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August 6, 2010
Editor's note: This is the first of a two-part analysis by Badii Kechiche, Senior Analyst with Pyramid Research’s Africa & Middle East regional (AME) team, about the ongoing challenges RIM is having in many regions, AME in particular, over security concerns. Kechiche's next post provides some suggestions to RIM for resolving the crisis.
Since the start of August, a war of words has ignited pitting the UAE government against BlackBerry. The device vendor’s encryption of emails, BlackBerry messaging service (BBM) and Internet browsing, as well as its foreign-based servers, could present a serious threat and become a conduit for illegal and terrorist activities, claimed the UAE government. The government indicated that it is resorting to an outright ban of services this time around since the vendor has failed to address its concerns over the past three years.
BlackBerry, from its end, insisted that the privacy and security of communication over its devices is paramount to its product and service offering. The device manufacturer has doggedly refused to discuss a solution based on granting the UAE government access, taking the stand that any changes to public perception with regards to BlackBerry’s secure communication could be even more detrimental to the vendor than being locked out of the UAE market.
Both parties have resorted to playing hardball over the past few days, and it seems like time is playing in favor of the UAE government for now. Only hours after the UAE’s announcement, Saudi Arabia cited similar security concerns and has also expressed intentions to shut down at least some BlackBerry services. More threatening, concerns over illegal activities, terrorist threats, and conservative social values strongly resonate very well with the rest of the countries in the MENA region.
All of a sudden, BlackBerry is finding out that the minor inconvenience of being locked out of the UAE market, with a population of about 5m, is morphing into a serious threat. As more governments in the region align themselves with the UAE, the vendor’s access to the whole MENA region is suddenly at risk. MENA is a fast-growing consumer market with a population of well over 400m, where we expect smartphone sales in most of these countries to contribute over 30% of total handset units sold by 2015.
The snowballing effect could have even more devastating consequences if large markets such as Pakistan, India, Russia and China decide to be more forceful about their concerns over security. This could explain the prompt intervention of the Canadian and American governments on RIM’s behalf — first on the basis of free trade, and then on the basis of Human rights concerns.
While political pressure and behind-the-scene compromises might help RIM navigate this crisis, the handset manufacturer should reconsider its strategy and stringent commitment to security as a selling point. But we’ll leave that to my next post.
— Badii Kechiche, Associate Manager
Related resources:
UAE: Fiber Deployments Will Boost Uptake of Pay-TV and VoIP
Country Intelligence Report published July 2010
The UAE’s telecom market generated $6.1bn in service revenue in 2009. Since the market has now caught up with those of the developed world in terms of service penetration, it can look forward to healthy but not dramatic growth between 2010 and 2015, during which we expect total revenue to increase at a CAGR of 2.5%. The fastest significant growth segments will be broadband Internet and mobile data, although mobile voice will remain the single largest contributor to total revenue.
Africa & Middle East Mobile Data Forecasts
Forecasts published quarterly
Our Mobile Handset Forecast products provide a complete picture of handset sell-through in each of Israel, Nigeria, Saudi Arabia, South Africa and Turkey. The Excel output includes five years of historical data and five years of market projections for metrics such as total handset sales, handset sales by network technology, new handset sales (by technology, by technology generation, by feature set), smartphone handset sales, vendor market share and handset ASP. We believe our Handset Forecasts are superior because they capture sell-through (units sold to end users) rather than unit shipments (sales from manufacturers to distributors) and rely heavily on our Mobile Demand Forecasts. Moreover, they are based on extensive field research, and a consistent methodology that is applied to all markets. Data from these Forecasts is available online for subscribers to our Data Tracker service.
Africa & Middle East Fixed Communications Forecasts
Forecasts published quarterly
Our Fixed Communications Forecast products provide a complete picture of wireline voice and data communications in each of eight African and Middle Eastern markets. The Excel output includes five years of historical data and five years of market projections for metrics such as demographics and economic trends, penetration of broadband and narrowband lines, Internet users, business users, voice telephony lines, VoIP, PCs, IPTV and revenue. We believe our Fixed Communications Forecasts are superior because they capture granular data gathered through extensive field research and use a thorough methodology consistently applied to all markets. Data from these Forecasts is available online for subscribers to our Data Tracker service.
Africa & the Middle East Mobile Handset Forecasts
Forecasts published quarterly
Our Mobile Handset Forecast products provide a complete picture of handset sell-through in each of Israel, Nigeria, Saudi Arabia, South Africa and Turkey. The Excel output includes five years of historical data and five years of market projections for metrics such as total handset sales, handset sales by network technology, new handset sales (by technology, by technology generation, by feature set), smartphone handset sales, vendor market share and handset ASP. We believe our Handset Forecasts are superior because they capture sell-through (units sold to end users) rather than unit shipments (sales from manufacturers to distributors) and rely heavily on our Mobile Demand Forecasts. Moreover, they are based on extensive field research, and a consistent methodology that is applied to all markets. Data from these Forecasts is available online for subscribers to our Data Tracker service.
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