BlackBerry Chief Executive John Chen looks on during the official launch of the Passport smartphone in Toronto, September 24, 2014.Aaron Harris
On an upper floor of central Jakarta's bustling Ambassador mall, Steven Chandra stands behind a white counter with displays for gleaming new smartphones from Samsung, Lenovo and HTC. A few years ago, such brands would have been highly unfashionable in Indonesia, where BlackBerry was the only device that mattered.
"Three years ago, all we knew about selling phones was selling BlackBerrys – nine out of 10 phones we sold were BlackBerrys," Mr. Chandra says.
But that has changed. "Now, it's one out of 10. I barely sell any."
BlackBerry Ltd.'s market share is collapsing in Indonesia, the world's fourth-most populous country and the Canadian company's most important emerging-market bastion. The massive Southeast Asian country of 250 million people has long been the crown jewel in BlackBerry's emerging-market success story, as well as a potent counter-narrative to the company's decline in developed markets. But BlackBerry's fortunes are waning in this fast-growing market because of strategic missteps, stiff competition and friction with the company's head office in Waterloo, Ont.
In 2011, BlackBerry accounted for 43 per cent of new smartphones shipped to Indonesia, according to global research firm IDC. That market share has now crumbled: In the first half of 2014, BlackBerry had just 3 per cent of the market.
BlackBerry's market share in Indonesia is well below global brands such as Samsung and more obscure ones such as Advan, Evercoss and the Indonesian budget phone Smartfren.
Although aging BlackBerrys with worn QWERTY keyboards are still common, and it's possible to see politicians and business people using newer devices, the brand's appeal has been worn down.
"BlackBerry became more and more boring, we didn't see any innovation," says Gupta Sitoru, who works in communications for a robotics company in Jakarta and traded his BlackBerry for an iPhone. "Then again, we don't care. People are moving on from BlackBerry."
In a detailed interview in Jakarta, BlackBerry's former country head Andy Cobham, a veteran of Indonesian telecom who also managed Motorola's business here for nearly a decade, said BlackBerry had fantastic technology and grew its business here to remarkable levels before things began to fall apart. Some of the missteps, he said, came from having to route everything he did through Waterloo. A prime example of this, he said, was the company wanting to push ahead with a widely advertised promotion for a 50-per-cent discount for the first 1,000 customers to show up for a BlackBerry launch. Local leadership advised against doing this because it might lead to a stampede – which is exactly what happened. The subsequent launch turned chaotic, leading to dozens of injuries.
"BlackBerry was a world-class product, Waterloo just mismanaged it," said Mr. Cobham over coffee at a luxury mall in Jakarta, where he now works for a business consultancy. "They were not global players. They were small town."
Mr. Cobham, who served in the Canadian Armed Forces before heading to Ottawa to work in telecom regulation, said BlackBerry executives were "overtly risk-averse" and legalistic as they tried to expand in the fast-paced market: He said he heard the word "legal" more times in one off-site, two-day session with BlackBerry executives than he did in all his years at Motorola. The company, he added, refused to alter BlackBerry's marketing material to language Indonesians would understand partially because of copyright reasons.
But there were also other blunders. He said former BlackBerry CEO Thorsten Heins's comment that they would exit the consumer market to focus on enterprise customers landed in Indonesia – where the majority of customers were consumers – like "a bombshell" and "destroyed them" here, creating anxiety among both wireless carrier clients and Mr. Cobham's own employees. The firm's executives were also dismissive toward enormously successful local carriers, Mr. Cobham said. "The word arrogance is not inappropriate. We tried to tell them how to run their business," he says, noting that Telkomsel alone has more than 130-million subscribers in Indonesia. "It totally alienated them."
He also said the firm did not promote locally hired talent, and that he lost several productive Indonesian employees who got frustrated and left.
But, he said, it seemed the Indonesian officials also singled out the Canadian firm. The government, which outlaws pornography, ordered BlackBerry to filter 400,000 website addresses they deemed pornographic, he said, something which led to frequent exchanges. They also demanded access to BlackBerry's secure data, like other countries. But BlackBerry decided, along with the government, to "rattle their sabres" in public – something "that was probably, in hindsight, a mistake." The government also wanted BlackBerry to set up a factory in Indonesia, which is known for its inadequate and congested roads and ports, as well as for red tape. Mr. Cobham says it was never going to happen. A decision to do manufacturing in a factory next door in Malaysia – a rival of Indonesia – created further anger.
Asked about missteps in the market and its loss of share in Indonesia, a BlackBerry spokesman said the country remains "a hugely important market for BlackBerry" and that active monthly users of its BlackBerry Messenger (BBM) service jumped 150-per-cent over the last year. Several Indonesians interviewed for this story noted many of their friends now use the free BBM application made for Google Inc.'s Android platform, and some who currently use BlackBerrys said they would soon switch to Android. Mr. Cobham questioned why the firm would keep the service free and simultaneously make it available to Android users – driving people away from the devices, while failing to monetize them.
The spokesman, Matt Stewart, noted that BlackBerry has launched a local mobile wallet service called BBM Money, and also launched a branded "Jakarta Edition" BlackBerry Z3 in May of this year. "Indonesia has been one of BlackBerry's strongest consumer markets – but we strongly believe today's consumers will be tomorrow's mobile professionals," he said in an e-mail. "BlackBerry will continue to be the number one player for those consumers."