RIM will target consumer market, not corporate, in China

RIM has stated its intention to focus on the consumer phone market, with the expectation that it will overtake its position in the corporate sector over the next few years.

According to Gregory Shea, the Canadian firm’s president in China, RIM expects that non-business consumers will soon shift their attention to the BlackBerry which has traditionally been ubiquitous amongst corporate users.

“This year and the next is the beginning of our consumer business here, and if everything works well we will probably end up seeing our consumer work overtaking the enterprise business,” he said.

The focus comes after RIM saw its position as a world leading manufacturer of business phones take a severe knock, with the BlackBerry under government scrutiny and losing out in a number of deals.

Shea stated that RIM had seen the number of global business users grow three times faster than consumer users, though that situation is beginning to be reversed. “Now it’s like three consumer users for every one business user,” Shea said to China Daily, before saying that China will probably follow a “similar pattern.”

In China, the world’s largest consumer market, RIM began to enter the market with the release of the BlackBerry in 2008. Since then the handset has been the phone of choice for multinational company executives, meaning that RIM’s position in the Chinese market has so far been limited.

However, in May RIM established a $100 million venture capital fund to invest in the Chinese market, as well as opening its first retail store in Beijing in July.

“This year we have seen accelerating growth in China,” he said, noting that RIM plans further expansion across other cities in China in the future.

According to figures from GFK China, smartphone sales amount to 15 percent of the phone market, though this is expected to see rapid growth as more users adopt 3G services. Furthermore Chinese shipments are expected to rise from 10 million in 2007 to 30 million.

Pang Yung, an analyst from GFK China, reckons that in order for RIM benefit from this growth it will need to tailor to consumers needs.

“If Blackberry wants to compete with the iPhone or Android-phones in China, it needs to launch more services that appeal to individual users,” said Yung.

There was cause for further optimism for RIM yesterday when Barclays Capital analyst Jeff Kvaal reiterated an overweight rating on the company’s shares and an $85 price target, stating that he believes that firm had a “healthy” third quarter in the three months ending in November, after taking RIM’s Playbook tablet into account.

According to Kvaal demand for the BlackBerry Torch is “solid” in the US, and, thanks to a $99 offer on AT&T he raised his estimates from 13.9 million to 14.1 million.

He also expects that RIM will recover from what has been a “difficult 2010” in the next year with product refreshes including the Touch Bold, a new Curve 8900 and the third version of the Storm.

The Playbook is offering further hope for RIM with expectations that it will sell in the region of 3 million units at an average price of $468, although some think that there will be models priced closer to the $600 mark.