-making with automatic alerts and automatically refreshed data
 Provide at-a-glance performance monitoring for accelerated action and decision
making
 Reduced administrative work in updating the master database
 Expedited processes enables more rapid billing
 Greater employee morale and more communication between mobile and office
employees.
 In a testimonial one client from Saudi Arabia writes:
BlackBerry has become the norm for our organization now. Brian Tower, Director of
Information Technology, OrthoRehab

BLACKBERRY SOLUTIONS- NEED OF THE HOUR

The BlackBerry® solution allows you to enhance your Business Intelligence (BI)
program with access and prioritization of critical data from just about anywhere.
BlackBerry push technology can improve and accelerate decision-making, with
constantly updated data.

When RIM introduced their Blackberry pager, it seemed like a simple enough idea, but
its popularity spread like wild fire. The product appealed to innovators who were so
reliant on e-mail and wanted to be connected at all times. The portability of the small
device packed with many wireless options and a cute keyboard made addicts out of
thousands of users.

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In today's fast-paced business environment, mobile executives and decision makers
must make quick decisions. Being unable to access information in the field makes it
difficult to remain responsive and limits your decision-making.

Target Market

To continue long-term growth

 RIM offers smartphone products with additional multimedia components to suit

consumers’ interactive lifestyle. RIM also targets the next generational cohort,
“Tweens”, who are adept to technology, social media and have considerable
influence on their parent’s consumer behavior.
 The demographics of the current Blackberry target market is composed of mid to
upper class buyers aged 30-55 in the professional, executive and industrial
segments.
 Students pursuing any professional course, they need to be connected with
friends, faculties and business world.

RESEARCH IN MOTION (RIM) LTD

Research In Motion Limited is a Canadian telecommunication and wireless device

company best known as the developer of the Blackberry smartphone. RIM is
headquartered in Waterloo, Ontario, Canada. It was founded by Mike Lazaridise. RIM
is listed on the Nasdaq Stock Market (Nasdaq: RIMM) and the Toronto Stock Exchange
(TSX: RIM).

Businesses of RIM can be categorized into four divisions: devices, service, software, and
others. The BlackBerry devices allow users to be connected to time sensitive materials.

History of innovations

Prior to the manufacture of the BlackBerry, RIM worked with RAM Mobile Data and
Ericsson to turn the Ericsson-developed Mobitex wireless data network into a two-way
paging and wireless e-mail network, hence released the Inter@ctive pager 950 in August
2000. About the size of a bar of soap, this device competed against the SkyTel two-way
paging network developed by Motorola.

In order to continue their success RIM holds both tangible and intangible (through a
combination of patent, copyright and trade secret protection as well as through

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contractual arrangements) resources that are important to their capability to provide
quality products to their consumers.

Milestones

 Today Research In Motion holds a subscriber base of more than 50 million.1

Largest in the world.
 In October 2008, RIM was named one of "Canada's Top 100 Employers" by
Mediacorp Canada Inc., and was featured in Maclean's newsmagazine.2
 On 18 August 2009, Fortune Magazine named RIM as the fastest growing
company in the world with a growth of 84% in profits over three years despite
the recession.3

1
www.rim.com/investors/pdf/40_F_FINAL.pdf Retrieved March 17, 2010
2
http://www.eluta.ca/top-employer-rim
3
http://www.financialpost.com/news-sectors/story.html?id=1902993

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Blackberry-Edge over others4

BlackBerry is a smartphone exhibiting multi functionalities developed and designed by

Research In Motion (RIM) since 1996. After having a look on the different features of
Blackberry device it seems endless. BlackBerry is primarily known for its ability to send
and receive (push) Internet e-mail wherever mobile network service coverage is present,
or through Wi-Fi connectivity. This includes

 Mobile email with auto-text, auto-correct, text prediction, support for many
languages, keyboard shortcuts, text emoticons, push
email, push Facebook and Myspace notifications, push
Ebay notifications.
 Instant messaging with BlackBerry Messenger, Google
Messenger, ICQ, Windows Live Messenger and Yahoo
Messenger.
 BlackBerry functions as a personal digital assistant with
address book, calendar and to-do list capabilities.
 It functions as a portable media player with support for
music and video playback and camera picture and
video capabilities.
 It also helps to encrypt and sign mail messages based on
digital certificates so that nobody can encroach the data.
 We can view attachments (not available previously) in
MS Word, Excel, PowerPoint, and PDF formats with selective options (whole
document, table of contents, particular sections).

Patents and litigations

There has been a rigorous battle among different players in wireless instrument
manufacturers for the ownership right, patent and licensing. See appendix A

4
http://en.wikipedia.org/wiki/BlackBerry. Retrieved on 18/09/2010.

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GROWTH STRATEGY5

After seeing the huge potential in the smartphone market and being unable to cater the
whole market RIM is trying to get a hold through Blackberry chip. RIM has announced
they are working on producing Blackberry on a chip to be used in third party products.
This will enable device manufacturers to make small devices powered by the
Blackberry chip.

Research in Motion (RIM) is a high technology firm that is experiencing explosive sales
growth. Although RIM, makers of the very popular BlackBerry, spent almost $360
million in R&D in 2007, this number was low compared to its largest competitors, both
in absolute numbers and as a percentage of sales (e.g. Nokia spent $8.2 billion on R&D).
In the very dynamic mobile telecommunications industry, investment analysts often
look to a firm's commitment to R&D as a signal that product sales growth will be
sustainable.

The strategy they are using includes

 Doing what they are doing now

 Building on their existing and satellite R&D locations
 Growing through acquisition
 Going global.

5
http://www.cata.ca/files/PDF/Resource_Centres/hightech/reports/studies/quebec-RIM.pdf

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Market and customer base

The mainstream consumer market is a target for acquiring new customers where RIM
will penetrate this segment by incorporating changes in consumer expectations.

RIM is operating in 135 countries with the help of more than 12000 employees and
revenue in fiscal 2010 was $14.96 billion. Research in Motion accounted for the largest
proportion of subscribers at 39.3%, down 1.3%. Apple was second on 23.8% (down
1.3%), with Google third on 17 %. Microsoft and Palm completed the top five with
respective market shares of 11.8 % (down 2.2%) and 4.9% (no change).

PORTER’S FIVE FORCES MODEL6

Customers- Because of the profile of the target customer, which is an early adaptor, this
market is relatively price in-elastic. The change in the price of the product does not
cause a significant change in the demand of the product. We saw several cases in which
the client preferred the latest and more expensive model. Thus the market has a high

6
http://www.cata.ca/files/PDF/Resource_Centres/hightech/reports/studies/quebec-RIM.pdf browsed at
18/09/2010 on 6:20 AM

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level of influence on the customer and the customer has a much lower influence on the
market (basically the influence is by some customers requiring additional features)

Suppliers-There are almost no suppliers to RIM for this market, since they design,
manufacture and program all their devices. Thus the level of influence of the suppliers
and on the suppliers is minimal.

Substitutes- Substitute products such as cell phone and PDA’s have a medium
influence on this market, mostly in the form of functionality. If a phone has a new
functionality, chances are the handheld device will catch up and get similar
functionality designed into it. However, this market has a larger influence on these
substitute products. More and more, the functionality of the hand held devices is
starting to appear on cell phone for example

New Entrants- Several new entrants are appearing (including Microsoft as of late with
Smartphone). Handspring has produced Treo - a product with striking similarities to
some BlackBerry features (RIM sued HandSpring over patent violations). This fact
proves that the new entrants do have an influence over the hand-held market. Analysts
did not react much to these threats (as opposed to concerns about RIM’s earnings)
indicating that this influence is medium in impact and not strong. However, just like
substitutes, the hand-held market has a major influence on the new entrants, who keep
trying to provide the same functionality and more at a lower price. The threat from big
players could be problematic as they can afford to lose money to capture market share.

SEMI GLOBALIZATION

Globalization is not so easy as it seems on papers. There are numerous factors affecting
the business in any country. Semi globalization is new term coined by Prof. Pankaj
Ghemawat, a renowned economist and professor at Harvard University. He pointed
out many areas where firms have to struggle a lot in going global. These factors can be
categorized in CAGE model.

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CAGE Model7

The CAGE framework of distance presented here considers four attributes:

Cultural distance- (religious beliefs, race, social norms, and language)- RIM is trying to
bridge this gap by providing the OS in multiple languages but still local players have
advantage of understanding the customer better. For ex. Recently, a mobile named
Ilkone conceived in middle east has been launched in Malaysia to target Muslim
religion. The mobile instrument has lot of features like automatic direction towards
Mecca, timings for prayers and rituals of Quran etc. So every company can’t incorporate
all the features.

Administrative or political distance- Policies in USA may not be same as in Sri lanka or
in India. Security and legal issues may be different for different countries. RIM is facing
tremendous problem from Government side. Saudi Arabia has banned the service in its
country and India is forcing them to set up their server in India.

Geographic distance -The physical distance between the two countries, the size of the
target country, access to waterways and the ocean, internal topography, and
transportation and communications infrastructures. Example- RIM has its server in
Canada so USA can easily access the server but India can’t do that. So India is forcing
RIM to setup the server in india.

Economic distance- Disparities in the two countries’ wealth and variations in the cost
and quality of financial and other resources. In the case of RIM there is huge gap in per
capita income in different countries. USA contributes more than 50% of their revenue,
but same time growing economies like India, China and Brazil etc are lucrative market
for them.

STATUS IN INDIA

Market size

India is one of the fastest growing country with GDP growth rate of 8.3% is lucrative
market of any company like RIM. Currently India has customer base of about 1.1
million.

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http://www.ghemawat.org/publications.html browsed at 17/09/2010, 6:44 PM

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Security Issues

India has put radar on all internet based communication service providers including
Research In Motion's (RIM) BlackBerry services, Skype and Google. The decision stems
from India's concerns that terrorists will use encrypted communications to co-ordinate
attacks similar to those in Mumbai in 2008. Indian authorities insist law enforcement
agencies should be able to access any communication through the telecom networks.
The government is demanding that all service providers should set up local servers to
enable intelligence agencies to monitor e-mail and chat conversations.

In India, two services from RIM, the BlackBerry messenger service and the BlackBerry
enterprise service are under intense government gaze, While the government has so far
been able to intercept and monitor voice-calls, SMSs, and emails on BlackBerry phones.

However, this time the issue is not limited to India. Countries like Saudi Arabia, The
United Arab Emirates (UAE) and even China have raised similar issues with RIM. In
fact, both the UAE and Saudi Arabia have already banned BlackBerry services.

RIM, on its part, claims the issue lies with the nature of the internet itself and not
BlackBerry. Speaking to the Wall Street Journal, Michael Lazaridis, co-founder and co-
CEO of RIM, said: “This is about the internet, every-thing on the internet is encrypted.
This is not a BlackBerry-only issue.”

“If they can't deal with the internet, they should shut it off. But we are going to continue
to work with them to make sure they understand the reality of the Internet. A lot of
these people don't have PhDs, and they don't have a degree in computer science.”

The BlackBerry operator had earlier said it would provide the IP address of the
enterprise server, located in the customer’s premise, as well as the PIN and the
international mobile equipment identity number of each BlackBerry phone to enable
security agencies access the data in a readable format. RIM also offered metadata‖ and
relevant information to security agencies, which will enable them in lawful interception.
According to media reports, metadata generally refers to data about data. It provides
information about a certain item’s content such as how large the picture is, the colour
depth, image resolution, when the image was created, and other data.

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Current status

India has asked RIM to set up a BlackBerry server in India as it has done in Saudi
Arabia for full interception of data. Government of India has given time to set up their
servers in India latest by November, 2010.

With a user base of nearly 1.1 million and growing, RIM surely want to end the
controversy amicably and get on with business.

CONCLUSION

For any research and development company, it is important to have the best knowledge
to produce products such as the BlackBerry. “The Company’s success is largely
dependent on its continuing ability to identify, attract, develop, motivate and retain
skilled employees” (Annual Information Form, 2008). With approximately 12,000
employees there has to be key players to ensure that they are continuously motivating
and retaining these skilled employees. This ensures that their knowledge and abilities
are used to create value for the company when developing new products.

Innovation is the key to any technological company, and same theory applies in the case
of RIM. They are engaged in the development of integrated hardware, software and
services that support multiple wireless network standards. RIM provides platforms
and solutions for seamless access to time-sensitive information including email, phone,
SMS messaging, Internet and intranet-based applications.

In spite of the recession, RIM was able to grow by more than 20% in year 2009. It
became possible because of their market diversification in different countries. So slow
down in US market was mitigated by growth in India and China.

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Appendix A

Patents and litigations faced by RIM Ltd.

On September 16, 2002, Research In Motion was awarded a patent pertaining to

keyboard design on hand-held e-mail devices. Upon receiving the patent, it proceeded
to sue Handspring over its Treo device. Handspring eventually agreed to license RIM's
patent and avoid further litigation in November of the same year.

On July 17, 2003, while still embroiled in litigation with NTP and Good Technology,
RIM filed suit against Xerox in the U.S. District of Hartford, Connecticut. The suit was
filed in response to discussions about patents held by Xerox that might affect RIM's
business, and also asks that patents held by Xerox be invalidated.[20]

On May 1, 2006, RIM was sued by Visto for infringement of four patents.

On January 22, 2010, Motorola requested that all BlackBerry smartphones be banned
from being imported into the United States for infringing upon five of Motorola's
patents. Their patents for "early-stage innovations", including UI, power management
and WiFi, are in question.

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BIBLIOGRAPHY

Photo credit: http://www.google.co.in/images

http://www.ghemawat.org/publications.html browsed at 17/09/2010, 6:44 PM

http://timesofindia.indiatimes.com/5688285.cms.htm , 15-09-10, 9.16 pm

http://theviewspaper.net/ 15-09-10, 9.09 PM

http://indiacurrentaffairs.org/blackberryin india/, , 15-09-10, 9.12 PM

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