Research In Motion Ltd. said that its talks with China Mobile, China’s leading wireless carrier, were “going well” for establishing wireless e-mail service in the world’s largest telecommunications market. According to RIM’s Asia Pacific Vice President Norm Lo, the company expects to close a deal by mid-year.
The Ontario-based maker of the widely used BlackBerry mobile e-mail device has reason to talk about talks; analysts just lowered their estimates for RIM’s revenues and earnings. The lowered projections came after the company reported fourth-quarter earnings that reflected its own reduced forecast and the company projected first-quarter revenue, earnings and subscriber growth significantly short of analysts’ targets.
The emerging Chinese market holds magical allure for foreign firms due to its massive size and relatively untapped potential for growth, particularly for companies such as RIM that may have saturated existing markets or due to circumstances such as RIM’s lengthy and damaging legal wrangle with NTP Inc. over patents that appeared to stunt its subscriber growth in the United States and Europe.
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RIM last month agreed to pay NTP $612.5 million in a four-year patent dispute that imperiled RIM’s more than 3 million subscribers in the United States, taking the sheen off its market-leading position in wireless e-mail in its premier market.
Meanwhile, RIM has worked to widen its product offerings to escape the fate of a pure-play e-mail device and service provider. Its BlackBerry Enterprise Server can manage e-mail-enabled handsets besides the BlackBerry. And, in the aftermath of the resolution of the NTP patent lawsuit, RIM acquired Ascendant Systems, a provider of voice mobility solutions for the enterprise. However, with voice a maturing service, the spectrum of wireless players are pursuing wireless mobility for the enterprise as a growth area, thus RIM is being pressed to broaden its portfolio. Meanwhile, service providers are pursuing enterprise customers, device makers are providing numerous alternatives to the BlackBerry and Microsoft Corp. is wading into the market as well.