Including the BlackBerry: http://www.theglobeandmail.com/servl.../Business/home
China's got RedBerry
Cheaper rival hits the market on eve of RIM's long-delayed debut
GEOFFREY YORK AND SIMON AVERY
From Tuesday's Globe and Mail
BEIJING and TORONTO — On the eve of its long-delayed China launch, BlackBerry is facing a sudden challenge from a cheaper Chinese rival called, unapologetically, RedBerry.
The new service, aimed squarely at BlackBerry, was launched this month by China Unicom Ltd., the state-controlled telecommunications giant that ranks as China's second-biggest mobile operator.
The new RedBerry service could pose a major challenge to Research in Motion Ltd., which is planning to launch BlackBerry in China by the end of next month. Its China launch has been delayed by two years of negotiations and regulatory obstacles, and RedBerry has now been introduced ahead of it.
China Unicom left no doubt that it is brazenly attempting to capitalize on BlackBerry's global fame.
"The RedBerry name extends the vivid name of BlackBerry that people are already familiar with, and it also combines the new red symbol of China Unicom," the company said in a press release.
China Unicom spokesmen refused to comment yesterday on whether they expected any disputes over trademark infringement. RIM did not respond to requests for comment made through its New York-based public-relations firm.
The new China service is the same basic "push-mail" concept as BlackBerry, automatically sending e-mail to the customer's phone whenever a new message arrives, although it does not use a proprietary handset. Instead it uses the CDMA digital cellphones that China Unicom is already marketing.
A state-owned newspaper, China Daily, said China Unicom's decision to call its product the RedBerry is "a clear sign that the firm is ready to challenge the BlackBerry push-mail service." Another Chinese business publication said China Unicom is "taking up the hatchet" against BlackBerry.
In its press release, China Unicom acknowledges that BlackBerry is "the most successful application of push mail." But a standard five-megabyte e-mail account at RedBerry will cost less than a dollar a month, plus a few cents for each e-mail sent. A typical BlackBerry account in Hong Kong costs up to $64 (U.S.) per month for unlimited e-mail.
"From RIM's point of view, this is rather disturbing," a Canadian business consultant in Beijing said, speaking on condition of anonymity. "It's obviously a copycat name. It's a fairly clever example of brand piracy."
RIM announced plans to crack the Chinese market in the first quarter of 2002, and it has already begun selling BlackBerry in Hong Kong. But despite signing a memorandum of understanding with China Mobile in 2004, it has faced lengthy delays in launching in mainland China.
Last week, RIM said it would launch its China service with China Mobile by the end of May. But it said it will target only multinational corporations and others in China who already have BlackBerrys.
One reason for the two-year delay, according to an Ontario government source, is China's concern that the high-level encryption technology in the BlackBerrys could make it difficult for China's security authorities to gain access to e-mail messages. Chinese security agents routinely monitor e-mail messages on China's Internet servers.
Another rival to BlackBerry will be offered soon by China Mobile, which will launch "PushMail" in Shanghai next month. PushMail will allow customers to use e-mail on their existing mobile phones.
Cellphone use in China has soared in recent years, with an estimated 404 million mobile phone subscribers in China today. The market for wireless value-added services in China is expected to skyrocket from $5.7-billion today to $13-billion within three years.
Brand piracy remains rampant in China, despite several court rulings against illegal imitators. In December, Starbucks won a court ruling against a Shanghai coffee shop that was using a similar logo and an identical Chinese translation of the Starbucks name. It won $62,000 in damages from the Shanghai imitator, but an appeal has been filed.
Ferrero, the Italian confectioner, won a court case in January against a Chinese rival that produced copies of its Ferrero Rocher chocolates.
The likelihood of confusion between BlackBerry and RedBerry among consumers would seem high enough for RIM to have a good case. And the company's position would probably be enhanced in a Chinese court if China Mobile joined any action against RedBerry, said Paul Devinsky, a partner at the Washington, D.C., law firm of McDermott Will & Emery LLP. Ultimately, any legal fight would hinge on who registered the trademark and service mark for BlackBerry first in China, he said.
The company has used lawyers to defend the BlackBerry name before. Last year, it sued Massachusetts-based BackOffice Associates after the firm named some of its software "CranBerry."
RIM has been pursuing a foothold in the enormous Chinese wireless market in fits and starts for years. The real challenge seems to be getting an acceptable revenue-sharing business model in place, said Ellen Daley, principal analyst with Forrester Research in Cambridge, Mass.
In Western markets, RIM collects a service fee from the phone companies of about $8 a month per user. In return, RIM runs the wireless traffic through its secure and efficient operating centre in Waterloo, Ont. Other technology firms have found cheaper methods of transmitting wireless data that bypass a centrally managed hub, but RIM's system is considered the premium version.
Chinese companies are looking at RIM's leading technology and saying they want a cheaper method that doesn't involve sharing so much of the profit, Ms. Daley said.
"I don't think RIM's expansion plans in China, in terms of the business user, is in significant jeopardy because of RedBerry," she said. "But if they had designs to go after the consumer side, that's where a lower-cost product is going to make a significant difference."