RIMM reached to compromise

Research in Motion seems to have reached a compromise with India, Saudi Arabia and several other governments in Persian Gulf area who were threatening to shut down many Blackberry services if Research in Motion did not give local officials greater ability to monitor electronic communications between the handheld devices.

Stock Analysis

Based in Canada, Research in Motion is a world leader in phone, especially smartphone technology. The company's signature product, the Blackberry, was the first mobile phone to offer textually-based communication, particularly e-mail. Since then, Research in Motion has continued to produce cutting-edge smartphones that come with capabilities of all kinds. Research in Motion is holding its own in the exploding smartphone market, but competitors such as the Apple iPhone and Google Android systems have pulled a large amount of business away from the iconic Blackberry. The smartphone market in North America has become increasingly saturated and all handheld technology manufacturers are turning their attention to the east. Both Arab states and Asia hold great promise for technology manufacturers, but as Google has learned, opportunities in those areas of the world can come with complications, particularly government complications.

Matters came to a head at the beginning of August when several governments expressed concern that Blackberry's encrypted messaging systems hampered efforts on the part of law enforcement and security officials to collect data. Much of the discussions have centered on the fact that Blackberry servers almost exclusively reside in Research in Motion's home country of Canada. Indonesia requested that Research in Motion build servers in Indonesia the idea being that the Indonesian government would have greater freedom to perform wire taps, decrease service charges and increase non-tax income. United Arab Emirates threatened to ban Blackberry services such as e-mail, web browsing and instant messaging unless the government was given greater access to encryption codes. Saudi Arabia threatened to ban many Blackberry services as a means of hampering the communications of militants and terrorists. India requires phone companies to place lawful monitoring services in place in order to help with its battles with Muslim insurgencies and would like to force Research in Motion to comply.

Encrypted Blackberry messenger services are not only used by entities planning acts of violence, but also by groups who pursue political activism through more peaceful means. The encrypted communications offered a kind of "free speech zone" to those who might disagree with government policy in a part of the world, where any dissent, even the written word is not often tolerated. Nabeel Rajab, a spokesman from the Bahrain Center for Human Rights has used Blackberry service to communicate with a few thousand followers. He said, "It [Blackberry Messenger] brought us new people we hadn't reached before. Not everybody uses the Internet but everyone uses the phone." Ahmed Mansour, and UAE blogger said, "When BlackBerry came, I started to get messages criticizing the government from people I'd never seen involved in activism. Regular people started discussing taboo subjects. It widened the circle of interest."

Much of the discussion centers around how much access to secret information has been given to other governments, such as the United States and China. The eastern and Asian countries believe that both of the bigger governments have access although there seems to be no proof and furthermore, even R.I.M. itself claims that they themselves do not have the key with which to "unencrypt" the messages. The latest news is that it seems that most of the governments in question have either come to an agreement with Research in Motion or delayed their impending bans. Most observers believe that some sort of compromise will be reached in most of the countries. The bottom line is that Research in Motion cannot afford to stop doing business in this part of the world and they will most likely do whatever is needed in order to get along.