BlackBerry: A Lot Depends On The U.S. Launch

| About: BlackBerry Ltd. (BBRY)

The smartphone market is so fiercely competitive that if you are unable to keep pace with the ever changing technology and trends; you are most likely to fall behind. BlackBerry (NASDAQ:BBRY) faced the same problem in the recent past, and the company is still struggling to regain its previous market position. The launch of its new handsets (Z10 & Q10) was eagerly anticipated, and it caused the stock price to record substantial gains. However, the stock lost most of its value after the launch and currently it is trading around $13 per share. Mixed reports about the sales figures have confused investors to some extent. The company is not coming out with solid sales numbers at the moment, despite claiming a blockbuster launch.

BlackBerry is yet to enter one of the most important markets for smartphones, the U.S. The company will launch its new handsets during the current month in the U.S. A lot of investors and analysts are waiting for the response from the U.S. customers to give their final verdict about the company. My personal opinion about BlackBerry is that I see more positives than negatives.

The Biggest Hurdle is Out of The Way

BlackBerry fell behind due to a lack of innovation and focus on the booming casual smartphones users. The company has a very loyal corporate customer base. However, BlackBerry handsets did not offer much to the non-business users. This problem now seems to be solved to some extent. The new system (BlackBerry 10) is receiving encouraging reviews and the platform is suitable for a number of applications and games. Furthermore, Z10 also tackles the issue of large screen display, which was lacking in previous BlackBerry handsets. On the other hand, Q10 caters to the traditional BlackBerry customers, who prefer QWERTY keyboard. Some BlackBerry users like to keep the tradition and feel more comfortable with the QWERTY keyboard. So, by launching two different handsets with almost the same features; the company has met the needs of the both sets of customers, in my opinion.

Current Sales and Future Expectations

There are a lot of opinions and estimates about sales, but no one seems to have any idea what will be sales figures. One of the most encouraging news items for BlackBerry was that a substantial number of new buyers were previously using Android or Apple devices. However, sales look to have slowed down recently after the initial high volumes. Some carriers in the UK are already offering the handsets on discount. However, these discounts are instigated by the carriers and therefore are unlikely to hit BlackBerry margins. Nonetheless, it sends a message that either the carriers are having a trouble selling or trying to position the handsets for mid-level customers. On the other hand, some analysts are backtracking on their previous estimates of device sales. Canaccord Genuity analyst, Mike Walky revised his sales figures from 300,000 devices to 800,000 devices. This is a big increase over such a short-period.

BlackBerry sales have been extremely positive in Canada and the UK. During the current month, the devices will be available in the U.S. as well as Indonesia, one of the most important BlackBerry markets in the Asia-Pacific. BlackBerry has almost 50% of market share in the Indonesian Smartphones market. However, Z10 may be a little pricey at $713 for Indonesian customers. The current price will put Z10 in direct competition with Apple's (NASDAQ:AAPL) iPhone V and Samsung's (OTC:SSNLF) Galaxy SIII. Indonesian customers are more into the affordable handsets. Nevertheless, sales figures will be augmented by the Indonesian launch, and the company is also planning to launch five more devices including Q10 for the Indonesian customers during the year.

Lastly, U.S. launch of the new handsets is eagerly anticipated and success or failure of this launch may well determine the long-term position of the company. Verizon Communications (NYSE:VZ), AT&T (NYSE:T) and T-Mobile USA will launch Z10 while Sprint (NYSE:S) will launch only Q10. It is encouraging for BlackBerry that the biggest carriers in the U.S. have committed to selling Z10. Verizon and AT&T are the biggest players in the market and collectively control the most of the market share. BlackBerry will have to record impressive sales figures in the U.S. to establish itself as a true competitor for Apple and Samsung. U.S. launch may be affected by the launch of Samsung's Galaxy S4. If Z10 is able to beat Galaxy S4's launch, then BlackBerry will again establish itself as a serious player in the market. However, if the launch does not give the desired results, the company may have to linger in the lower margins market through cheap handsets.


BlackBerry is one of the biggest and most widely recognizable brands in the world. The company has an extremely loyal customer base. The initial signs of the launch are encouraging, and the company has been successful in attracting customers from other platforms. However, it should be kept in mind that BlackBerry has to do a lot in this cut-throat market to regain its previous position. I believe the U.S. launch is probably the most important event in the recent history of the company. The success in the U.S. can again put BlackBerry with the big boys. On the other hand, a less than impressive launch may condemn the company to fight for scraps with other fallen giants, such as Nokia.

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.