This article was published on September 8, 2011

RIM passes over dominant Indonesian market, chooses Malaysia for new BlackBerry factory

RIM passes over dominant Indonesian market, chooses Malaysia for new BlackBerry factory
Matt Brian
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Matt Brian

Matt is the former News Editor for The Next Web. You can follow him on Twitter, subscribe to his updates on Facebook and catch up with him Matt is the former News Editor for The Next Web. You can follow him on Twitter, subscribe to his updates on Facebook and catch up with him on Google+.

Research In Motion (RIM) has raised eyebrows in Southeast Asia after announcing that it has chosen Malaysia as the site for its regional BlackBerry manufacturing centre.

The move has shocked many in Indonesia who, given the significance of the market for RIM, had expected that the firm would tap the Southeast Asian giant – whose population exceeds 220 million – to further strengthen its brand and market position whilst generating jobs and investment in the country.

Statistics from BlackBerry Cool suggest that, while Malaysia may have stronger infrastructure and more straightforward legal steps, its smartphone market is dwarfed by that of its neighbour Indonesia.

Indonesia represents a much higher volume of downloads and interest in BlackBerry products than Malaysia. In terms of device sales, it’s clear that Indonesia is the bigger market. Sales of BlackBerry smartphones in Indonesia [are] expected to reach 4 million units with a [total] value of US$300 per unit next year. This is compared with the annual sales of 400,000 units in Malaysia.

RIM isn’t alone in selecting Malaysia for a key site. January saw search giant Google chose Kuala Lumpur as the site for its second regional office, in addition to Singapore, to develop its presence in the region.

Google Southeast Asia chief Julian Persaud hinted that superior infrastructure was behind the decision, telling AP that Malaysia’s online landscape was “growing rapidly with significant developments in both broadband Internet access and e-commerce activities” with a talent pool of “the highest quality”.

Added to these set backs, Indonesia has watched as Google opened an office in Thailand last month too – so why is the country continually overlooked?

Setting up office in Indonesia is no easy task, foreign companies must go through significant processes which are comparatively lengthier than those in Malaysia.

As the Jakarta Post revealed back in July, Google – and Erich Scmidt no less – has pledged to open an office in Indonesia before 2012, however there is some way still to go.

[Google is] involved in serious talks with the Communications and Information Technology Ministry regarding its business plan and would soon prepare a memorandum of understanding with the government.

Presumably, this long process coupled with Malaysia’s infrastructure were key reasons for RIM, like Google before it, selecting Malaysia. But what repercussions could this have on the ailing giant’s marketshare in Indonesia, one of its key strongholds.

With Android pushing BlackBerry for entry-level, budget smartphone sales in the region it could be suggested that RIM has missed an opportunity to strengthen its presence in the country.

Android is rivalling Apple, RIM, Nokia and other smartphone giants hard in many global markets. While RIM still enjoys a strong presence in Indonesia, it can’t count on things remaining the same forever.

For example, the pressure on networks to delivery a quality service could cause Android to find greater popularity in the market, as this BBC recently pointed out. While even BlackBerry-mad Indonesia is not immune to the appeal of Android which boasts a huge range of devices, covering different budgets, designs and handset manufacturers.

Another way to assess the possible impact is to look at what locating its manufacturing centre in Indonesia could have done for RIM, as BlackBerry Cool speculates.

If RIM chose to make the manufacturing center in Indonesia, it would certainly guarantee a very large Indonesian market for the foreseeable future as Indonesians would see the product as a local smartphone.

Perhaps this investment alone would help RIM weather any poor sales in other regions as the country’s population is young and would continue buying the devices over a long period.

Also, it leaves the possibility of another smartphone opening a manufacturing plant in Indonesia which could shift the market and RIM would lose an enormous customer base.

Tech-crazed Indonesians will be disappointed at missing out on another giant, only time will tell if this decision has a long-term impact on RIM’s position and success in the country.

The effects will soon be felt by the Canadian giant with the Indonesia government planning to “impose additional tax on imported BlackBerry devices”, as Daily Social reports.

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