[araskin]

Can anyone comment on how many BB10 devices does BB need to sell for it to be successful launch? 100k, a million.... ?

Posted via CB10

[Superfly_FR]

18 million in the first calendar year seems to be the magic number. In fact it reflects the street consensus to recover gross profits on devices sales.

Posted via CB10

[killa4luv]

so thats like 1.5 million per month that means we need to see something on the order of a few hundred thousand in the 2 small markets its been released in over the course of February up until mid march after India has launched a few weeks already.

[anon(3310921)]

what's the assumed margin with that 18 mil #?

[Marc_Paradise]

I thought that 18 million number was for a return to multiple dollars per share in profitability. I think the number to simply be profitable is lower.

And frankly, I don't think BBRY is expecting profitability b until next year.

[zyben]

By Tiernan Ray

Amidst increasing optimism about some kind of turnaround at Research in Motion (RIMM) based on its forthcoming “BB10” operating system for the BlackBerry, Tavis McCourt with Raymond James this evening offered up what he calls a “sensitivity analysis” of what BB10 sales could do for the company’s business.

McCourt, who has a Market Perform rating on RIM stock, is modeling a net loss per share for RIM in the fiscal year ending this coming February of $1.72, on a GAAP basis, which is slightly better than the $1.99 net loss the Street is modeling, on average. That’s based on expected sales of $11.07 billion, which is in line with Street expectations.

For fiscal 2014 ending in February of that year, he’s modeling $12.214 billion and a net loss of $1.31, which is better than the consensus for revenue of $11.3 billion, but worse than the consensus for a GAAP net loss of 45 cents.

McCourt ponders what it would take in BB10 sales to reach breakeven for RIM, and comes up with a target of 18 million units in fiscal 2014. Anything below that and RIM has a net loss, anything above that and RIM has a net profit, he believes.

McCourt makes several assumptions, including that the average price of older BlackBerrys, falls to $180, and that gross margin is negative on those units.

He assumes, conversely, that BB10 will have a higher average selling price, at $375 per unit, and a gross margin of 30 million. McCourt is assuming services revenue in 2014 of $3.9 billion, and operating costs of $4.05 billion.

McCourt has a base assumption of 24 million units of the existing BlackBerry 7 units being sold next year, down from 31.7 million this year, as the older equipment is cannibalized by BB10 and competition from Android-based devices.

Here’s McCourt’s analysis for just the BB10 volumes in fiscal 2014:

Raymond James BB10 Sensitivity Analysis, November 2012

As far as how McCourt rates RIM’s chances, he sees the company up against the challenge that Apple (AAPL) and Samsung Electronics (005930KS) currently own most of the smartphone profits, making it tough for the also-rans to make money. And Nokia‘s (NOK) performance so far with Microsoft‘s (MSFT) Windows Phone on its Lumia smartphones is not encouraging, he thinks:

Essentially, Apple and Samsung have developed massive scale economics in smartphones, and this is leading to outsized operating margins for these two vendors. However, none of the other competitors have reached that level. It appears that one needs to sell well over 30 mln smartphones annually in order to reach sustainable profitability. Because RIM owns its own OS, perhaps it does not quite require the 30 mln or so smartphone sales to reach profitability that Android partners appear to require, but even getting to 18 mln is no easy task [...] To put the challenge ahead for RIM in perspective, Nokia has tried to help launch a new OS to the world, and in the first year it has sold roughly 10 mln devices, at an average ASP we suspect is well below $300 and at gross margins that are flattish at best. This has included substantial marketing support from carriers and from Microsoft, and although RIM can probably count on marketing support, it does not have a deep-pocketed OS partner to lean on.

McCourt’s note follows an upgrade late Wednesday by National Bank Financial’s Kris Thompson, based on the prospect of higher BlackBerry sales in 2013, and an upgrade by Jefferies & Co.’s Peter Misek on Tuesday based on what he considers a better risk-reward ratio of late on the chances of a BB10 success next year.

RIMM: Target 18M BB10 Units for Profit in FY14, Says Raymond James - Tech Trader Daily - Barrons.com

[aniym]

18 million in the first year seems extremely high, given that devices must be selling to the consumer at an ASP of at least $400. Samsung managed to sell 24 million of the first Galaxy S phone between 2010 and 2012, and that was after almost literally plastering the entire world with them, and throwing in millions upon millions to advertise them. During this same period, Android overtook iOS as the dominant smartphone platform as well.

[howarmat]

im going with the 18 million figure. Its a number that is pretty reasonable. its not a hard goal so if they do more sales its even better looking. As for the launch. When they have the earnings report if they can say they sold 500-750k devices i think that is doing good. We will see. So far when the boss made his 50% better comment i was guess around 225k devices but i doubt we ever know for sure

[Superfly_FR]

Maybe it's a good idea to put this 18 million in perspective roughly it is 25% of BlackBerry user base.
Latest poll I read stated abt 47 % of those considering BlackBerry10 upgrade...
Add some appl android or windows users...

Posted using CrackBerry App on BB10

[sentimentGX4]

The number of devices sold matter less than if BBRY can come out of the red. In other words, it's about the $$$ BBRY makes and not about the number of devices sold.

[darkehawke]

Maybe it's a good idea to put this 18 million in perspective roughly it is 25% of BlackBerry user base.
Latest poll I read stated abt 47 % of those considering BlackBerry10 upgrade...
Add some appl android or windows users...

Posted using CrackBerry App on BB10

The problem is that a lot of upgrades will be later rather then sooner!

[Charles Martin1]

Maybe it's a good idea to put this 18 million in perspective roughly it is 25% of BlackBerry user base.
Latest poll I read stated abt 47 % of those considering BlackBerry10 upgrade...
Add some appl android or windows users...

Posted using CrackBerry App on BB10

I believe production capacity is 2 million/month, although I have no idea how many they are actually producing. Production will be tightly managed, I just hope they don't choke it off too much.

[bekkay]

I'll go with 5% marketshare within 1 year. In general, I think if BB10 manages to become #3 platform, we can call it successful.

[richardat]

I'll go with 5% marketshare within 1 year. In general, I think if BB10 manages to become #3 platform, we can call it successful.

I'm glad to see some fairly realistic assessments here. (though 5% marketshare is likely to require a LOT LOT more than 18mil)

I see it a bit differently though OP. Yes, these are ballpark estimates for achieving some measure of sustainability, which is all well and good, however, let me suggest this: IF BB were to sell 20 mil. phones this year, and Apples sells 200mil, and Android sales are 500mil....where does that actually leave BB? Note as well, that the BB userbase will then be 20mil.....how big will the ios/android userbase be?

I said before bb10 was release that the absolute best case scenario is to work themselves back into a reasonable position a few generations of phones from now, and that seems all the more the case now. For that to happen, they must achieve these numbers at minimum......BB users will still be on the marginal fringes......they must then continue to advance and release, not only matching the big boys, but exceeding them, to gain enough of a base to compete reasonably. All the while they will be up against companies with resources that dwarf them (which undoubtedly is also why they are still looking at selling/buyouts/merging/partnerships)....even with this kind of "success", it will be quite a high-wire act. This is the reality of the situation.

[abwan11]

I've had 3 Iphones since 08 and have switched. I love my new z10.

[THBW]

By Tiernan Ray

Amidst increasing optimism about some kind of turnaround at Research in Motion (RIMM) based on its forthcoming “BB10” operating system for the BlackBerry, Tavis McCourt with Raymond James this evening offered up what he calls a “sensitivity analysis” of what BB10 sales could do for the company’s business.

McCourt, who has a Market Perform rating on RIM stock, is modeling a net loss per share for RIM in the fiscal year ending this coming February of $1.72, on a GAAP basis, which is slightly better than the $1.99 net loss the Street is modeling, on average. That’s based on expected sales of $11.07 billion, which is in line with Street expectations.

For fiscal 2014 ending in February of that year, he’s modeling $12.214 billion and a net loss of $1.31, which is better than the consensus for revenue of $11.3 billion, but worse than the consensus for a GAAP net loss of 45 cents.

McCourt ponders what it would take in BB10 sales to reach breakeven for RIM, and comes up with a target of 18 million units in fiscal 2014. Anything below that and RIM has a net loss, anything above that and RIM has a net profit, he believes.

McCourt makes several assumptions, including that the average price of older BlackBerrys, falls to $180, and that gross margin is negative on those units.

He assumes, conversely, that BB10 will have a higher average selling price, at $375 per unit, and a gross margin of 30 million. McCourt is assuming services revenue in 2014 of $3.9 billion, and operating costs of $4.05 billion.

McCourt has a base assumption of 24 million units of the existing BlackBerry 7 units being sold next year, down from 31.7 million this year, as the older equipment is cannibalized by BB10 and competition from Android-based devices.

Here’s McCourt’s analysis for just the BB10 volumes in fiscal 2014:

Raymond James BB10 Sensitivity Analysis, November 2012

As far as how McCourt rates RIM’s chances, he sees the company up against the challenge that Apple (AAPL) and Samsung Electronics (005930KS) currently own most of the smartphone profits, making it tough for the also-rans to make money. And Nokia‘s (NOK) performance so far with Microsoft‘s (MSFT) Windows Phone on its Lumia smartphones is not encouraging, he thinks:

Essentially, Apple and Samsung have developed massive scale economics in smartphones, and this is leading to outsized operating margins for these two vendors. However, none of the other competitors have reached that level. It appears that one needs to sell well over 30 mln smartphones annually in order to reach sustainable profitability. Because RIM owns its own OS, perhaps it does not quite require the 30 mln or so smartphone sales to reach profitability that Android partners appear to require, but even getting to 18 mln is no easy task [...] To put the challenge ahead for RIM in perspective, Nokia has tried to help launch a new OS to the world, and in the first year it has sold roughly 10 mln devices, at an average ASP we suspect is well below $300 and at gross margins that are flattish at best. This has included substantial marketing support from carriers and from Microsoft, and although RIM can probably count on marketing support, it does not have a deep-pocketed OS partner to lean on.

McCourt’s note follows an upgrade late Wednesday by National Bank Financial’s Kris Thompson, based on the prospect of higher BlackBerry sales in 2013, and an upgrade by Jefferies & Co.’s Peter Misek on Tuesday based on what he considers a better risk-reward ratio of late on the chances of a BB10 success next year.

RIMM: Target 18M BB10 Units for Profit in FY14, Says Raymond James - Tech Trader Daily - Barrons.com

Thanks for the post. However, as subsequently discussed by several other analysts, McCourts assumptions appear to be overly bearish in several aspects and as such the break even point is thought to be lower somewhere between 12-14 million units for the fiscal year. I think Misek has calculated it at 14 million.

[araskin]

Ok so somewhere between 12 and 18 million BB10 devices. Plus the legacy BBOS devices... right?

Posted via CB10

[howarmat]

i think they need to sell more than 12-14 bb10 devices in the next fiscal year to be "successful" IMO

[THBW]

i think they need to sell more than 12-14 bb10 devices in the next fiscal year to be "successful" IMO

I would agree but I don't think this will be a problem in the long term. BB is delivering a unique user experience that will attract the hardcore BB supporters, the curious and the disenfrancised. Lets face it Apple and Android are not going to change a business model that is not under stress. This leaves a nice window of opportunity for BB. While I'm very positive on BB long terms success, short terms pressures/metrics are a concern to me. So if they can sell greater than 14 million units, they will live to fight another day and one that will be in their favour.

[Shanerredflag]

It appears most are in agreement then...anything over 20 Million new device sales will be considered a great success.

Personally I believe they will sell over 5 million of the new OS (first quarter excluded) and continue the march of 5-7 million older OS's per quarter...would this then be considered a huge success?

[Shanerredflag]

And...looks that with as little as 5% brand transfer from AAPL and Samsung the above numbers are easily achievable
https://forums.crackberry.com/e?link...token=1ud0b_KA
Apple Hardware Sales In FY 2012: 125.04M iPhones, 58.23M iPads, 18.1M Macs And 35.2M iPods | TechCrunch

[superdirt]

Companies that sell less than 20 million historically don't last very long. 20 or even 18 mil for argument sake would be a minimum for sustaining themselves.

Making profit is not the only goal for BlackBerry this year. The company was generally profitable even before BB10, so why was there cause for concern? The issue is that they must sell enough phones to generate enough return business in the future. 20 mil seems to be the magic number here too.

Would survival be considered a win? Depends on your point of view.

Posted using CrackBerry App on BB10

[Superfly_FR]

I'll go with 5% marketshare within 1 year. In general, I think if BB10 manages to become #3 platform, we can call it successful.

You mean + 5% then ... because there will still be a load of BB6/7 device (either held or newly bought) by the end of the year.

[aniym]

Companies that sell less than 20 million historically don't last very long. 20 or even 18 mil for argument sake would be a minimum for sustaining themselves.

Making profit is not the only goal for BlackBerry this year. The company was generally profitable even before BB10, so why was there cause for concern? The issue is that they must sell enough phones to generate enough return business in the future. 20 mil seems to be the magic number here too.

Would survival be considered a win? Depends on your point of view.
Posted using CrackBerry App on BB10

The company was profitable before BB10 in the same way that HTC was profitable before Samsung arrived on the Android scene. Things change. BB was never an app-oriented OS, it was all things considered, a very basic phone that did email, calendar and phone calls well and was a phone that corporate IT loved. The market has changed dramatically since then.

[richardat]

The company was profitable before BB10 in the same way that HTC was profitable before Samsung arrived on the Android scene. Things change. BB was never an app-oriented OS, it was all things considered, a very basic phone that did email, calendar and phone calls well and was a phone that corporate IT loved. The market has changed dramatically since then.

That's true...and with a marketshare of around 2-4% and dropping, the outlook was/is hardly bright for the older phones.