India, UAE can’t risk backlash over BlackBerry: Analysts
By Gurmukh Singh, IANSWednesday, October 13, 2010
TORONTO - Though BlackBerry maker Research In Motion (RIM), based at Waterloo near here didn’t react Tuesday to India’s decision to extend its deadline till Dec 31 to satisfy New Delhi’s security concerns, analysts said no emerging economy wants to risk a backlash by throwing out BlackBerry.
The Indian home ministry Tuesday gave its second reprieve in six weeks to RIM to provide access to its instant messaging, email and web browsing for security reasons.
But analysts interpreted India’s decision - after the UAE move Friday not to ban the smart phone - as the inability of emerging economies to block a must-have device for their businesses.
“No country wants to be the country that is so undemocratic that they kick out BlackBerry,” the Canadian Press quoted analyst Tavis McCourt, of Morgan Keegan & Company, as saying.
“My impression is look - if China allows it and you don’t, you’ve got a serious public relations problem as a country,” McCourt was quoted as saying after India’s extension of its deadline for the BlackBerry maker.
According to analyst Tero Kuittinen, of MKM Partners, it is in the interest of RIM and India and the UAE to reach an agreement and not throw out the BlackBerry maker.
“It is not the kind of publicity these countries would want,” he was quoted as saying by the Canadian Press.
Because of this publicity, he said, there is a negative “overhang” on RIM’s stock which has sunk more than 20 percent this year and is currently trading at about $49.
“Wall Street hates issues that it cannot quantify or it feels it can’t really get its hands around. The degree of uncertainty may make these issues actually look larger than they really are.”
He said RIM could install servers in India to satisfy security concerns.
William Blair & Co. analyst Anil Doradla said prolonged security issues could affect BlackBerry sales internationally.
“RIM is at a critical juncture in its life cycle,” Doradla was quoted as saying.
“It is faltering on its share in North America. It is a company that cannot afford to continue on with issues on the international front.”
RIM has refused India’s demand, saying it doesn’t have access to encrypted data on its smart phones.
(Gurmukh Singh can be contacted at gurmukh.s@ians.in)
