John Chen will find selling 10 million BlackBerry (NASDAQ:BBRY) handsets annually is not an impossible task. The first BlackBerry OS 10 handset for this year, the Z3, got a very warm welcome in Indonesia. It's far from an iPhone-level of success, but Indonesians still lined up in Jakarta to get their hands on this first Foxconn-made BlackBerry 10 smartphone.
The blog entry of Eric Lai should weaken the pessimistic article published by Agence France-Presse [AFP]. The AFP article stated only around 50 people lined up for the first day of the May 16-18 launch event for the BlackBerry Z3 in Jakarta. I know it's dangerous to question the veracity of AFP reporting, but I would like to believe that this was a wrong and premature judgment of a three-day event.
All the BlackBerry fan sites and the official blog of BlackBerry said the Z3 sold out on its first day of its official release in Jakarta. Here are some of the pictures that BlackBerry employees took during the first day of the launch. It's incorrect to assume that BlackBerry only sold 50 Z3s last Friday at Central Park Mall Jakarta.
The pictures above were taken May 16. I want to assume that the BlackBerry Z3 sold out again during the weekend. The news vine previously reported a very strong pre-order interest for this phone two weeks ago.
Indonesia Is the Acid Test
John Chen opted to launch the Z3 in Indonesia because it is where BlackBerry still has significant presence. The May 16-18 event in Jakarta is Chen's acid test whether BlackBerry still commands enough market appeal to make its phone division profitable again.
BlackBerry phones used to enjoy 43% share of smartphone sales in Indonesia in 2011. The entry of cheap Android phones has eroded it to 14% by 2013. However, Indonesia is still Chen's best bet for a comeback in phones. BlackBerry has basically lost all of its glory in other countries.
Source: Kantar World Panel
As of Q1 2014, BlackBerry has a mere 2.7% market share in the U.S. too.
BBRY will be in deep trouble if the Z3 does not deliver enough sales numbers. Even though a poor market acceptance for the Z3 won't kill BlackBerry, the sell-side community will likely punish BBRY for the rest of 2014. I, on the other hand, will not lose hope if Indonesians don't give enough support for the BlackBerry Z3.
There are other countries where an Android-compatible $200 BlackBerry 10 smartphone can find buyers. India, Latin American countries, the Philippines, China, and African emerging markets are ripe for an affordable BlackBerry phone that can run Android apps like the Z3.
Foxconn's influence in China will help the Z3 gain enough retailers support in that country. Some Chinese customers will find an Android app-compatible BlackBerry phone attractive. Filipinos and other Asians who used to love the BlackBerry brand will find the Z3 affordable enough. The upcoming BlackBerry OS 10.3 update will even bring more goodies for Android apps users.
The $191 price tag for the Z3 Jakarta is fair enough considering its specs. I hope it gains carrier support among Asian, Latin American, and African countries. John Chen's 10 million handset target will be a lot easier to achieve if mobile service operators starts wholesale purchases of the Z3 for bundling on their low-end postpaid subscription plans.
The Z3's success in Indonesia will make it easier for John Chen to convince carriers around the world to support it. Foxconn can also use some of its worldwide contacts to pressure a few carriers to give the Z3 a chance. The biggest operator here in the Philippines, Smart, is still offering the BlackBerry Q10 and Z10 for diehard BlackBerry users.
Furthermore, the market appeal of BlackBerry is still strong enough that Chinese/Korean cloners are still finding it profitable to make and sell clones of the Z30 and Z10. These two BB10 phones will not provoke piracy if the brand is dead.
The BlackBerry brand is not yet deceased. John Chen can cure the disease. The Z3 and the Classic are the first step towards making the handset division profitable again. BBRY is a long-term HOLD.
Disclosure: I am long BBRY. 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.