1. imcurved's Avatar
    BlackBerry's BB10 U.S. Launch Is Critical To Stock Amid Shaky Outlook

    After several weeks of delays, BlackBerry will finally debut its new BB10 platform in the U.S. next week. AT&T, the second largest wireless carrier in the country, announced Monday that it will launch the long-awaited fully touch BlackBerry Z10 smartphone on March 22nd.

    Prospective BlackBerry buyers will be able to pre-order the Z10 more than a week ahead of launch, starting Tuesday. As for the pricing, AT&T plans to sell the device for $199 with a two-year postpaid contract. Other U.S. carriers have also expressed interest in BlackBerry’s new smartphone, with T-Mobile having started taking pre-orders for the Z10 from business customers since Monday and Verizon expected to launch the same in the coming months. Sprint remains the only U.S. national carrier that will not release the Z10 but is committed to selling the Q10, another BB10 handset with a Qwerty keyboard.

    The U.S. smartphone market is crucial for handset manufacturers since success here generally translates into positive consumer sentiment in other markets. The growing number of U.S. carriers announcing support for BlackBerry should increase the company’s hopes of staging a comeback in a market which it used to once dominate. However, while carrier support is a necessary prerequisite, it may not be sufficient to increase user adoption at a time when rivals Android and iOS are attracting the most developer resources and BlackBerry’s limited app availability is being seen as a serious impediment to high-end smartphone experience. The response from the initial launch markets in Canada and Britain may have been positive, according to company executives, but these are still early days and BlackBerry will need to ensure that the retail demand doesn’t fizzle out post the initial euphoria – something that could prove exceedingly tough in a market largely dominated by the iOS and Android.

    Keeping this in view, we maintain our $12 price estimate for BlackBerry’s stock, about 20% below the current market price. An upside/downside to our price estimate completely hinges on the sustainability of the initial success and the kind of market share gains that BB10 sees in the coming months.


    BB10′s U.S. outlook uncertain

    Geographically, what has hurt BlackBerry the most is the drop in perceived brand value in what is one of the most lucrative smartphone markets in the world, the U.S., where the company has now lost its 3rd position to Windows Phone. According to Strategy Analytics, Windows Phone made good market share gains on some high-profile smartphone launches in Q4 2012 to overtake BB for the first time ever. BlackBerry will he hoping to reverse the losses now that the Z10 is scheduled to launch on U.S. soil next week, but changing public perception of a company that failed to keep up with Apple and Samsung in the fiercely contested smartphone world will be tough.

    Moreover, it will also have to fight with a resurgent Windows Phone for a greater share of the carriers’ marketing budgets. Sure, carriers are looking to increase competition in the smartphone market and lessen the impact of subsidies on their margins, but it remains to be seen how much marketing weight they are willing to put behind the new OS given iOS and Android’s popularity and Lumia’s strong holiday quarter with WP8. The delays in launching BB10 handsets in the U.S. due to an unusually long carrier-testing phase may have potentially been due to this reluctance.

    With BlackBerry nowhere near its peaks of customer appeal, it will look to get its installed base to upgrade to BB10 initially. We expect most of the early BB10 adopters to be BlackBerry fans and existing subscribers, of which there are about 80 million around the world currently. A majority of these subscribers are however in international markets where BBM’s appeal is still pretty strong. A U.S. success for BB10 will therefore depend on the number of Android and iOS users it manages to convert, especially now that BlackBerry’s market share has tumbled to a historical low of 1.1% in the U.S. last quarter.


    Enterprise focus crucial

    As important as retail is to BlackBerry, a lot more crucial will be its ability to latch on to its enterprise clients. By our estimates, the BlackBerry services division, which includes push e-mail fees and that is reliant on continuous enterprise patronage, is the company’s most valuable division currently, accounting for more than 35% of our price estimate for the stock. It is on this division’s high-margin revenues that BlackBerry has managed to generate cash in the last few quarters despite seeing its handset revenues fall by nearly half in the past year.

    But a carrier push to reduce fees as well as a loss of more enterprise customers to rival platforms as the bring your own device movement becomes more popular could hinder BlackBerry’s strategic move to boost revenues from the services division. In addition, the new BB10 devices will not be supported by the existing enterprise servers, potentially making the BES 10 upgrade process costlier and complicated, thereby reducing BB10′s chances of pushing into the enterprise. (see BES 10 Fragmentation Increases The Risk For RIM)

    Making it even tougher for BlackBerry is increasing competition from retail stalwarts Apple and Samsung that are upping the ante in the enterprise market as well. Last month, Samsung debuted its KNOX enterprise mobile solution with which it expects to make its Android smartphones more secure and take advantage of the ongoing BYOD trend to directly challenge BlackBerry in the enterprise. Apple, meanwhile, is touting the security of its closed iOS ecosystem and the iPad’s popularity to sign on enterprises at BlackBerry’s expense. As a result, BlackBerry’s share in the enterprise smartphone market fell to only about 10% last year. Apple, on the other hand, accounted for almost 50% of the smartphones shipped to enterprises, followed by Samsung at 16%.

    A lot depends on BB10′s reception in the market, and BlackBerry faces an increasingly uphill battle against the well-entrenched mobile ecosystems of the iOS and Android that are steadily making their way into the enterprise. BlackBerry’s mobile market share has plummeted from over 3% in 2011 to an expected 1.8% in 2012. Although we do not expect BlackBerry to ever reach the heights it once commanded in the smartphone market, if it manages to win market share back to over 3% by the end of our forecast period, there could be 30% upside to our price estimate.
    Clinto likes this.
    03-15-13 10:14 PM
  2. Shanerredflag's Avatar
    Thx

    Posted via CB10
    03-15-13 10:15 PM
  3. Bold_until_Hybrid_Comes's Avatar
    "After several weeks of delays, BlackBerry will finally debut its new BB10 platform in the U.S. next week. "

    Delays?? When was an earlier US date announced???
    Vorkosigan and DuexNoir like this.
    03-15-13 10:33 PM
  4. DuexNoir's Avatar
    "The U.S. smartphone market is crucial for handset manufacturers since success here generally translates into positive consumer sentiment in other markets. "

    This would be more applicable if the launch had occurred in the US first but in this case most international countries already have the Z10 available before the US.

    "The delays in launching BB10 handsets in the U.S. due to an unusually long carrier-testing phase may have potentially been due to this reluctance."

    So the delay was due to the fault of the carriers then? And it's suggested the delay was because the carriers were initially reluctant to accept BB.

    Posted via CB10 on my Z10
    Clinto likes this.
    03-16-13 12:03 AM
  5. Dapper37's Avatar
    Its a forbes article but whos the author, whos the analyist?? it reads like a cross between an article and analyist guidance! or is it just a hit piece?
    03-16-13 12:19 AM
  6. Bbnivende's Avatar
    3 percent is not a very lofty goal . We have to hope that BB becomes the new cool. They need a better Ad campaign. They should banish BB7 devices from the stores. They need to have better instore displays showing how the simple gestures work.
    Turnda643 likes this.
    03-16-13 12:47 AM
  7. ddlax22's Avatar
    "After several weeks of delays, BlackBerry will finally debut its new BB10 platform in the U.S. next week. "

    Delays?? When was an earlier US date announced???
    This ^
    03-16-13 01:17 AM

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