Research-in-Motion Turns to China to Bolster BlackBerry


Research in Motion's (RIMM) stock rose over 7% on July 9. But the spike probably has little to do with the BlackBerry maker's U.S. business. The BlackBerry has been, until recently, the dominant smartphone used by businesses, but that position is being challenged by Apple's (AAPL) iPhone and a number of handsets powered by the Google (GOOG) Android operating system. RIM has tried to move into the consumer smartphone market but has not been successful enough, at least for investors.

So RIM is doing what many companies do when their core business is weakening. It's turning to China. Some analysts think that the reason RIM's stock is its plan to move rapidly into the country. RIM's 52-week high is $88.08. It closed yesterday at $53.33. According to Reuters, RIM "said it is preparing to launch an applications store and consumer Internet services in China as part of its push into the world's top mobile market."

China has a different 3G standard than the ones in the U.S., so the BlackBerry is being modified to work on the system that's used by China Mobile (CHL), the top wireless service provider, according to some reports. RIM has a 2G product that works on the China Mobile network now.

The cautionary tale for RIM may be Apple's iPhone. It was officially launched in China with great fanfare when Apple teamed up with China Unicom (CHU) to sell the device in August, 2009. But there's little evidence that the iPhone initiative in China has been a success. It remains to be seen whether RIM will face a similar fate.