Notwithstanding the decline in market share in the past year, BlackBerry India Managing Director Sunil Lalvani is extremely bullish about the company’s growth in the high potential Indian market. He, however, makes it clear that the smartphone maker has no intentions of getting into the sub-100 dollar phone market to gain an edge over competitors.
In an interview to The Hindu, he talks on a variety of issues including the move to make BBM available on other operating systems, and the company’s plan to improve its after- sales service. Edited excerpts:
You joined BlackBerry at a time when sales were dipping. However, lately, we have been seeing a lot of action . How would you summarise your two months as the head of India operations for BlackBerry?
I’ll summarize it in three words — exciting, interesting and challenging. Firstly, I am very excited because we could not be in a better country than India because of the opportunities the market offers. While there are about 650 million mobile phone users in India, only 12 per cent of them are smartphone users. So, the headroom to grow is tremendous.
It’s interesting because it keeps you on your toes, and keeps you thinking at every stage how to differentiate yourself. We differentiate ourselves in two categories, one is for the consumer and other is for the enterprise. Enterprise market we always had a stronghold… so how do we continue to be relevant there. And, in consumer market, launches such as Q5, BBM Channel, BBM cross platform are what is driving the interest.
Challenging because the market is competitive, and there is no two ways about that. There are a lot of expectations, a lot of competitive pressure on price points. There is a very aggressive price war going on. A lot of demand tends to come from certain pockets of the industry where Blackberry is loved by people but they want a sub-$100 (about Rs. 6,000) device. We don’t have a sub-$100 device, and I’ll be the first to admit that.
I can not make a false promise that we’ll get one because it’s not practical. If you look at the way the market has evolved, a lot of these sub-$100 devices are imports from other countries, semi-knocked down or locally manufactured. They get some benefits which we don’t get.
So, we cannot get a sub-$100 device into the market. We are playing into the sub-Rs. 10,000 category going up to the Rs. 40,000 category.
India has always been a very price conscious market. Your Q5 model is the lowest costing BB 10 device, and is priced at nearly Rs. 25,000. How do you think this will impact your market share?
When we launched BB 10 in India, Z10 was priced at about Rs. 43,490. Then, we launched Q 10 (priced at Rs. 44,990). The market adoption and response to both these phones have been fantastic. But being a price sensitive market, a lot of users who could not afford Rs. 40,000 phone came back to us, saying that the platform is great but we can not afford it. So, with the Z10, for example, we launched an upgrade programme, and have seen a 40 per cent rise in our sales numbers. The Q5, which is targeted at urban youth, we think, is very aggressively priced. If someone finds this high, the option of going in for EMIs is always there. At every stage, we are trying to make products affordable to the consumer.
Someone in the market who is more price sensitive and maybe cannot afford a Rs. 25,000 device can also look at Curve. Curve is available with EMI option for as low as Rs. 799 per month.
Also, while OEMs are dropping prices and introducing cash back offers, one key element that is missing is what about your monthly cost of data usage? We have aligned with three carriers— Aircel, Vodafone and Idea— and are offering data plan. So, across 15 circles, for all these carriers, users can get a data plan of 1GB for as low as Rs. 129. Two years back, we were charging Rs. 229. So, we are making recurring costs for users come down rather than that one time thing.
Now that BBM will be available on iOS and Android platforms as well, do you think you’ll be able to retain customers, particularly the youth?
It’s a relevant question. If you look at the market over the last two years, with new instant messaging tools like WhatsApp, WeChat coming in…what is their USP? They work cross platform. They are not restricted to one OEM or platform. On the other hand, while people still swear by the user experience they get on BBM, they say the only reason they possibly moved away was because BBM was not available cross platform.
So, two things will happen. Someone who is possibly evaluating moving away from BlackBerry because BBM was restricted in the past will not move away as now he can stay connected using his or her BlackBerry device.
Similarly, those who had moved out to other OS may be a year ago because of other messaging apps available cross platform could look at coming back. But while BBM will be available cross platform, BBM experience on BlackBerry will always remain the best. There are features like BBM video and BBM screen share, which will all be available to BlackBerry users and not on other platforms. So, these will be our USP.
Then there is BBM Channel, which, according to me, will be the next game changer. We have 61 million BBM users worldwide who send and receive close to 10 billion messages each day. That’s big is terms of data usage. The moment you make BBM cross platform, you are looking at an exponential growth of that 61 million to a huge number.
BBM Channels will allow users to create channels for themselves, a brand, business or community. These can be paid or free channels. In case of free channels, there is ad-based revenue where we get a share, and if they are paid channel, there is revenue for us there. So this is the new BlackBerry we are talking about. It is a completely new revenue stream. We are definitely bullish on the way BBM will evolve for us as a big revenue generator as well.
What will happen to your relationship with the operators as currently you share revenue with them for specialised packages just for BBM?
BBM will continue to operate through the carrier networks, so there will still be a data plan. Operators will not see any revenue loss; revenue will only increase as more and more consumers use BBM. If you look at the key operators in market, they are looking at data services revenue uptake. Voice is virtually commoditised, and the tariffs are low anyway. So whole revenue stream or profitability that comes in for operators today is data, and BBM is data-centric. So, it will help drive revenue for them as well.
What about BB OS? What kind of roadmap do we see for that? Will it co-exist with BB 10?
Globally, we have segmented markets into prime BB OS markets and BB 10 markets. India is a prime market for both. There is an urban segment which is targeted for BB 10 as a platform with features like multi-tasking, social networking capabilities… it’s targeted at urban youth.
BB OS will continue. BB OS 7, in particular, will continue. We’ll roll out more devices on that platform as well where operator data bundling will continue as there are a lot of Tier 2, Tier 3 markets which are under penetrated. Smartphone adoption in cities like Delhi, Mumbai and Bangalore may be very high, but when you go to Tier 2 and 3 markets, the penetration is still low. And because it’s low, we are trying to get BB OS there. For operators, the benefit with BB OS is better data compression that helps optimise their frequency spectrum. For users in these markets, they get BB OS devices that are also available in the sub-Rs. 10,000 category along with lower recurring cost of ownership. So it’s a win-win situation. Operator gets more data services revenue, we get to sell more BB 7 devices and the user gets the power of BB OS at a lower recurring cost.
How many new devices can we expect?
It is difficult to put a number because the roadmap evolves. It is continuously evolving. But we definitely have some BB 7 devices coming in, and some BB 10 as well.
What type of market share are you looking to achieve in India?
We have lost a bit of market share in the past year, year and a half. Firstly because we didn’t have a lot of product launches as the company itself was going through a transition. The BB 10 as an operating system took a little longer and was launched in January this year. So, a lot of customers who could not wait for BB 10 moved ahead to Android and iOS. Hence, we lost a bit of market share. Our priority number one is how we can get that market share. We are trying to get back to the levels we were at. So, it’s really taking one quarter at a time.
After-sales service is not one of the strengths of BlackBerry. What are your plans in this regard?
We have got feedback, and are looking into it. One of key priorities that I have is to correct the after-sales service experience. Till last year, a lot of it was managed through our distributor partner Redington and in-house.
Starting January this year, we have outsourced it with certain SLAs (service level agreements) defined. We have close to 100 service centres where users can walk into. We are not there yet but are working to improve experience for our customers. So, our first approach is to bring a service centre as close to them as possible.