BlackBerry (NASDAQ:BBRY) Inc. has begun selling its new line of "BB10" equipped phones in Canada and the United Kingdom. The Canadian corporation has reported that sales are going better than expected, with many retailers even selling out of their stock. While this might seem like good news, it only serves to mask the impending failure of BlackBerry 10 in the United States.
On February 6, 2013, analysts at TD Securities investigated how well the new BlackBerry 10 devices were selling in Canada, one of the few markets where the phones are currently available. Demand is higher than expected, and the analysts report that even some former iOS and Android users have been switching over. However, the phones are not yet available in the U.S. Nor will they be for a long time. As I stated in a previous article, BlackBerry muffed the release of BlackBerry 10, only handing over phones to carriers several weeks ago. Phone service providers in the U.S. are notoriously strict with their testing procedures, and the phones won't hit the market until mid-March. While the BB10 devices might be top of the line right now, they won't be by then. The delay will push the release of BlackBerry 10 close to the release of the iPhone 5s and the newest Samsung Galaxy, and BlackBerry will encounter significantly weaker sales because of the mistake.
BlackBerry has managed to release its phones in markets where people still clamor for a new BlackBerry, but it has failed to do so in the most important market of all: the USA. While it's a good indicator that BlackBerry can sell its phones in the UK and Canada, people don't have the same urge to buy in the United States market, which dwarfs the other two in comparison. By Q4 2012 Android had 70.1% of the market share in the U.S., while iOS had 22%. Both competitors displayed evidence of strong growth, with Android growing at a frightening pace, gaining ~20% of the market in the span of one year. The iPhone also had a breakout quarter in the U.S., leading Apple (NASDAQ:AAPL) to be the top phone manufacturer in the U.S. for the first time. These trends are indicative of shifting consumer preferences; people want more iPhones, and people definitely want more Android. The United States smartphone market is the most advanced and rapidly shifting; BlackBerry's late entrance will encounter consistently weak demand.
BlackBerry has been in a long-time struggle with its very own executives. Having ousted the CEO recently, the company appointed Thorsten Heins to save the failing company. His first move? To make a complete mess of the corporation's most important product launch, ever. Heins has years of experience in the telecom industry, but still managed to delay the release of BB10 in the U.S. by several months. BlackBerry has also started marketing heavily, making its way into Super Bowl ad space. The advertising is poorly timed, however, as the advertisements are trying to sell a phone that you can't even buy yet. Will people wait weeks, even months, after being exposed to advertisements about BlackBerry 10? No. They are going to use their upgrades for a new phone as soon as they need it, and be completely satisfied with the result. BlackBerry's management has been less than impressive, and I believe that the new people on board will fail to revive the company.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.