RIM runs into China security syndrome

From our friends up north, the The Globe and Mail writes about Research In Motion's (RIM) challenges penetrating the China market. According to the article, the launch of RIM's wireless service in China has been delayed due to government concerns that "the high-level encryption technology in the BlackBerrys could make it difficult for security authorities there to gain access to e-mail message. Agents routinely monitor e-mail messages on China's Internet servers, which are all state-controlled."

As the world's biggest cellphone market with more than 400 million users, China is a key market for RIM, but after signing a letter of intent with China's biggest cellphone carrier, China Mobile, 13 months ago, "RIM still does not have a firm date for launching its BlackBerry service in mainland China."

Carmi Levy at Info-Tech Research Group said, "The issue of security control has to come up. It hangs out there as a potential deal breaker. The wheels tend to turn very slowly when you try to get into the Chinese market."

In order to tap into BlackBerry driven communications, China would need the key to RIM's encryption algorithms. Levy stated, "You have to ask yourself: 'How comfortable would RIM be putting the ability to decrypt its technology into the hands of the Chinese, and would China demand it?'"

Levy pointed out that another area of potential concern is "whether the U.S. government would try to prevent the sale of encryption technology to China." Even though RIM is a Canadian company, the "encryption algorithms that underlie it were developed years ago by the U.S. military."