BlackBerry Goes On The Offensive

| About: BlackBerry Ltd. (BBRY)

Several months ago I said that BlackBerry Needs A Cheaper BB10 Handset And Fast. I am not exactly sure why so many readers were against the idea, but BlackBerry (NASDAQ:BBRY) is a very popular phone around the world, and in order for BlackBerry to become a more mainstream brand, it needs a lower priced device to expand the ecosystem.

This new phone is called the Q5 and more or less is a lower priced Q10. While no details were given or specifications, the Q5 has the same functionality of the Q10, just that the parts are of lower quality.

BlackBerry's smartphone market share in Indonesia was about 42% in 2012, down from 67% in 2011. One of the reasons for this slide is the emergence of many cheaper rivals from Google (NASDAQ:GOOG) Android manufacturers, especially from China. However, BlackBerry is a very prestigious phone to have in Indonesia. So a lower priced model should put a halt to BlackBerry's market share slide.

According to the WSJ, BlackBerry's market share in Canada doubled from 6% in Q4 of 2012, to 13.5% in Q1 2013. The reason was the release of the Z10. So how will BlackBerry's market share register in several quarters with the release of the Q10 and now the Q5? I think its market share will further increase.

The Q5 will also do very well in mature markets such as England. For those who don't know it, BlackBerry had a 12% market share in the U.K. as of 2012, compared to 25% for Apple (NASDAQ:AAPL). The reason (to a certain extent) has to do with the same reasons BlackBerry is so popular in Indonesia.

Teenagers buy the cheapest BlackBerry models and use BBM to text each other for free. In addition, with BBM video, users can now have a face to face conversation, and with the share screen function (something exclusive to BlackBerry), teenagers can also share photos with each other. I predict that the Q5 will be a smash hit among teenagers in the U.K. and become very popular in many parts of the world where purchasing power does not permit people to buy a Z10 or Q10.

BlackBerry also announced a bold decision to open up BBM and offer a version for iOS and Android.

To an extent this means that you don't have to have a BlackBerry device anymore to use BBM. However, this also means that if you don't have a BlackBerry device, you can send messages to your BlackBerry friends from now on.

One of the repercussions of this policy -- I think -- will be that there will less pressure for BlackBerry users to change brand in order to be able to use messaging apps that are not available for BlackBerry.

In addition -- and depending on how popular BBM becomes as an app -- BBM will openly be competing with Skype and other communication apps. This will at the very least expand BlackBerry's brand awareness, because most people have no idea what BBM is. And depending on how popular BBM for other platforms becomes, in the long run it should help sales also. In either case, I don't think BlackBerry will lose.

Brandindex measures brand perception. In a recent post named BlackBerry Paradox, it had this to say:

Call it The BlackBerry Paradox: consumer perception for the smartphone brand is the highest it's been in two years, practically at Samsung Galaxy levels, with the much-hyped Z10 product launch. Yet, brand loyalty still remains well behind its rivals, and consumers in the market for new smartphones are becoming less likely to purchase a BlackBerry

Click to enlarge
(Click to enlarge)

Just like Rome was not built in a day, brand loyalty and consumer perception will not come back for BlackBerry in a day.

Please remember BlackBerry has essentially been out of the smartphone space for several years now. BlackBerry's older operating system could not compete with Apple's iOS and Android. However with the launch of the Z10, Q10 and now the Q5, brand awareness is coming back (as the chart shows), and with a vengeance.

Brand loyalty however -- like respect -- has to be earned over time. I think BlackBerry will eventually earn this respect, but it will be a function of time.

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.