BlackBerry Prepares The New Keyboard

| About: BlackBerry Ltd. (BBRY)

BlackBerry (NASDAQ:BBRY) is preparing to release the new Q10, which should hit Canadian and European stores around the first of the month and then the United States in the coming weeks. Bloomberg is saying:

The phone’s most unusual feature is its screen. Unlike just about every other smartphone, whose displays are taller than they are wide, the new BlackBerry’s is a 3.1-inch-diagonal square with a resolution of 720 by 720 pixels.

That means, among other things, that it can show much less content per screen than other phones -- for example, icons for 12 apps, as opposed to 24 on Apple (NASDAQ:AAPL)’s iPhone 5 and 20 on the Samsung (OTC:SSNLF) Galaxy. You can theoretically watch a movie on it, but I can’t imagine why you’d want to.

BlackBerry enthusiasts, of course, don’t really care about that. What they want to know is: “What about the keyboard?”

I used to be a keyboard guy. My first "smartphone" was the T-Mobile MDA, which had a slide-out keyboard and a touch-sensitive screen. Unfortunately it also ran Windows Mobile, which was buggier than a roach motel and liked to blow up with not-very-amusing frequency, including at times you really wish it wouldn't (like during a call.) It also had a stylus that you actually needed to use it productively.

Along the long path I ditched the hard keyboard and moved to touch screen phones, where I am today. I love the Z10 and very much liked my Samsung SGS-II, along with the other touch screen phones I had before that.

What changed? How I used the phone changed.

In short I went from my phone use (aside from making and receiving calls, of course) being mostly about texts and emails to media consumption in one form or another.

That's what drove the "smartphone revolution," incidentally.

But at the same time it did two other things, one of which is going to eventually blow up in people's faces, and the other, which gives BlackBerry a unique market that the Q10 will address.

First, when we turned to media consumers with our "smartphones" the traditional Madison Avenue folks along with the upstarts in the "new media" space all descended on us as sheep are sent toward the barn to be shorn. Firms like Facebook (NASDAQ:FB) arose with the so-called "app ecosystem." That "ecosystem" is not, contrary to often-pumped media nonsense, about "what you want." It is about advertising -- stuffing commercial messages under your nose and trying to convince you to buy things at a time when you would otherwise be inaccessible to the marketing mavens.

So far nobody has come up with the "magic sauce" in this space and I argue that it's unlikely that anyone will. The reason is simply real estate and the annoyance factor. Traditional television has 12 minutes of advertising per hour. That is, about 20% of the material is advertising. The reason for this is quite simple -- people seem to be willing to put up with about 20% "trash" in the content they wish to consume; beyond that they turn it off as the annoyance factor rises up far enough that the "draw" (the content being sent) is no longer sufficient to keep the consumer's attention.

If your smartphone screen is 3.5" long (a roughly ~4" diagonal measurement) then this means that 0.7" of that, or just over a half-inch, can be advertising, and that tiny space is not big enough to monetize effectively.

This, incidentally, is why I believe that Facebook's mobile "push" will fail and so will the other ad-supported media models on handheld devices. There simply isn't enough room to drive revenue without trashing the ratios that you must maintain as the maximum you can intrude into someone's user experience before they turn you off.

So how does this all tie into the Q10? Simple: The (foolish and ultimately guaranteed to fail, in my view) drive to media phones, where the business model is one not of giving the consumer what they want but rather, in fact, is all about trying to reach into their wallet on a continuing basis through the day left those who didn't change their model of what they do with a mobile device out in the cold.

There are a lot of those people -- they see the "mobile smartphone" as primarily a means to make and receive calls, of course, but also as a primary means of textual communication, especially email.

This user of the technology literally has nowhere to go in the current "smartphone" space.

Until May 1st, that is, when they do -- the Q10.

I suspect the share of the total smartphone market that rests in these users is somewhere between 10-15% of the whole. The demographic is grossly skewed toward the professional user of technology, which means incomes of $100k/yr+ and this segment tends to wear suits to work rather than jeans. They drive Audis, BMWs and Mercedes rather than Ford F-150s. They demand secure storage and secure communications. And they want their damn keyboard, because when they get an email from someone the need to answer it with more than a "K" or other short quip -- they need to be able to actually communicate using the device.

These people not only will make the sacrifice of screen real estate for the keyboard, they demand it. They also want very long battery life because the annoyance factor of running out of power in the middle of the day is not about annoyance, it's about missing a critical email from a client, and that in turns means lost money.

That's the Q10's market and it is likely the most-understated opportunity that BlackBerry -- and nobody else -- is aiming at. The reason nobody else is aiming at it is because the iOS and Android phone and software makers are all wedded to the phone being a means to sell you things. That's their model, whether it be Google (NASDAQ:GOOG) or Apple.

For those who use their phones as business tools and find the idea of carrying a marketing portal used to blast their eyeballs with ads from Google, Apple or Facebook extraordinarily offensive, there's the Q10.

I predict it will quickly saturate that segment of the market.

Disclosure: I am long BBRY.