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BlackBerry Security: Blessing or a Curse?

Research In Motion's top-notch security is both a blessing and a curse for the company as governments in some key emerging markets, where RIM is looking for growth, threaten to block the BlackBerry service over national security concerns.

Last week, governments in several countries including the United Arab Emirates, Saudi Arabia, Indonesia, and India threatened to shut down BlackBerry e-mail and Web browsing services in their countries. Regulators in these countries said that RIM's stringent encryption and security network pose security concerns since authorities are unable to monitor and read e-mails and Web browsing activity.

With more than 90 percent of the U.S. population owning a cell phone, companies such as RIM are looking to new markets, such as the Middle East and Southeast Asia, for new subscribers. Today, Saudi Arabia is RIM's biggest Middle East market with about 700,000 users. Nearby UAE has 500,000 customers. These markets are expected to grow as smartphones become more popular worldwide.

Saudi Arabia said earlier this week it would start blocking RIM's BlackBerry Messenger service on Friday. And the UAE has said it will ban not only the consumer version of the service Messenger but also all mobile e-mail and Web browsing on the BlackBerry platform starting October 11.

RIM said in a statement earlier this week that it's working with officials in each country to hammer out a solution. The Associated Press reported over the weekend that RIM and Saudi officials had reached an agreement. RIM now has until the end of the day Monday to prove the fix satisfies the Saudi's security requirements. But the threat of shut downs still looms.

What makes this situation interesting is the fact that RIM, the No. 1 smartphone maker in North America and No. 2 worldwide, got such a strong market position because of its tight security.

"RIM's strong security has been a double edged sword," said Ross Rubin, an analyst with NPD Group. "On the one hand it has helped the company get where it is today. But now it's threatening its growth into new markets."

Indeed, it's RIM's rock-solid security that has made it such a popular device and e-mail service among Wall Street banks, law firms, local, and state governments, and hundreds of other security-sensitive industries. Even President Obama uses a BlackBerry, albeit a souped-up version of the device.

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    Marguerite Reardon has been a CNET News reporter since 2004, covering cell phone services, broadband, citywide Wi-Fi, the Net neutrality debate, as well as the ongoing consolidation of the phone companies. E-mail Maggie.