Blackberry Beware - RedBerry is there to steal the show

On the eve of its long-delayed China launch, BlackBerry’s iconic wireless e-mail device in China is facing a sudden challenge toe-to-toe from a cheaper Chinese rival called, RedBerry. Blackberry announced today that it will be launching its service in China by the middle of this year, through China Mobile. The Chinese are masters at the let’s copy and do it cheaper game. Not to be upstaged, state owned China Unicom announced it will be launching its own mobile e-mail service in China, called, Redberry.

The new service, aimed squarely at BlackBerry, was launched this month by China Unicom Ltd., the state-controlled telecommunications giant that ranks as China's second-biggest mobile operator.For the past seven years, Canadian firm Research In Motion (RIM) has been planning to launch a version of its BlackBerry mobile email service in China. It filed its first application to do business there in 1999 and has since registered at least nine trademarks for the device and accompanying service. And now, just a few weeks before the BlackBerry service launches, China Unicom, has launched it’s rival service.

The new RedBerry service could pose a major challenge to Research in Motion Ltd Blackberry. With some four million BlackBerry devices in use around the world, RIM competes with Palm (PALM), Hewlett-Packard (HPQ), Nokia (NOK) and Motorola (MOT) on the device front. Meanwhile its software rivals include privately held Good Technologies, and Microsoft (MSFT), among others. Having competitors with seemingly similar offerings is nothing new to RIM. It’s China launch has been delayed by two years of negotiations and regulatory obstacles, and RedBerry has now been introduced ahead of it.

RedBerry is virtually identical to RIM's service, but a lot cheaper. It is, after all, a state-owned enterprise, immune from the tiresome obsessions of shareholders and the stock market. So a standard e-mail account at RedBerry will cost less than a dollar a month, plus a few cents for each email sent. RIM has not revealed its rates for Chinese service yet, but it will certainly have to be higher if the company is to make a return on all the investment it has put into penetrating the market. Just for illustration, a typical BlackBerry account in Hong Kong costs up to HK$ 64 (£4.70) a month.

China Unicom insists its "RedBerry" technology comes from a Beijing-based company named Facio Software, which sells a software product called Uni Pushmail, but many wonder why RIM has not yet picked a trademark fight with China Unicom. RIM isn't commenting on the matter, but a source familiar with the company's thinking says RIM doesn't consider the Redberry service much of a threat.

Meanwhile, analysts also aren't paying much attention to the prospect of a RIM rival in the vast Chinese wireless market. "The reality is that there are already a lot of competitors out there, and they're trying to set up their own solution," says James Faucette, who covers RIM for Pacific Crest Securities in Portland, Ore. "RIM makes a healthy monthly profit per subscriber, and anyone who thinks they can provide 80% of the solution and capture some portion of the market that RIM is going after will give it a try," Faucette says. "But I don't think there's anything more ominous here than what's already available from Good or Microsoft."

The only things that the Chinese cannot copy are innovation and expertise. For the present, at least, not much in the way of new technology comes out of China. The Chinese also still need the expertise of Western companies to implement large scale complicated technology projects. Perhaps Western technology companies should bear these things in mind before they launch headlong into the massive, unregulated Chinese market with dollar signs in their eyes. The RedBerry is yet another blatant case of 'brand piracy' and is par for the course in China. So by all means get your stuff made there - but keep your IP at home.