Mess or Success: The BlackBerry Guessing Game

by Brad Moon | March 5, 2013 6:15 am

It’s an understatement to say that BlackBerry (NASDAQ:BBRY[1]) has a lot riding on the success of its new smartphones and operating system. The company — formerly Research In Motion — has been locked in a downward spiral, with market share shrinking rapidly. Success and the survival of the company rests on new handsets that were unveiled by CEO Thorsten Heins[2] in New York on Jan. 30.

We’ve been playing the guessing game about public reception to the BlackBerry Z10 (the first of the new BB10 devices to be released) ever since.

The company itself has been mum on actual numbers, choosing instead to spin the launch as more successful than anticipated while talking around sales figures. For example, a press release published on Feb. 6[3] was just three sentences in length:

“In Canada, yesterday was the best day ever for the first day of a launch of a new BlackBerry smartphone. In fact, it was more than 50% better than any other launch day in our history in Canada,” said Thorsten Heins, President & CEO of BlackBerry. “In the UK, we have seen close to three times our best performance ever for the first week of sales for a BlackBerry smartphone.”

Sounds encouraging … but a little tentative and suspiciously short of actual information. And reports from the U.K. indicate that BlackBerry’s press release might not be telling the whole story.

Retailers like Carphone Warehouse are slashing Z10 prices, suggesting that BlackBerry is struggling in that market[4]. The article also mentions the apparent disconnect between BlackBerry and wireless operators, after Thorsten Heins claimed the Z10 was sold out or in limited availability in the days after the launch, while sellers said they had plenty in stock. It also quotes a Pacific Coast analyst, who feels that U.K. carriers are now positioning the Z10 not as a premium smartphone on the same footing as Apple’s (NASDAQ:AAPL[5]) iPhone 5 and Samsung’s (PINK:SSNLF[6]) Galaxy S III, but as a midlevel device.

This isn’t good news for BlackBerry, but jibes with a piece from a few weeks ago pointing out that being able to compete[7] against last year’s rival models is not the spot BlackBerry should be in if it wishes to impress with its new devices.

After all, if the Z10 is just holding its own against the Galaxy S III, what’s going to happen when Samsung releases the Galaxy S IV on March 14[8]?

I’m not trying to pick on BlackBerry here. Samsung is on a roll and I’m sure Apple is also fretting that iPhone 5 sales are going to suffer too, but with a new Galaxy arriving at the same time that the Z10 finally manages a U.S. launch, the hype and comparisons are not likely to be in BlackBerry’s favor. Add in Samsung’s recent foray[9] into enterprise smartphone management software with KNOX, and mid-March could be grim for BlackBerry.

In the meantime, here’s a smattering of examples of the smokescreen that has developed around BlackBerry Z10 sales:

• Feb. 5: “RBC’s checks at 40 Rogers, Bell, Telus and Wireless Wave stores in Canada indicate healthy demand for the Z10[10] as several stores were sold out of the device by the end of its first day on the shelf. Meanwhile, pre-orders hit a record high for BlackBerry at Bell.” — Financial Post
• Feb. 6: “In a sad scene that may not bode well for the comeback of the cellphone giant formerly known as Research in Motion, the new BlackBerry Z10 debuted[11] on its home turf to very unenthusiastic, even lonely reception in what should be the Canadian company’s most enthusiastic market.” — The Atlantic
• Feb. 6: Reports start circulating that reported Z10 sellouts[12] were more related to low inventory (with UK stores reportedly receiving only 15 units and selling them over the course of two to three days) than high demand.
• Feb. 19: Canaccord Genuity analyst Mike Walkley slashes sales estimates of the Z10 by 85%[13], from near 2 million to 300,000 during the February quarter.
• Feb. 25: “We exceeded our expectations, and the requirements were ambitious, he said, adding that “before we give out specific numbers, we want to … watch for awhile.” — Thorsten Heins as quoted[14] in the Toronto Star.
• Feb. 25: Canada’s Glentel released a statement[15] saying the Z10 has been the lead-selling smartphone in its 330 Canadian stores since launch, outselling the iPhone 5 and Galaxy S III.
• Feb. 25: ZDNet reports analyst Pacific Crest is lowering its Z10 estimates[16] for the fiscal year, noting the Z10 is cannibalizing BlackBerry Bold sales. It pegs the number of Z10s shipped (not sold) by the end of the fiscal year at 1.5 million (down from 3 million to 4 million).
• March 4: Canaccord notes “steady but modest sales levels for the Z10” and revises sales estimates[17] up from 300,000 to 800,000.

Up and down, based on rumors and innuendo with nothing but marketing speak from BlackBerry. Contrast this with Apple and Samsung, who are more than happy to trumpet sales figures[18] after their opening launch weekends, and one can’t help but get the feeling that BlackBerry is avoiding confirmation of numbers less than hoped for from its big comeback campaign.

Whatever the Z10’s sales really are, we should get some concrete numbers on March 28, when BlackBerry is scheduled to release its Q4 and year-end results.

As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.

Source URL: https://investorplace.com/2013/03/mess-or-success-the-blackberry-guessing-game/

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