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BlackBerry 10: It's Shiny, It's New, But Will It Sell?

Feb. 09, 2013 12:18 PM ETBlackBerry Limited (BB)158 Comments
Ashraf Eassa profile picture
Ashraf Eassa

Innovation? Give Me A Break

My view of the smartphone industry doesn't jive with that of those who believe that it will be a high margin source of profits eternal. They're just handheld, watered-down computers that happen to be connected to the internet at all times thanks to the kind (and profitable) services of AT&T (T), Verizon (VZ), and others. The word innovation in this space has been thrown around so many times that I cannot help but facepalm every time I hear the word. Look, Apple (AAPL) took advantage of the fact that transistor technology had advanced sufficiently to enable half-decent performance in a small power envelope. No magic, just a straightforward evolution of the cell phone.

Of course, Apple wasn't the first to this smartphone craze -- that was actually our good friend BlackBerry (BBRY). They were the "innovative" ones that first decided to add some neat functionality to a phone. It was a great e-mail device, it could surf the web, it had a nifty keyboard, and for the life of me, I couldn't stop hearing about "BlackBerry's" in TV shows, online, in magazines, on the news, and so on. It was a craze, and like with all crazes, it caused a stock price bubble:

BBRY Chart

BBRY data by YCharts

Of course, everything came crashing down when Apple's iPhone did it better, and then Google's (GOOG) Android sparked a flurry of competition and essentially commoditized the smartphone. If you can all buy the same parts, and if you can all get the same operating system (and customize it as you please) then what differentiating feature do you have, especially if you're behind the technological curve like BlackBerry quickly became?

BlackBerry 10: Back To The Future?

I like BlackBerry. Of all the standalone smartphone vendors, it is the only one that

This article was written by

Ashraf Eassa profile picture
Hi there! I used to write articles here and elsewhere, but no longer do so. I have provided my Twitter handle and LinkedIn profile below.

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Comments (158)

Jay Benny profile picture
The Z10 and QNX are the first and so far only real decent mobile solution. Long BB.
smart money i is long on BBRY for loong time trade on spikes and dips for bigger bang and lower cost sleep better at night. I DO. John
The only real way for Samsung or anyone else to compete with the Blackberry Z OR Q 10 is to out and out right buy all the shares of Blackberry,.
Stock Talk profile picture
Thanks for nice article.
BBRY dropped 8% today on an Analyst comment that U.S. carriers are not hopeful on Z10. What are your thoughts on this?
Stock dropped about 4 % yesterday on HD switchinglackberry from b to iphone
Do you see more pain in the next few days for BBRY stock?
Jay Benny profile picture
HD is irrelevant, as it is a drop in the bucket. As for the US, no-one cares about that market, as it is also a drop in the bucket. Over-reaction to analyst bs. Long term, BB is going to $50+. Long BB is where the smart money is going.
Ashrafs comments are only confirming what i thought about this stock.. i think its still undervalued at the moment.
Back when Apple released OS 10 , they had less than 5% of the PC market, and just about all institutional clients had abandoned them. The analysts at the time said there is no way Apple could recover to even 10% of the PC market, and was doomed.

Guess what? Apple still has a barely significant share of the PC market. Nobody could have guessed at the time that the product that made Apple big was the iPod, then the iTunes store, then going retail, then the iPhone.

I personally do not think that the future of BBRY lies in smartphones, just as the future of Apple was not in PCs.
Z10 ads on tv are fantastic , looks like they sponsored the Dragons Den . great coverage .
Blackberry Z10 the new way to multi function
Noodlez profile picture
good and balanced article. thank you.
Ashraf Eassa profile picture
You're welcome! I tried to keep it as balanced as possible :)
nice article very well put and enjoy all your past ones too.
Ashraf Eassa profile picture
Thank you...as always, there's more to come.
The Z10 is still selling for $800.00 plus on ebay even after being available for close to two weeks now. Thats a 25% premium to the store cost. So there is your answer >>Yes it will Sell<< Just wait untill the US launch then the Q10 arrival. BBRY is heading to $40 + per share just like Peter Misek said and then its off to the races.
All I am gonna say.....NFLX has a market cap of $10.13B, BBRY has a market cap of $8.49B.

Which company would you rather buy if you had $10B sitting in your bank account. I know I would Blackberry!!!!!
Apps + design is not innovation. sorry. Phones are incapable of doing everything, and the number apps their are (I can't fathom the number, several millions) aren't going to improve one's productivity in the long run - it really adds to the clutter. Every anti Android and iOS article talks about apps..how many of those apps are actually useful? of course it's relevant to the user but it's not like so many apps out there are actually any good. The fact that so called "technologists" all of a sudden started talking about apps and design vs. the features is just silly to me. People should stop believing the hype about what a commercial or blog tells you and do the research on what real technology encompasses.

the apple stock has dropped because the innovation has dropped. when you roll out very similar products that are just in different colors and different sizes, it tends to get stale. meanwhile, the company has been ruining itunes by very x.1 version. I am not a fan of the company because of these reasons. But the consumer is going to think what they want to think, because they simply aren't knowledgeable and aren't willing to put in the knowledge into learning.

I am a blackberry user (have had several ipods, an itouch and now a nano and an android phone in the past)
BBRY blew it a long time ago. It's BYOD in enterprise now. They lost their virtual monopoly in enterprise and they will never get it back. A few unique features will not be enough for BBRY to pick-up any meaningful market-share. I agree the stock may have a brief run until the markets realize that their new sales are mostly coming from long awaited upgrades from existing BBRY customers using devices that look like antique smart phones at this point. They will not get any meaningful pull from AAPL, maybe some from Android.

I think what you continue to miss in your articles is that people are not just buy a "device' or "features" when they buy a smart phone. They are buying a company, an ecosysem and an overall user experience that includes customer support, device interoperability. an OS and an app library. This is why margins won't come down as much as they have historically when you use other non-ecosystem hardware examples. Also, innovation is happening much more rapidly than it has in the past with PC's. This will also keep margins higher than they have been on hardware historically.
Jay Benny profile picture
The iPhone is the antique now. The Z10 is the best there is to have right now. They are the future. AAPL is the past. They're done.
rrosey2 profile picture
Short term trades waste my time. I like a stock I can put away...and then go back to my real interests.
I have had Apple for years and will continue.
noodleface profile picture
Just an FYI. I was in Costco in the Prairies where BBRY was not supposed to be selling well. Went to ask if they had any blackberrys, they had 1 black phone for bell, Sasktell = sell out, Rogers = sellout. The girl had worked there for 2 years and has not seen demand for a phone like this. She estimated every 2 of 3 customers are switching from Apple and Android!
DC_Zee profile picture
It is a return to BBM. You cannot find a better way to group communicate, and now that they have added video and screen share, it has added a lot of value. The inclusion of gaming and an integrated media world helps drive that forward. An analyst predicts 20 million BB10 phones sold by the end of 2013, I think more than that.
Thanks Ashraf, another interesting article. I don't always agree with you but at least you have the guts to put it out there. You are NUMBER ONE FOR A REASON. Here is some advice for your critics:

If you think your view is correct, write an article and post in on the real Seeking Alpha, not in the comments section. Write an article, and start spreading your 3 degrees of wisdom. Show the public what your awesome brainpower can do.

Only cowards stomp around the bowels of comment sections of REAL articles with REAL bona fide source links. Stop screaming like a hyena on meth and go public with your commentary. Until you do you are a pretender TROLL.
Ashraf Eassa profile picture
Thank you, bearvalleydave.
You guys are too smart for your own good. You are talking tech details and specs. You are not watching the young generation. Cool factor is No.1 for kids. There is no future for any brand without the young generation.

I watch my 2 sons in 20s, teen nephews and nieces, and watch my employees, I certainly don't agree with their taste and all that facebook stuff, but youth is the big fish every maker want.

I love Cadillac, what do young people say about them? old white people cars, that is the kiss of death. BB is absolutely old people phone, give your children a BB is unusual and cruel punishment. American kids start having their own cell phones at 10 or younger, can you honestly imagine a 10 years old girl buying a BB? or a 16 years old? get real.
Tikay profile picture
Cadillac is not a good example of how a company excites the young generation but Ford is. Ford used to be "uncool" not that long ago. The joke was FORD stood for "Found on Road Dead." The company saw the gallows coming and managed an amazing turnaround before it hit bottom.

Ford now stands for cutting edge, smart technology, totally "cool." At the time of their turnaround, they had loyal and embedded customers, like Blackberry, and their new technology won over new customers to add to their fan base. Ford reinvented itself and roared back into profitability. Similarly, Blackberry can leverage its enormous fan base, all 79 million subscribers, to propel them back into profitability because their QNX OS is a superior competitive advantage.

Would my kids trade their Samsungs for a Blackberry? With 6 models planned for release this year, I would venture to guess one of them is going to target my kids and the < 24-year-old age group. If Blackberry gets their marketing right, the answer is absolutely.
DC_Zee profile picture
Gaming and social media, the two hot buttons for the young. BBm carried the day for RIM for many years but they dropped the ball on gaming. The new phones do both quite well, so I think your argument relates to BB7 and older. It won't be a quick return for BB to the hearts of the young, but all it takes is one outlier kid to say "Hey this is cool" and away it goes like an avalanche. Also, kids do get older and their tastes and needs change. Right now the boomers still influence the market, and if BB is an old peoples phone, then that is a good thing.
Loon-a-tick profile picture
Gosh I hate when people P in your Cheerios for no reason other than to make a broadly subjective negative comment that doesn't further the discussion. OK...we all get it! Apple is in trouble! Someone has to lose. My advice ....cut your losses while you can. Lord knows I hung onto NG too long and got spanked bad. Hopefully BB will get me back to even.
Ashraf has accomplished something I have never seen before with this article. The vast number of comments. The lame astroturfing for BB. The meaningless pronouncements about future stock prices. The collusion to develop a BB stock bubble right under the market's nose. The side splitting humorous comments. The specter of BB's pending fate, after all, even IBM mainframes are still being sold.

Thank you all for a very enjoyable Sunday read.
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