Proceedings of the Standing Senate Committee on
Foreign Affairs and International Trade
Issue 12 - Evidence - Meeting of May 29, 2014
OTTAWA, Thursday, May 29, 2014
The Standing Senate Committee on Foreign Affairs and International Trade met this day at 10:30 a.m. to study security conditions and economic developments in the Asia-Pacific region, the implications for Canadian policy and interests in the region, and other related matters.
Senator A. Raynell Andreychuk (Chair) in the chair.
[English]
The Chair: The Standing Senate Committee on Foreign Affairs and International Trade is continuing its study on security conditions and economic developments in the Asia-Pacific region, the implications for Canadian foreign policy and interest in the region and other related matters. We have before us Mr. Morgan Elliott, Vice President of Government Relations, BlackBerry.
Mr. Elliott, we have heard of your activities and presence in the area that we are studying, with great emphasis on the stories that we have heard from Indonesia. Thank you for appearing before the committee to add to our study. I presume you will be concentrating more on the economic developments and your position in the country and maybe the region. Welcome to the committee. If you have an opening statement, we would like to proceed with that, and then the senators will ask questions.
Morgan Elliott, Vice President, Government Relations, BlackBerry: Thank you, Madam Chair. I want to point out the clock is a little fast. You have heard of just-in-time delivery; well this is just-in-time testimony as I was here at 10:29. I made it by the wire courtesy of Air Canada.
The Chair: We sometimes have witnesses that are delayed because of security issues. When it comes to our clock, we then go searching.
Mr. Elliott: I can assure that security was very efficient. Thank you for allowing me to come before the committee. It is a pleasure to provide our views on economic opportunities in the Asia Pacific. I will focus primarily on the four countries you have been looking at: Indonesia, Myanmar, Philippines, and Singapore.
Prior to that, I thought it might be helpful to give a little background; and this is not meant to be a commercial. With lots of noise and media attention on some of the stories about what's going on with our company, I thought it might be helpful to address the prognosis of BlackBerry, because I'm sure you may have those questions, which I'm happy to entertain as well.
Last November, we saw a pretty big wholesale change in terms of our structure of the business with a new CEO, new CFO, and a whole new C-suite in our area. We have embarked on a pretty aggressive turnaround strategy. At a very high level, we're focusing primarily on four main areas. We're going back to our roots, so to speak, of focusing on the enterprise customer, namely large industry, regulated industry, large governments; and the Government of Canada and the Senate of Canada are very good customers.
In the enterprise area, there're lots of rumours that we're not doing well, but I can assure you that we manage more in the enterprise mobility management area for our customers than all our competitors combined; so we're still doing well in that segment. It is not to say that we take it for granted; we don't. We're doubling down on our efforts to maintain and grow it.
To give you a quick snapshot, we have 10 of the 10 largest global customers, 5 of the top 5 largest gas and oil companies, all the G7 governments, and 16 of the G20 governments; and we operate in over 175 countries. Four carriers in Canada the government would like, but we deal with 665. You can only imagine the challenges we have with that.
The second area of focus is our messaging services, which are BBM or pin-dependent as you know. It has evolved into a leading instant messaging platform. We opened it up to Android and Apple's iOS system. Even original equipment manufacturers like LG are loading it before the customer gets the phone. Since we've launched BBM channels on devices other than our own, the numbers have gone up to 50 million to 60 million customers. It represents an opportunity to commercialize that as well, which I would be happy to get into if you have questions.
The third area of focus is our Internet of things connected machine to machine. We own a company located in Ottawa called QNX Software Systems. You may not have heard of them but I can guarantee that you are familiar with their technology. They're in the oil and gas sector and run most of the nuclear plants and train systems in the world. Believe it or not, we are in 40 automotive manufacturers and 250 vehicles. If you drive a Volkswagen, an Audi, a BMW, or a Chrysler, GM or Toyota vehicle, those are our systems doing the telematics and informatics systems as you see a connected car. I would be happy to answer questions on that too.
The fourth area of focus, despite the rumours that you hear, devices remain and will continue to remain an important element in the solutions that we offer. We believe that the device business can be profitable, but clearly we have to make changes in that area so we have made some partnership agreements with third-party manufacturers. The first device coming out of that was the Z3, which we launched in Indonesia.
In terms of our fiscal health, we have $2.7 billion in the bank. Our margins are up almost 10 per cent last quarter. We reduced costs by 51 per cent. Our goal is to be cash neutral by the end of this fiscal year and cash positive by the end of next year. We have a really strong foundation, but that's not to say the turnaround plan is not without risk. I want to assure you that it is a strong platform from which we are building our turnaround. That's the commercial.
Let me turn to what the committee is looking at on economic conditions in Asia Pacific, with a focus on Indonesia, Philippines, Myanmar, and Singapore. Of those markets, Indonesia is, by far hands-down, no surprise, one of our most important markets for our devices and systems. It is interesting. They have nearly 300 million subscribers in Indonesia, which is far greater than the population. They're the fourth largest market in the world and one of the top 10 3G markets. Similar to youth in North America, young Indonesians are totally bypassing fixed phone lines. Compared to the 300 million wireless subscribers, there are only 9 million fixed-line subscribers. It gives you a sense of how mobility is affecting lives in emerging markets.
Another unique factor to Indonesia is that mobiles are mostly prepaid. About 95 per cent to 98 per cent are prepaid as opposed to the model in North America that is post-paid. We're driving full speed ahead in this market. As I said earlier, our Z3 was built with Indonesia in mind, and that's why we launched there first. They have been a very good customer. They love to stay connected. They are the kings of the selfie. They post more selfies than any other country in the world. They love to chronicle their lives through social media.
We have also made some pretty significant investments and partnerships with the country, which is important. For example, our BlackBerry Innovation Centre is a collaborative joint effort between one of the universities, the Bandung Institute of Technology and the Indonesian government. We're looking at trying to catalyze the growth of a smart mobile society in Indonesia, triggered by the emergence of an absolutely massive amount of mobile content application developers that are located there.
Also Bali, a great place to be, is actually the global location of our application content review and vetting centre. For every app that comes out, about 90 per cent of them go through Bali to check for things, functionality, how they operate with our system, malware and what have you.
We also support about 1,500 developers indirectly in Indonesia that develop for our platform. We also access and purchase a number of our accessories. Our headphones come from there; some batteries get assembled there. Some of the parts inside the vibration motor when you get a buzz on your device are sourced from Indonesia as well.
We also partner with the Ruma foundation. For those of you who aren't familiar with it, it's an organization that empowers small traders and small businesspeople in Indonesia with mobile technology and access to financial information services that they probably couldn't otherwise afford. We have big investments, and we spend a lot of time in Indonesia.
Myanmar represents a very interesting market. It is still early days in Myanmar, but they have 53 million people we think. The first census after 30 years comes out this month or next month. Most of it will depend on our presence and how the networks get rolled out. The Canadian government has been very good in terms of opening doors for us. We've had a number of conversations. That was courtesy of the Department of International Trade, through some of the trade missions and some of the other travels that they have made there, and they have been extremely helpful.
It is too early to say what our footprint would be. They will be definitely very cost conscious. We worry about a burgeoning government in terms of how they will handle business and how it will develop, but it's something that we will monitor. You can find devices there. It's just that we don't have a very big presence there.
Singapore is a very small country for us but very advanced economically and technologically. That doesn't mean it is not important. We support a large number of our international customers who have operations there. In the past, traditionally, we have also had customer support operations for the region based out of Singapore.
It also has an extensive app developer ecosystem, which we partner with. There are really no issues in terms of conducting business in Singapore. It is one of the most advanced and easiest countries to work in.
The Philippines is somewhat of a different story. It has a large population, yes, and mobile penetration rates that are over a hundred per cent. People actually have two or three SIM cards, simply because they're very price conscious. They will go to one for a better signal or for a better price.
Most of the people use what we call "feature phones." You can think of your old clamshell phone that may not have email access but would have SMS and maybe some Internet capability. That's simply because, as I said before, they don't see a need in terms of the extra cost. That's changing with the younger demographics coming up. About 40 per cent of the phones sold there now are smartphones.
Like I said, with people there, it is not uncommon to see them have two or three different SIM cards, which is something we don't see here.
Every country, of course, is important for us in Asia, but, obviously, market dynamics and opportunities are always the key drivers in terms of where we focus our investment and our attention.
That is just a brief opening snapshot. I find that the information you probably want will come out in the questions, and we will have a constructive dialogue. Thank you.
The Chair: Thank you, Mr. Elliott.
Senator Downe: How closely do you work with the Government of Canada on your business overseas, export development, financing, other agencies of the government?
Mr. Elliott: Extremely closely. At one point in time, I don't think it is the case now, but we were Export Development Corporation, EDC's, biggest customer in terms of accounts receivable insurance. They've been an absolutely outstanding partner.
By far, the biggest partner has been the Department of Foreign Affairs. I was told I wasn't supposed to say this, but they've saved our bacon more than once in terms of opening up markets, making connections and actually advocating on our behalf. It is no secret that we have faced issues in different countries that either want to shut us down or to try to get to our secret sauce so that they can do whatever activities they want.
We view the Government of Canada as an extension of BlackBerry. We feel very lucky to be able to use them.
Senator Downe: I notice, in the lobby register, that you have had a number of meetings in the last number of months with the Prime Minister's Office and the Prime Minister directly. Are those pertaining to trade, or are they on other issues of BlackBerry?
Mr. Elliott: Totally international trade issues.
Senator Johnson: Good morning, Mr. Elliott. Congratulations on BlackBerry's success in Asia. You are doing Canada proud. I know Foreign Affairs is helpful.
From a growth perspective, to what extent are Indonesia — and you told us much about that — and other emerging markets in the Asia-Pacific region critical to BlackBerry's overall success?
Mr. Elliott: Any large market will be important to us. What we have seen recently is the emergence of other manufacturers, other handset devices. It is really pushing the price point down on devices. One of the reasons why we partnered with Foxconn in Taiwan is that 65 to 75 per cent — and numbers may not be exactly correct — of parts of a small phone are the same, whether you buy a BlackBerry or one of our competitors' devices. It makes things a little easier when one of the biggest manufacturers can source the parts cheaper than we can. We make it in such a way where we share the risk, and we also decrease our risk too. We are finding it very price sensitive.
Where we see the value is in the handsets, but one step further from that is helping companies grow and protecting their information as they grow. We are finding that our enterprise systems in terms of secure communications, even cheap communications on BBM that don't really cost consumers that much, are critical for us in our growth. It will be a major part going forward.
Senator Johnson: Apart from Indonesia, what countries does BlackBerry see as providing your strongest commercial opportunities in the Asia-Pacific region? You mentioned Myanmar, Philippines and Singapore.
Mr. Elliott: Thailand, Vietnam as well. You can include India in that area.
With regard to countries with a large population base, Canadian companies and other companies in developed countries should be worried that they really have an opportunity, as they develop their economies, to leapfrog over where we are with technology. They don't have to rely on systems that are already in place where companies have to get the return investment on what they're doing.
In Myanmar, where the cellphone is pretty spotty — I believe it is just 2G — they can jump right to LTE. The ability to conduct business and connect communities is really transformative.
Senator Johnson: In terms of institutions, Canadian and international, other than Foreign Affairs, who has helped you expand your operations in the Asia-Pacific region?
Mr. Elliott: Canadian government departments?
Senator Johnson: Or international.
Mr. Elliott: The Department of Industry has been very good for us as well. Yes, they're the regulator here in Canada, but they also help during an international forum like the ITU, developing standards and providing input on different trade agreements, from expansion of the ITA to TPP to a whole host of different agreements.
We also find that other governments are interested in partnering with us, too. Indonesia has been a great partner. We got off to a rocky start, but the market was growing so big that we were scrambling to keep up with it before we could decide where to make investments. Lots of countries come to us every day asking us to do R&D. They offer incentives every day to come. We get a regular tour of different countries, and ambassadors that come through Waterloo who are trying to track business to their countries.
Senator Johnson: That's great.
When is the land line going to be done and over forever?
Mr. Elliott: Good question.
Senator Johnson: No guesses?
Mr. Elliott: I would like to give it up but my wife won't in case the power goes out. She still wants 911.
The Chair: I'm with her.
Senator Dawson: If and when we do make it to Indonesia, the partners at Research In Motion — I'm an old fan of BlackBerrys and I knew them under their former name — should try to organize visits. I want to get to the Z3 Jakarta Edition, which you have launched. Here it is low cost from our perspective, but how is it in their market? How does it fit in their price range?
Mr. Elliott: It is toward the upper end of the lower value chain.
Senator Dawson: The lower end of the upper value chain.
Mr. Elliott: Some of the materials are not the same, but the experience and connectivity is absolutely the same. It is one of the largest screens you can get in the market in Indonesia. That is not to say there's no pressure from other manufacturers located in other Asian countries that are putting out lower priced products.
Indonesians love BBM. A great story about this is — I will say kudos to them — the current Ambassador of Canada to Italy, Peter McGovern, who used to be the Chief Trade Commissioner at Foreign Affairs, was hearing complaints from the embassy in Jakarta that they couldn't connect with businesspeople because the only way they connected was via BBM. Instead of the email address on their business card, they had their PIN number. That's how they were connecting.
Through his efforts, the Jakarta embassy got access to BBM. That's a testament to the price sensitivity of markets where they are paying pennies for minutes and pennies for data.
Senator Dawson: This should be a transport and communications debate, but what is the level of competition in Indonesia? Are there a lot of companies operating?
Mr. Elliott: Yes. With a country that has that big a population, the competition is fierce.
[Translation]
Senator Fortin-Duplessis: Mr. Elliott, welcome to the committee. I am glad to have you with us today.
A few years ago, BlackBerry had some trouble with the Saudi and Indian governments as far as data encryption and your devices were concerned. Have you run into similar problems with other governments, those in the Asia-Pacific region, in particular?
[English]
Mr. Elliott: I wouldn't necessarily call them problems. Misunderstanding would probably be a better characterization of some of the issues we had in those countries. It is safe to say that all countries care about national security, policing and fighting crime. We have a finely honed team that goes in and educates law enforcement officials on how the system works.
I wouldn't necessarily say there are troubles, but we spend time educating different police forces and national security agencies on how our system works.
So there isn't confusion on that. BlackBerry is no different than a virtual private network that a banking or technology company or ATMs would use. People want to be able to transfer information that is secure, can't be intercepted or decoded because, let's face it, there are people who may not have the best intentions and other nefarious activities that go on.
We go in and tell them that if you are able to intercept the message, you can't decode it because it is encrypted. But if you are able to catch the message, you know the source it is coming from. Why not go right to the source?
There is no special sauce in terms of a back door; there are no special agreements for any other country. Every country gets treated the same. The BlackBerry enterprise side that the government uses is fully encrypted.
[Translation]
Senator Fortin-Duplessis: I would conclude, then, that yours is a very secure system. You stood firm. You did not accommodate the requests of various governments. You must not be able to listen to them much or inform them of conversations that might put their security at risk.
[English]
Mr. Elliott: The reason we get in trouble is because it is so secure. With countries like Indonesia, India, Saudi Arabia and outside of the Asia-Pacific, we have gone from a conversation where they have wanted to shut us down to "How we can use this technology for our governments?"
There are a number of governments across the world on different email systems that you can get from the Web. I don't want to name competitors. I don't want to highlight competitors in terms of their weaknesses, but governments are working on just regular base Web mail, and they're not encrypted. The conversation has changed from "This is too secure and we want to shut you down" to "We want to use your product because it is so secure."
With all the recent activity surrounding Edward Snowden, being a Canadian company has been very much the best business development tool we have had in years. We should put him on our Christmas card list for sure.
[Translation]
Senator Fortin-Duplessis: Indonesia is your biggest market; you have been tremendously successful there. Would you be willing to share the secrets to your success with Canadian companies that are not necessarily involved in communications? That way, they could hope to enjoy the same level of success that you do and prosper in Indonesia.
[English]
Mr. Elliott: Absolutely. We have done a couple of things. The Department of Foreign Affairs has had a small pilot project in Spain — it hasn't been in Asia yet — where we used some of our contacts for smaller companies to get access to some very senior-level CEOs within a country.
We strongly believe in supporting Canadian companies that use our products and have done it in the past. Absolutely, we're more than willing to do that.
Senator Oh: Thank you for being here to give us this information.
On BlackBerry in Indonesia, would your biggest competitor be Samsung, notepad and notebook?
Mr. Elliott: Everyone you can think of is there, but Apple not so much. They have a small office but haven't really entered the market. There is Samsung and some of the other Chinese competitors, Huawei, Lenovo — once they get their phones — and other ones not known to the Canadian market place.
Senator Oh: Besides Indonesia, what is the second largest market in the ASEAN countries?
Mr. Elliott: I would have to say the Philippines. I don't have exact numbers. We have been successful there despite the fact that smartphone penetration rates are still low. They're growing very fast, though.
Senator Oh: You mentioned Indonesia and that they are manufacturing batteries, earphones and other accessories. Are they manufacturing them in Indonesia or somewhere else?
Mr. Elliott: They're made in Indonesia. The headphones are made in Jakarta by Cresyn, and the motors are in Batam, Indonesia.
Senator Oh: Do they also supply the North American market?
Mr. Elliott: Yes, that's not just for the Z3; that's for all our devices.
Senator Oh: For the Z3, the new BlackBerry that launched in Jakarta, that is manufactured by Foxconn.
Mr. Elliott: Foxconn.
Senator Oh: In China or Indonesia?
Mr. Elliott: It's not manufactured in Indonesia. My understanding is that Foxconn has negotiations going on with Indonesia, but I'm not privy to that. But, no, it was not made in Indonesia.
Senator Oh: I was in Singapore last month, and they talked a lot about your success story.
[Translation]
Senator Rivard: Mr. Elliott, you said you had 300 million subscribers in Indonesia, a country with a much larger population than Singapore. You did not mention how many subscribers you had in Singapore or the market penetration rate. Is it 10 per cent or 20 per cent of the market?
If I am to believe what I have read, Asia has the highest standard of living, Singapore first, followed by Japan. If you do not have your fair share of the Singaporean market, what gives your competitors a leg up?
[English]
Mr. Elliott: That's a good question. If I knew that, I would probably be very successful in the business development area. Japan has been a challenge for us against some of our competitors. We've never had an overly large market share in Japan. I don't know why; we've spent a lot of marketing dollars. Perhaps we haven't understood the market. That's not to say we have totally abandoned it, but for some reason, historically we haven't experienced the same success we've had Indonesia, where it's been wildly successful.
In Singapore, it's just pure population base. Where do you focus your efforts? Do you focus your efforts on a market that has 300 million subscribers or one that has 5.5 million with limited resources? You have to go where you think the best opportunities are.
[Translation]
Senator Rivard: My second question is this. Every year for the past 10 years, we have been asked to contribute a larger and larger amount of funding so that the Canadian Grand Prix in Montreal can take place.
As government representatives and taxpayers, we always ask whether we should continue to spend advertising dollars on the event. It is a fact that, after soccer, Formula 1 is the second-most watched event in the world.
In recent weeks, I noticed that the BlackBerry logo was quite prominent on the Mercedes cars. At the Monaco Grand Prix last week, the top two competitors in the race were driving Mercedes, and the cars featured the BlackBerry logo.
So I would assume that if you decide to invest in Formula 1 advertising, you realize that it will generate a good return on your investment. That may also be grounds to justify continued participation by governments in the event; it is extremely significant for Montreal.
Your business partners also invest in Formula 1 advertising. You are in the company of the UBSs, Petronases and Rolexes of the world, and I am sure research shows that the investment made by those who opt to spend those advertising dollars is well worth it in terms of exposure.
Coming back to my question, I would imagine that the amount of your sponsorship exceeds a million dollars. I realize you cannot tell us how much it is, however.
[English]
Mr. Elliott: That's a great discussion point regarding advertising and subsidies. To give you a sense of what we've had from the Canadian government, back in our early days, there was a program called Technology Partnerships Canada and we received several million dollars to invest in what was then called the Wireless Wizard technology, which was the precursor to BlackBerry. One of the small things I look after is the repayment of that investment from the Government of Canada, and I can assure you that was a very good investment they made, not only in creating jobs but the return on equity they got was absolutely phenomenal.
The second biggest thing that we get is the SR&ED program. I also look after the Scientific Research and Experimental Development tax incentive program, and it's one of the biggest factors. We continue to do our R&D activities in Canada. As of last year, we're still the largest R&D investor in Canada, and at times we've recouped about $150 million of our taxes. There's no hidden information there. We've just plowed that back into R&D.
Government being an important investor — absolutely. We prefer programs that enable us to put our efforts where we think we'll get the greatest return, and we don't mind being audited or justifying the program. We really like the SR&ED program over, say, a directed program or Technology Partnerships Canada program.
In terms of advertising, it's great that Canada does it, and they should do it. It might sound trite, but we find very useful the Canada Day receptions, where we have an opportunity to invite different people and make connections, especially in the Asian countries where it's very critical, not to just come in and start doing business, but to develop the relationship. Those events actually help us develop those relations on sort of neutral territory where you can make those connections.
We're always happy to chip in and help defray the costs for that, too. There should be more openness to doing that, as well.
Absolutely, the Government of Canada should continue to advertise. Whether it's in F1, which is expensive, or whether it's very targeted at the embassy or the consulate level, I would say you have to do a combination of both for sure.
[Translation]
Senator Rivard: You are among Canada's industry leaders, employing a lot of people, and we wish you much success. Canadians get excited about good news and worry when the news is not so good. Because of your dynamic approach and your clear sense of innovation, we wish you all the success you deserve.
[English]
Mr. Elliott: Thank you very much.
The Chair: I have a supplementary question to what you were saying about Singapore. We are being told over and over again that Singapore is a concentrated financial hub now, perhaps an alternative to China and the difficulties. A lot is being centred there, and it's in a developing stage; we don't know how much more, how more intense or if there will be competition. But it's not really the Singaporeans, per se; it's a base where you can do a lot with the people who come in, because you're getting the best and the brightest from the region who are centred in finance. They are the ones who want the equipment, but then they go back to their countries with it. Are you developing any strategies on that basis into Singapore?
Mr. Elliott: The whole enterprise market is our number one focus in terms of our turnaround strategy, so financial locations like Toronto, London, New York and Singapore are important. Banks are our big customers, so we work very closely with them and develop those relationships. Those will be key to our turnaround, absolutely.
Senator Demers: We are really watching our expenses around here, so if you are in a good mood, maybe you could think about this committee here for a little gift maybe sometime, only if it's $200 or less.
I have two questions for you, sir. What are some of the main challenges faced by foreign businesses seeking to do business in the countries ranked at the lowest end of the World Bank's Transparency International Corruption Perception Index?
Mr. Elliott: As I said in my opening comments, we work in about 175 countries, so that's one thing we worry about all the time. We spend an inordinate amount of time with our employees teaching and training them on improper payments and what not to do. There is legislation in Canada and in the U.S., so we spend a lot of time making sure our employees know what's right, what's wrong, what's acceptable and what's not. We actually take it a step further and include the perception thereof as well.
It's tough in some of those countries because that's the way business is done, but since the beginning, we've always conducted our business such that we will not participate in that type of system or partake in those activities at all.
Senator Demers: Given the challenges of doing business in certain Asia-Pacific countries, what best practices or lessons learned would help foreign businesses seeking to enter these markets?
Mr. Elliott: It goes back to the question about Canadian advertising. Developing those relationships is critical. One problem we ran into was that we didn't have those relationships with different countries. It's not only about how you can do business and how you can make money in those countries, which is important as corporations are there to profit, but also about how they can partner with the local economies and governments and national governments to help bring along their citizens as well. I equate it to the industrial regional policies that we practise in Canada in the defence industry.
We want to see 100 per cent return on our investments, so we shouldn't be surprised when governments in other areas where we're investing and making money want to see a similar investment but in other sectors. It's important to develop the relationships from the beginning, learn their customs and ways of business that are appropriate, and work with them as a partner as opposed to coming in and saying this is the Canadian way or the American way or the European way and it works best. You have to do what works best in the particular country.
[Translation]
Senator Robichaud: You partially answered my question. Some witnesses have told the committee that companies wanting to do business with that part of the world often had to deal with corruption, which could be found throughout the region and was very hard to avoid.
No doubt, you have had to deal with the corruption element. You said that all of your people who travel to those countries are well-educated when it comes to best business practices and that no one should have any dealings that could in any way be considered to be corrupt or to deviate from standard business practices. Have you been confronted by that sort of thing?
[English]
Mr. Elliott: Not to my knowledge. Each year we have to sign our business ethics and practice tools. There is a Web- based test that we have to go through, and we have a Web portal if you have a question where you can anonymously enter your information to seek guidance on whether something is appropriate.
I'm not necessarily sure if that answers your question. To my knowledge, we have not faced that at all. If we did come across that, the person would be dismissed immediately, with or without cause.
Senator Robichaud: It is possible to do business —
Mr. Elliott: Absolutely.
Senator Robichaud: — in a normal way. This was my question, because we hear a lot about the negative side.
Mr. Elliott: If you keep above board, it's an easier way to do business. It's kind of like when you tell a bunch of lies — it's easier to tell the truth because you can't remember all your lies and how you put it together. Operate above board and make it simple.
Senator Robichaud: Thank you. I like that line.
The Chair: It's one my father told me over and over again.
[Translation]
Senator Rivard: Although your product assembly is done here, your raw materials come from Asia. How does the fluctuating value of the Canadian dollar against the U.S. dollar affect your business? When the value of the loonie is at 91 cents, it may give you a competitive edge, but if it fell to 80 cents, as some are predicting, would that help you by inflating the value of your products? Does that aspect have a critical impact on your selling price?
[English]
Mr. Elliott: There's a really simple answer. We operate in U.S. currency. Of course, we hedge currencies across the globe, but we've always operated since the early days in U.S. currency. Depending on when the dollar goes up or down, our profits are affected by that percentage. For us it's been less of a concern than many manufacturers in Canada.
The Chair: Mr. Elliot, you can see the interest and the pride in the Canadian product that we all use. I assure you that Senator Demers was joking.
Senator Demers: Of course.
The Chair: However, we utilize BlackBerry, and some of us like one model better than another, so there is a great discussion about the product, where it's going and where the company is going.
It was very helpful to us to have feedback from Asia-Pacific and their involvement with BlackBerry and your future. Thank you for sharing with us where the company is going in its restructuring, et cetera, and your unique position in Asia-Pacific. Should we be able to go there, this information will be extremely helpful.
If there is anything else you want to add, I'll give you a moment here. Also, if there are any materials that you think would be helpful to us, send them along.
We are looking at how Canada trades, what the security issues are not only for IT material but also generally working in those areas. The issue around governance and corruption has come up. Anything else that you think would be helpful in our study and our recommendations to our Foreign Affairs people would be helpful.
Thank you for coming today.
Mr. Elliott: I thank you for your ongoing support. I know when we launched BlackBerry 10 a number of senators wanted to be part of it and were interested in the development. If at any time you have tips or tricks or you want training sessions, we can always put something together. Using a new device sometimes can be a little daunting, even for us when the new devices come out. I'm more than happy to put something together if you need training. If you're ever in Waterloo, you are welcome to come to BlackBerry as well.
The Chair: You can hear some of us saying, "We need it." It may be a question of our age and memory before devices, so we take a little longer to get used to them. I assure you that the comments you hear of difficulties at the start are usually overcome with use.
Thank you for coming and sharing this information. We look forward to including some of this in our report. I trust it will be helpful to you also.
(The committee adjourned.)