Will RIM's BlackBerry do better than Apple's iPhone in China?

Research in Motion (RIMM) sealed a distribution deal for its BlackBerry in China in a partnership with Legend, the owner of Lenovo, on December 7. A day later, the handset company said it had another distribution deal with China Mobile (CHL), the largest cellular carrier in China. The new initiative will be aimed at consumers and small businesses. Bigger companies have been offering BlackBerries for two years.

There is reason to curb enthusiasm about the RIM announcement, even though China has over 600 million cellular subscribers, more than twice as many as there are in the US. And market penetration is low enough in the nation of almost 1.4 million people that the cellular phone business is still a growth industry.

RIM is up against many established smart-phone products from Samsung, LG, and Nokia (NOK). Sales of the Apple (AAPL) iPhone in China began two months ago and have not been a success, based on most reports.

RIM is coming into a market where may cellphones are not marketed through the major carriers. There are millions of unlocked iPhones in China. They work on most carriers systems in the world's most populous nations. But RIM's handset often requires that customers have their own RIM e-mail servers. It is not clear whether unlocked BlackBerries will interact with RIM server hardware if the handsets are incorrectly configured.

RIM is up against the China tech industry plague of knock-offs. Chinese rogue hardware designers with consumer electronics skills make imitations of most top-selling phones which siphons off sales of the originals.

RIM is attracted by China's huge cellular customer base, but the landmines in the market may well keep sales of the BlackBerry at moderate levels.

Douglas A. McIntyre is an editor at 24/7 Wall St.


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