Research In Motion Ltd (RIM) is seeking to reassure Wall Street customers about the security of its BlackBerry e-mail service as countries including Saudi Arabia and India press for more access to its network, said two people familiar with the situation.
RIM has held at least one conference call in the past week with clients including Goldman Sachs Group Inc and JPMorgan Chase & Co to discuss BlackBerry operations, said the people, who didn’t want to be named because the talks were private.
At least one corporate customer has told RIM that it is not satisfied with the explanations so far and is seeking an additional meeting, according to one person.
The company needs to persuade customers of the security of its messaging system, said Scott Sutherland, an analyst at Wedbush Securities Inc in San Francisco.
The talks underscore the challenges for Waterloo, Ontario-based RIM as it expands in emerging markets as growth in North America slows.
Sales outside North America rose to 37 percent of RIM’s US$15 billion in revenue in the last fiscal year, up from 23 percent in the fiscal year ended February, 2005.
Corporate customers such as Wall Street banks favor RIM’s BlackBerry because its encryption and other safeguards protect communications from prying eyes. Saudi Arabia, the United Arab Emirates (UAE) and India have pushed for more access to BlackBerry services, out of concern the smartphone could be used to coordinate terrorist attacks or violate national mores.
Saudi authorities decided this week to allow the BlackBerry messaging service to continue in the country, after threatening a ban.
RIM and the kingdom’s wireless operators are making progress in implementing a system to allow monitoring of user data, the state-owned Saudi Press Agency said, citing the country’s telecommunications regulator.
Such reports have prompted questions from corporate customers about whether RIM is making concessions on the security of its software, said one of the people familiar with the conference call.
“This whole issue has come up very quickly,” Sutherland said.
“Trying to solve something this quickly obviously triggers concerns that there will be loopholes created in the system,” he said.
RIM shares fell US$0.77, or 1.4 percent, to US$53.40 at 4pm New York time. Since the UAE said on Aug. 1 that it would ban BlackBerry messenger, e-mail and Web-browsing services because of security concerns beginning on Oct. 11, the shares have lost 7.2 percent.
The Indian government said on Thursday RIM and wireless operators had to give regulators access to mobile communications by Aug. 31 or face a shutdown of its service. On Friday, a government official said RIM would provide India with the means to monitor BlackBerry instant messages next week.
The company may also offer tools to monitor e-mails from RIM’s corporate customers, the official, who declined to be identified in line with government policy, told reporters in New Delhi.
Robert Crow, RIM vice president of government relations, said earlier on Friday he was “still hopeful” of solving security issues concerning BlackBerry services in India, after meeting Indian Home Secretary G.K. Pillai.
The US government said on Friday it wouldn’t intervene in a dispute between RIM and Indian authorities over the company’s BlackBerry service.
“While we have been in touch with our foreign partners, this is a matter for Research in Motion to work out directly with Indian officials,” the US State Department said in an e-mailed statement.
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