[amazinglygraceless]

The Z30 And Phablet Market Could Be BlackBerry's Savior

As everyone knows, BlackBerry (BBRY) is currently in deep trouble. The company is currently exploring strategic alternatives in order to reinforce itself and to maximize value for shareholders. Now that Microsoft (MSFT) has bought Nokia's (NOK) hardware division, BlackBerry competes with three titans; Apple (AAPL), Samsung (SSNLF.PK) and Microsoft. In such a competitive market, deep pockets are one of the keys to being successful, but I'm not going to talk about that in this paper. In fact, BlackBerry still has a little chance to succeed in the smartphone market with its "phablet" Z30. Here is why.

First, what is a phablet phone? A phablet is a smartphone with a screen bigger than 5 inches, which has the same features as a traditional smartphone.

Right now, there are only two big competitors for BlackBerry in this market area, namely Samsung with its Galaxy Note and Sony (SNE) with its Xperia Z. Both have premium prices and features. BlackBerry's Z30 has been designed to compete with them and will be released in the coming months.

Phablet Market

While traditional smartphone sales are growing at a slower rate, supersize phones continue to grow at an impressive rate. According to Transparency Market Research, 825 million units will be sold in 2018. It represents a growth of 25.8% each year, from 2012 to 2018. A large part of this growth will come from North America and Asia. According to ABI Research, 385 million units will be sold in 2017 and Asia will represent the biggest market share for phablet phones. Even if there is a gap of nearly 400 million units between both studies, one thing appears very clear: supersize phones will represent a big opportunity for smartphone companies in the near future. ABI Research predicts more than 200 million units sold in Asia Pacific in 2017 and 87 million units sold in North America in 2017. That's big news for BlackBerry because it is still very popular in countries such as Indonesia or Malaysia.

Where is Apple?

Apple, which released its new iPhones 5S/5C two days ago, didn't do anything to come in this new market area. In my opinion, it represents another strategic mistake made by the company. But that's good news for BlackBerry, which will benefit from this absence of initiatives from Apple.

Quick Calculation

If BlackBerry can own as little as 1% of this market in the following years, the company will be able to generate comfortable new revenues. If the ASP for the Z30 is near $600 multiplied by 3.85 million units (1% of total devices sold in 2017), it will generate $2.31 billion. If BlackBerry can reach 10%, the potential revenues will go to $23.1 billion...

Conclusion

A lot of people are saying BlackBerry will go bankrupt soon. Even if the company is in trouble with bad news regarding current BB10 sales, I would like to remind these guys that the company still has nearly $3 billion in cash and can boost its marketing efforts to gain traction and boost its sales. In my opinion, here is one reason why Prem Watsa is still a strong supporter of the company.

[szlevi]

Pure speculation... could work out though but it would require significant marketing investments throughout the world from BB and being busy with selling the company it does not seem TH et al would be willing to focus on anything other than keeping the books in the best possible form ie spending as little as possible on everything while preserving a working, live company.

Ahh and 5" is not a phablet - that ship has sailed last year, let's face it. It's above 5" today, the author apparently is unaware of this latest market twist.

[si001]

apps, spec, marketing.

[Skatophilia]

I find that for me personally the Z30 would be too big of a phone, but i hope it does well!

[europolska00]

Szlevi, the OP's article DID say that a phablet is more than 5". So calm down with the bold type. Also yes, this speculative article is speculation. Very good, you're paying attention. We all needed the obvious point out to us. Thanks!

Posted via CB10

[JasW]

If someone knows AG's personal email, please let him know that someone has hacked into his CB account and is posting "articles" from Seeking Alpha.

[mikeo007]

Here's another "article" from the same site, also published today, with a differing view:

BlackBerry Ltd (BBRY): The Z30 Phablet Has Precisely 0% Chance Of Saving BlackBerry - Seeking Alpha

I've been calling this conundrum that BlackBerry (BBRY) is in since February 4th, when I published one of my very first articles here on Seeking Alpha entitled "Dead Company Walking: 5 Reasons BlackBerry 10 Marks the End".

I was promptly told by what seemed like billions of BlackBerry longs that my arguments held no water, and that I was wrong on every possible account.

24,784 people received this article by email alert
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I stated in my previous article:

The mobile phone market is no longer an emerging market. It is a market simply dominated by both Apple and Android. In conjunction with that, almost all smartphone accessories and 3rd party products are made for either the iPhone or certain Android phones. BlackBerry is not only going to have to compete with these two, it's going to have to reintroduce itself as a whole into the already firmly established mobile phone market. That means the potential customers that BlackBerry is going to be going after are probably already loyal to either Apple or Android.

These five points are enough for this investor to lean towards the bearish side on the upcoming BlackBerry 10 release. Unfortunately, in the balance, also hangs the fate of the company as a whole. There is substantial risk on going long BlackBerry here, a risk that makes a short position the most desirable here.

And here we are in mid September, 2013 - and it's looking like BlackBerry is running out of options.

The trading on BBRY for the past six months has resulted in some investors taking nearly 40% losses from BBRY's recent highs near $16 in late April/early May. Even though, in the last 12 months, the company has still be able to produce returns of 42.5% - an area that this investor will argue should be viewed as continued potential downside for BBRY.


(Click to enlarge)

And now, it seems like BlackBerry has gotten themselves into a bit of dire straits. What's next for the company? Strategic alternatives? Buyout? New revolutionary product to save the company? As postulated by another Seeking Alpha contributor seemingly trying to throw the mother of all hail marys, the Z30 phablet to save the company?

While Gillian Mauyen's article is very well written and raises a ton of fact based points about Apple not being in the phablet game, and the potential of the phablet market going forward, I'd love to provide a friendly counterpoint as to why I think the phablet is not going to be BlackBerry's savior.

No doubt you've seen phablets around, when you've asked yourself "what in god's name is that guy doing holding his entire tablet up to his ear?", or "why is that guy's phone the size of a small third world country"?

(CAN YOU HEAR ME NOW?! )CAN YOU F***** HEAR ME NOW?!
(Click to enlarge)

A phablet is a horrible mutant mixture between a phone and a tablet, that some people think could be the "niche" that could save BlackBerry. QTR thinks there's a couple of major problems with this, so let's explore why there's no possible way that a phablet is going to be BlackBerry's saving grace.

1. It's Not a Niche

Tablets are a niche. Phones are a niche. PCs are a niche. Phablets, are again, an emerging horrifying mutation of two niches that already exist; not unlike a strain of some flesh eating bacteria that has mutated to avoid convention medicine, the phablet is what people who want major innovation 24/7 have mashed together, seemingly strictly out of boredom.

All of the hype on phablets going forward are all based on proformas or forward looking projections. You can't ignore the risk that potentially comes should not just the Z30, but the phablet in general not catch on.

[Dunt Dunt Dunt]

If someone knows AG's personal email, please let him know that someone has hacked into his CB account and is posting "articles" from Seeking Alpha.

Think it was SOMETHING positive..... regardless if anyone really believed it or not.

The PlayBook and BB10 have showed us that it isn't the Hardware, nor even the Software that people look at in making their decision to buy a device. They want to do what 95% of the other smartphones on the market can do, that is there first consideration... then it moves to specs and capabilities.

[Dunt Dunt Dunt]

Here's another "article" from the same site, also published today, with a differing view:

I agree more with this one.

I know several Kindle Fire users that actually plan to move to iPads because the Kindle ecosystem is so much more limiting... some book formats don't work. Ecosystem is important to users these days.... that is one of the main reason that the Z10 isn't seeing sales that we would have like. A bigger screen isn't changing that.

[trsbbs]

Whatever BlackBerry brings out in the way of the Z30 it must have speed and great visuals.

No bugs (rebooting etc)..

Must have a refined OS. 10.2 with no issues would be good. With an update shortly after launch improving camera, media functions and further user enhancements.

They have a shot but must bring some big guns to the table and market it aggressively.

Posted via a Verizon Z10. 10.2.0.1443

[playbookster]

Well I will be buying one

Posted via CB10

[FSeverino]

they are talking about an emerging market that would hit its stride in 2017... and with 1% of the 2017 market BB can make money

will BB make it to 2017?

[amazinglygraceless]

I find that for me personally the Z30 would be too big of a phone, but i hope it does well!

Same here but I am rooting for the device any way.

Pure speculation...

...which is why the author of the article used "could be" not "is" or "will be"

[amazinglygraceless]

Here's another "article" from the same site, also published today, with a differing view:

Saw that one too but didn't put to much stock in it as it makes it's premise a forgone conclusion.

[m1a1mg]

That's why SA is totally worthless. Just remember, ANYONE can write for SA.

If you accept that SGOTI wrote a positive about BBRY, you have to accept the negative as well.

[amazinglygraceless]

That's why SA is totally worthless. Just remember, ANYONE can write for SA.

If you accept that SGOTI wrote a positive about BBRY, you have to accept the negative as well.

I disagree. I kind of like the fact that opposing points of view are presented and that they are not walking one line. It really is up to the reader to decide what is of value to them...or not.

[Shlooky]

No it won't. let's face it...no one is buying BB phones. the only savior for BBRY is a sale or taken private.

[lnichols]

I'm not seeing how a bigger Z10 will be a savior. The Z10 is a great phone and people aren't buying it over Samsung and Sony, so why would a Z30 change this trend? What will BlackBerry do with a Z30 launch that will be different from the catastrophic Z10/Q10 launches. Same marketing people and upper management. Are they going to slap premium pricing on it again compared to the phones it is competing against or price it to drive adoption?

Posted via CB10

[berklon]

Just like people buying the SG3 or SG4 over the Z10, why would someone buy a Z30 when they can buy a Galaxy Note?

A bigger Z10 isn't the answer.

The Z30 will sell poorly like the other BB10 devices - if it eventually gets released.

[darkehawke]

I'm not seeing how a bigger Z10 will be a savior. The Z10 is a great phone and people aren't buying it over Samsung and Sony, so why would a Z30 change this trend? What will BlackBerry do with a Z30 launch that will be different from the catastrophic Z10/Q10 launches. Same marketing people and upper management. Are they going to slap premium pricing on it again compared to the phones it is competing against or price it to drive adoption?

Posted via CB10

Fiver says we see exactly the same ads we saw for the z10 and q10

Posted via CB10

[epyon52328]

Just like people buying the SG3 or SG4 over the Z10, why would someone buy a Z30 when they can buy a Galaxy Note?

A bigger Z10 isn't the answer.

The Z30 will sell poorly like the other BB10 devices - if it eventually gets released.

Actually the screen is only slightly bigger than the S4 so that might be a more apt comparison than the Note II. And did you ever stop to think maybe part of the reason that the Z10 didn't sell was because of its smaller screen size? Apple can get away with a 4" is because of their ecosystem and you can only get itunes on Apple products and can't transfer your music off to another device.

Posted via CB10

[lnichols]

Actually the screen is only slightly bigger than the S4 so that might be a more apt comparison than the Note II. And did you ever stop to think maybe part of the reason that the Z10 didn't sell was because of its smaller screen size? Apple can get away with a 4" is because of their ecosystem and you can only get itunes on Apple products and can't transfer your music off to another device.

Posted via CB10

Funny my iTunes music is on my Z10. Movies is a no go but music is DRM free.

Posted via CB10

[berklon]

And did you ever stop to think maybe part of the reason that the Z10 didn't sell was because of its smaller screen size?

Do you honestly think the Z30 is going to make much of a difference, especially when there are other products the same size with a MUCH better/deeper ecosystem?

A bigger phone will still have the same problem... it's made by Blackberry (which has an image problem with the general public) and will have a poor ecosystem.

[techvisor]

I agree with article that BB should make phablet, make it 6 inches, they need a differentiator. Just look at the trend, its not hard to figure out. For those that want smaller screen get z10, for those that want larger screen get z30, for those that want tablet get z30. Apple will loose some sales because of screen size, those could be BlackBerry's gain, but they don't have the ballz. BB is just buying time, holding onto as much cash as possible. Since Alicia Keys is creative director, they should make the screen the same size as her

[richardat]

I think Graceless is pulling our legs.

I saw that article before and had a good laugh at it...(which is really all any SA "article" is worth), but that article is poor even by SA standards. It can be summed completely as:

BB is making a phablet
Phablets are popular
Therefore if BB can get a percentage of that market it will save the company.

To the vacuous, ignorant author: really Sherlock? Quite the deduction you made there.....convincing.

You know what else is popular these days? Smartphones. Now if BB could get a percentage of that market.....

Therefore, things are really looking up!