While it continues to struggle in wealthier countries, BlackBerry Ltd. is enjoying a surprising surge in Africa this year, offering a possible lesson in how the company could remain a competitive force in global markets with its cheaper devices.
A survey released on Tuesday showed that BlackBerry now has a 23 per cent share of the cellphone market in South Africa, up from 18 per cent last year.
This makes it the second-most popular cellphone brand in South Africa, behind only Nokia, and it remains the most popular smartphone in the country. The survey, by independent South African research firm World Wide Worx, also concluded that BlackBerry has "growth momentum" in South Africa, with 29 per cent of respondents saying they planned to buy a BlackBerry next year.
Another study the firm did last month showed that BlackBerry had an astonishing 57 per cent market share among university and college students across South Africa. Its low-priced data packages and free BBM messaging service have made it popular among young people as a relatively cheap status symbol.
Across the continent, BlackBerry gained almost three percentage points in its market share in the second quarter of this year, controlling nearly 18 per cent of the African smartphone market, according to a separate survey by International Data Corp., an advisory firm.
BlackBerry's continued strong presence in Africa is a sign the company can still hold its own, even as smartphone options proliferate for consumers. But pricing is key.
"There's a continued appetite for BlackBerry as a real status symbol," said Arthur Goldstuck, managing director of World Wide Worx, one of the research companies that conducted the latest South African cellphone market survey.
"It has a strong aspirational appeal and a strong trickle-down effect," he said in an interview. "There's a tremendous appetite for a low-cost BlackBerry device. There's a lot that BlackBerry's head office could learn from these trends."
Instead of promoting its latest Q5 phones, which have a retail price of about $450 (U.S.) in South Africa, the company should be devoting more effort to marketing its bestselling Curve phones, which are only half as expensive, Mr. Goldstuck said.
"BlackBerry doesn't seem to be leveraging it in the emerging markets," he said. "That's precisely what's missing from its current strategy."
In the latest South Africa survey, Nokia's market share has dropped from 50 per cent to 44 per cent since last year, while BlackBerry has surged ahead of Samsung, whose share has increased only marginally from 18 per cent to 19 per cent.
The survey also found a dramatic rise in the use of cellphones for banking in South Africa. And it found a sharp rise in spending on data services, rather than voice calls. Among young people in the 19 to 24 age group, only 56 per cent of their mobile budget is now spent on voice calls, down from 66 per cent last year.
BlackBerry's current momentum in Africa and other emerging markets could be quickly lost if it fails to promote a cheaper range of phones, Mr. Goldstuck said. The company is probably planning a strategy of this kind, but it should be making its plans clearer in these markets, to fend off the threat of new cheaper rivals, he said. "The problem is that they're being very cagey about it."
In a sign that BlackBerry is increasingly aware of its potential in emerging markets, the company announced on Tuesday that its BBM service will soon come preinstalled on a variety of Android-based smartphones in Africa, India, Indonesia, Latin America and the Middle East. It listed 12 different smartphone producers that will include BBM as a preinstalled feature, beginning next month.
But new threats to BlackBerry are rapidly developing, with producers introducing a range of cheaper Android-based smartphones in Africa and other emerging markets to compete with BlackBerry.
Tecno Telcom Ltd., a Chinese mobile-phone manufacturer that focuses exclusively on Africa, has been selling a $70 smartphone in several African countries with substantial success. Tecno recently began selling a "made in Ethiopia" phone, from a factory in Addis Ababa, and it has plans to manufacture in Nigeria and Kenya. It is among the companies that have agreed to preinstall BBM on its phones.
Another Chinese-controlled company, Alcatel Mobile Phones, is selling smartphones for as little as $20 in the developing world. Some of its phones, with BlackBerry-style keyboards, have been dubbed "AlcaBerries" by their buyers.