Research In Motion reaches deal in Saudi Arabia?

Saudi Arabia
By Bla1ze on 7 Aug 2010 07:35 am EDT

Sure seems that way according to a report from MSNBC. The agreement, which was advised to MSNBC by a Saudi regulatory official, who spoke on condition of anonymity because he was not authorized to discuss the details of the deal with the media, would have Research In Motion installing a BlackBerry server within Saudi Arabia. If this report is in anyway accurate and Research In Motion is installing looking at this as a viable option, it opens the doors for other governments to request the same treatment.

With the United Arab Emirates announcing it will ban BlackBerry services starting in October and Indonesia and India threatening the same action based on their claims the system doesn't allow for control of the data within the network, we could see a lot back and forth happening here between Governments and Research In Motion. While it's still too early to tell how all things will play out, it's quite an interesting topic when you really look into all the parties involved here and their reasonings for such actions.

Source: MSNBC

Via: @zacharye

Reader comments

Research In Motion reaches deal in Saudi Arabia?


India started pushing RIM after there were reports that RIM had installed a server in China to cope up with the security raised by the Chinese government. The papers in India suggested that the Indian government had lobbed this idea to RIM which it declined.

So should non BB users be worried? Are these governments saying they can "snoop" on every handset other than BB's?

If so this is scary and troubling because I doubt it's going to stop at RIM. I'm guessing they will block all SSL traffic and other protocols and ports that "could" be used to encrypt data and voice.

So who's next? Apple, Google, Nokia?

Whhatever the reason behind. RIM need to bring solutions. If RIM couldn't bring the solution then all other countries may follow the ban. If there is no BIS, BB means nothing. The reason we all using BB is mainly bcs of BIS. I once travel to Vietnam and stay there for 3 weeks without BIS, I started to hate BB.

As a longtime shareholder of RIM, I am happy to see that RIM caved in and was able to accomodate KSA. I am hopeful that they will find a way to accomodate UAE, Indonesia, and whoever else. It was disappointing to see RIM take a defensive posture and say they can't or will not doing anything to protect or defend a growing marketshare in the ME.

In addition, it seems most people do not know how BIS and BES works not only in govt but the commenters here as well.

1.) BBM, PIN messages and email are not enrypted and never were on BIS. So alot of commenters and media have that fact well wrong.

2.) Only BES allows for true encryption since, since IT will be have the key for it, that RIM does not have access to. So govts can go to the company to get the messages and not need to go to RIM.

In short it was a good decision by RIM to keep up growing marketshare @ a time, when they are in a strong fight with Apple and Android.

Sorry, isn't "scrambled" the same as encrypted? Yes, any Blackberry device can descramble it, but it's still unreadable by any device that doesn't have the key.

I think you answered your own question. If any blackberry device can descramble a message, how secure is it, since how many BB devices are there in the whole world...millions!!!

You need to read the 2nd bullet point, if you send a BBM message to your friend and I intercept it and route it to my BBM, guess what...I can read it! How secure is that?

Encryption involves use of a key between you and another person only (in really simple terms). Now if you encrypt your message, and I intercept it, without that key...I am not able to read it. There is a huge difference between the two forms of communications.

A warning that something is possible does not mean it is probable. This is also an old memo, RIM has added additional security measures to the BES and BIS system.

America LOVES you. You are exactly what they wanted to form all of us into. You follow capitalism blindly and as long as you are making a buck then who the hell cares?

Forget about morals and ethics .. you want the green.

Stop fooling Yourself. The people who are worried have a right to be. I'm assuming you vote republican and have probably never read the patriot act? If so .. give it a good read. Maybe it will change your extremely flawed and brainwashed views, or maybe you're just in it for the money. Either way, learn some values.

I don't know how we do it, but in Venezuela, there are people on the shopping malls that are able to change a device's PIN address or clone it. We can also change IMEI on devices that are stolen and therefore with a new IMEI and PIN can get service on any of our three cellphone carriers.

RIM caved in. Its obvious its a commercial decision and they fell into a trap and thus opening the floodgates.
In other words, they're afraid to lose business even from radical governments. Nevertheless, its a commercial decision and money means money!

You say it like it is a bad thing. I am glad they caved in, and it would not suit any one if they took some stupid and illogical stand to fight different govts about access.

...I am worried about it. It now runs the risk of opening the flood gates and now the hallmark of the Blackberry, its security is vulnerable. "Your information is secure, just ask the government."...

These rantings from these governments have little to do with security and all to do with control. With the flick of a switch, Saudi Arabia put the lights out on 700,000 users with access to information that clearly the government wants contained. It's the same or UAE and supposed democracies like Indonesia and India.

Really, look at the countries that RIM has installed servers to appease - China, Saudi Arabia...who else? US Govt BBs are all running BES, no need for a RIM server...

So, hooray RIM, you "saved" <1% of your user base, you'll likely do the same for UAE and your market valuation will recover...but at what cost?

Oh please, this is a stupid much hand wringing...oh what cost?? Oh RIM please don't sell to govts that crackberry commenters don't like...oh boo hoo. Please what kind of shareholder are you?

It is called an opportunity cost, that is the cost that RIM pays for not being in China, India, and the KSA. So if RIM picks and leaves, do you think people will not buy iphones or android phones. Please, between India and have population of ~2 billion people, and a growing middle class that seems to want and buy BBs. Who are you to tell them no, who cares if RIM caves as along as the make the sale...and to be honest, RIM can not afford not to.

Perception is just as big a player in market cap as any hard numbers. Corporate customers, RIM's biggest segment, assess security in how and what they choose to do business. RIM has bullet-proof security. If the cards are down, could something be done in a pinch to have law enforcement play a role? Sure.

Now however, corporate customers must now assess their vulnerability where they do business because of "less than friendly" business environments. Places that are already hedged against foreigners (like Saudi Arabia, UAE, China, et al), and already bend the rules like cheap silverware now have even more prongs to poke at foreign business.

It's a real perception, not a rant. In the end, I think that the money players in this mess could have softened the Saudi government (who compromise their "pure" values at the drop of a hat).

I'm just happy that I will not loose my BBM service, and will now plan to get the 9800 :D .... Thank you RIM for making a deal :D

RIM have a reason to be concern about this because RIM stock lost $ 2.7 billion dollars just in 4 hours time during the time Saudi have banned some BB service.

Why would the dropping price of the stock concern them? They have a stock repurchase program in place. Dropping value means less cost for them to repurchase.

Swings in market capitalization are an everyday fact and a $2.7 billion dollar loss isn't much in light of the $18 billion dollar loss in market capitalization that RIM has already suffered since their highs of last year.

This "$2.7 billion! Oh My God" storyline is rather silly.

for Saudi to ban BB service completely will hurt RIM pretty much because RIM cannot afford to lose billions of dollars, if they were to lose that much, it will be harder for them to recover huge losses.

The reason that a market cap loss should concern them is shareholder value, and the loss of it no matter who is the company is not a good thing.

Granted in this case, it seems like a minor blip in the valuation of shares being traded. The concern would be over a long term, will RIM be shut out of existing markets or new ones because of their stance. If so, then what smartphone will take the place of BBs and you would see that phone being a growth story and not RIM.

In addition, you would expect that this would decrease share price and prob lead to shareholder lawsuits in regards to management. Low share prices make you a more easy target of a takeover or of an activist investor. Sure they can do a stock repurchase to goose their PE ratio and give a quick boost to their price, but you can argue that money should be spent on say new tech or marketing rather than a share buyback.

Apple has lost $18 billion in less than two months, Google has lost $41 billion since January. Market capitalization is not a reflection of business performance but of the attitude of the market place. That is something that companies have very little control over.

RIM just had their annual general meeting and despite another prediction by the media over an angry greeting from shareholders, there was only one investor who expressed concern. So where are these lawsuits going to come from? RIM has increased the sales, increased profit, and increased cash flow. What is the basis for a lawsuit?

They have gone through these stretches several times in their history and have always rode them out by not panicking but by taking advantage of the lack of faith in the market place with share repurchase programs. Let's not forget that the market also felt Apple would be unable to compete and had written them off. How did that work out for the investors that made that call?

And a takeover? Who is going to buy them out? Microsoft? If Microsoft didn't buy RIM when they were valued at $50 million(when the deal was first rumoured to be happening), why would they buy them now that RIM is worth over $30 billion?

RIM has been increasing their R&D and marketing spending, at a percentage of revenue that is greater(almost twice) than what Apple has been committing. So it's not like the share repurchase program is coming at the expense of other areas.

Using market capitalization in stories is silly because it makes people who are unaware of how the stock market works think that RIM actually lost money. I'd rather not see the media feed into ignorance.

A number of points:

1.) Apple and Google each have a market cap that in the hundreds of billion dollar range. RIM has a market cap of say 30 billion dollars. So the percentage of loss would be greater for RIM that for either Apple or Google. So you can say Apple had a market cap loss of 18 billion but still has a higher market cap that say Microsoft or Berkshire Hathaway.

2.)The simple fact of the matter is that RIM while it has increased cash flow, sales (with BOGOs), and expanded into some new marketplaces....still has a stock that is trading pretty much flat for the last 52 weeks. So show that there no bullish sentiment for RIM, if RIM is doing so come the stock is treading water? So you think they can go on forever...with a stock trading flat for years on end? Please....people are taking a wait and see approach to see how RIM is able to defend against Apple and Android. Should there be a decline in marketshare, do you think investors will hang around?

3.) MSFT can buy RIM for 30 billion, you make it sound like 30 billion is hard to raise...considering the amt of MSFT has saved and the fact they can raise money through either debt or equity raises. Maybe they are waiting for RIM to fall further in price, why has been doing it. It would be a good fit, since they both are good at selling to the enterprise.

4.) Considering the amt of option exercises that are done, you need to do the stock repurchasing. It is a gimmick to still make the stock look better than it is.

Market capitalization is not as important for a company with no need to raise money to operate. It's more of a concern for short-term traders which again, isn't that important to RIM as a viable company. They've seen the share price drop 30% in a single day in the past.

I believe I made it very clear why the share price has been flat and that's because the market thinks they can't compete against RIM and it is trading at a valuation that is much lower than comparable companies. The market trades on emotion and not so much on reality. The greatest investors, like Warren Buffett, have made their fortunes on buying companies that maintain strong fundamentals when the market has written them off.

RIM is still showing revenue and profit growth in the mid-20 percent range. The market is negative so they are doing the share repurchase to combat the other "gimmicks" of the market such as naked shorting. One man's gimmick is another man's smart move.

And I don't know if you've heard but the US economy isn't doing so well and banks are under pressure to reduce their risk. Who is going to lend out $30 billion in this environment? Or do you feel Microsoft will spend their entire cash and asset reserve to purchase a company that cannot be integrated into their current mobile division?

RIM's stock buyback program is a gimmick and it is so sad that you can not see it.
First so called naked shorting is a banned pratice, so I am not sure why you would raise that as a defense for their buyback program.
Second, as a long time shareholder of RIM, they are spending money...shareholder money on a dumb move...which is this stock buyback program. This does nothing to increase shareholder value for the long term.
Third, is this the best way to return excess cash to shareholders? I don't think so, they are basically reducing the float of shares to make them look good for the time being.
Also speaking of cash, I don't see that RIM has say 30 billion or 22 Billion in the bank. I think on their balance sheets, they have about 3 billion in cash, and they are doing what with it...buying shares to prop themselves up. You are the big RIM defender, so tell me this? Where is a dividend, how come RIM does not pay say a 8% yield? The answer is, that RIM does these buyback to prop up their falling stock price for stock option holders....which is a gimmick.

It is good to see that you don't know how the credit market works. Considering the corporate bond market is pretty robust, MSFT will have no problem selling a few billion in notes that has a good yield in which investers will snap up. Also MSFT will have no problem lining up a huge number of banks to help with this capital raise, banks would welcome it. So if MSFT wanted to, it would be able to raise a bid for RIM should it choose. How this is a smart move, let RIM shares flounder and decline and then when they have a mkt cap of say 20 billion or 10 billion then they can make a offer. I know I would be interested to hear it.

As for Warren Buffet, last time I checked, he was not a tech investor. He was looked for undervalued companies or companies that were in a business that had a high cost of entry, a moat. So RIM does it have a moat? Considering that within the past few years, the likes of Android and Apple have been eating into their marketshare...that moat seems to pretty thin. Apple and Google are very rich companies fight for marketshare and it seems it is coming @ the expense of RIM. Mkts are rational, I am not sure why you think they are so emotional. The simple fact is that the mkt is foward looking and it believes that the furture earnings and marketshare of RIM will not be as robust as it was in the years past when it had the smartphone mkt to itself.

please check what the actual stories are. RIMM stock did NOT fall that ammount in 4 hours, it was over a 48 hour period. im not saying that makes it better, the two events are linked, but not as strenuosly as you suggest, this hasnt been helped by people posting the two facts in the same post (cb blog post).

tech stocks are notoriosuly viable, take Apple stock, still not at or above pre-iphone4 levels!

No government want's a device that is so heavily used by members of their government want the data stored in another country where another nation is controlling it.

Just like the BB Pres Obama has and other government officials do you really think that the BES is in Canada that handles the transmission of data from the White House?

I don't see the big deal actually I think its a benefit for the users in that region maybe even speeding up the data flow process. Besides if BB wanted to get the data they could easily remote backup all server located in these nations. So its really not a big deal and it keeps RIM in the game and with a simple inexpensive solution.

I'm also wondering why CrackBerry(among others) continues to mention Indonesia as a country that is proposing a ban. The comments made by Heru Satadi who only raised the possibility of a ban have been refuted by several members of the Indonesian government.

Communications and Information Minister Tifatul Sembiring and the Ministry spokesman Gatot Dewabroto have said there is no plan for a ban, only a request for RIM to open a data centre in Indonesia. Gatot Dewabroto also stated that they have no legal ability to force RIM to set up a data centre. It's not that tough to find these quotes.

You would be silly to use email and BBM through BIS to communicate things that could potentially irritate countries that are police states, just in case you are a human rights advocate of some sort. I can't find the link anymore but there was an excellent article here on CrackBerry that discussed the security of BBM in quite some depth. Your communication is never truly secure as long as some third party (most likely RIM) holds the decryption key. Public key cryptography security system is the one that is truly secure because private decryption keys are never exchanged in the communication process and only the public encryption keys are. I personally treat everything I said through emails and BBMs on BIS as if I were posting through FaceBook or Twitter, no expectation of security whatsoever.

What about google, yahoo, msn, and other services?
Do they also asking them to put the datacenter in their country?
And do they also banning those sevices if they rejected it?
And what about other smartphones? I can send encrypted mail and chat from my WM and Android.
That is what ssl meant for. People have rights to keep their confidentiality. Even from their govenment.
They should stop producing knives because it could make somebody killed.
They should kill all cows because it could make people got heart attack.
And then they should blocks the sun because it could make people got cancer.
Yes they should, because it is also a threat for their people and country.

I hope everyone understands that this comment comes from a Blackberry ADDICT; if RIM decides to start giving any government the right to look at our data transactions, then I feel like they have decided to give up their customers altogether. It seems that RIM is willing to sell us out so it looks like ill be selling them out. This looks like it is going to be Androids time to really flourish. I hate that I am thinking this way but thats me. There are very very few things that I will choose over my Blackberry, but freedom is one of them...

Hah, I can only wonder what concept of "freedom" a BlackBerry addict can have XD. I love how nowadays we rely solely on Anonymous to gives us news, nobody cites sources anymore, anyone remember a certain Judith Miller? Bitch ¬¬

So you would move to a platform that's easily accessible to government spying? That doesn't make much sense.

Frankly, it ticks me off. Doesn't anyone take a stand? I know it's easy for me to say, I'm not the CEO, but I really would like to see a company say "we're not going to cater to you fascists, even if it means we lost 2 billion customers AND it leads to the bankruptcy of our company, we will do that before we cave in to these dictatorship requests."

Yes, I know--easy for me to say when I'm not the CEO, but all of these companies caving, like Yahoo! censuring results to placate China etc, is only another way to let these fascists governments win. You have to take a stand, no matter the cost, and live or die by the consequences.

Somebody, PLEASE!

On one hand, I'd like to say "take a stand". It seems silly to cater to these radical governments who have to have their hand in everything. I mean, do you really think that the China gov't is somehow gonna be overthrown just because they can no longer access Yahoo? Give me a break.

On the same hand, I totally understand the business aspect and the end-user aspect of working with them. I mean, I agree that if the gov'ts of these countries also use BB, just like our own, they'd expect specific servers that are even safer than the stardard ones. I can see how there are many users who would be bothered because of the choice of gov't. I also don't like alienating and mounting our own "jihad" of sorts against them just because they have a different set of beliefs, norms, and values. However, I don't like them "needing" servers they can "get into" just because they want to be able to see what everyone is saying and doing (if they want).

I wonder it it's all the data they want to access or will it have to be by warrant? By warrant I would understand but if they want to do it on everybody sounds a bit crazy to me.

What's next, all couriers and postmen will have to drive past local centres where all mail and packages will be opened and checked?

radical governments? Its pretty much all governments doing what my government already does. I'm pretty sure the patriot act has the US government able to snoop on bb traffic as well. I dont support the act itself as it IS a huge invasion of privacy but it passed nonetheless.

Don't forget that other countries simply have not given their citizens the "supposed" rights we have here. And its not RIM's job to cater to our wants/ideals over in the Middle East or anywhere else. Other governments run their countries totally different than we do, we can change how they run their own country no matter how much we think we are right.

Besides if RIM did not agree to put up the tower, Android or Apple surely would have somewhere down the road. If that is what the government wants, then someone will cater to such a simple need.

I did not say I agree w/any of it, but it is a simple truth of the global economy.

A couple of comments based on my experience in government chasing people (and comms) that did not want to be found.

There is nothing unreasonable or radical in the requests of these respective governments. In truth, if law enforcement of security agencies in the U.S., U.K., PRC, Russia, Singapore, France, Germany, Venezuela, Colombia and several other countries want your e-mails or IMs (BES or BIS), they have the capability (and, in some countries, after getting a Court-issued warrant) to do exactly that. There is nothing, for example, in the U.S. and Canadian systems that is immune from collection.

Thus, the REAL issue is that, for the first time, other nations not in the traditional West flexed their economic muscles and forced equal treatment.

Again, why is this bad (for individuals or others) when it has been available in the West for decades ?

If you have something to say to someone that you absolutely don't want to be overhead, copied, etc. -- don't say it. :)

I think that they should cave in to a maximum of 7 countries, then as soon as the 8th comes withdraw the extra servers that were put in immediately, make them suffer, because guys, those governments use bb's, and why do you think its called a crackberry? Cause you get addicted, if they buy an iPhone or something to replace the fallen BB they'll seriously miss the BB, I can not imagine my life right now with out a BB, it fits into my daily routine and grows its roots into it, I remember I couldn't use my BB for 2 days cause it got wet and they were the hardest days of my life as long as I can remember, if my country wouldn't allow BB services I would just move somewhere else, although that's improbable so ill even add in that I'll cut myself if they do,

I think it's kinda dumb for these countries to block blackberry services.
they can't block the internet, surely there are other means to get messages out without a blackberry..
there are e-mail. that can be encrypted, IMs...
come on people get real...

I think RIM should say "fine - we are so outta here". You don't want us, well, just try to get us later. They should be the ones boycotting these backward Arab countries instead of kissing their behinds to hawk their wares.

Common guys, Grow a pair!