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Can You Fall in Love With the BlackBerry Z10?

The US launch of BlackBerry's next-generation smartphone, the Z10, which went on sale March 22 at AT&T stores, will not only test whether the company still has enough loyal customers, or whether the company can ever recover from its lost market share. Sales of the new product will also expose whether the company has developed a strong supply chain strategy, which is pivotal to its survival.

Will consumers buy the BlackBerry Z10?
BlackBerry, formerly known as Research in Motion (Nasdaq: BBRY), is pinning its hopes on the success of its latest smartphone. However, if consumers don't have a compelling reason to leave their current smartphone contracts and switch to a new product, sales of the Z10 won't get to the levels BlackBerry would like to see.

A face only a shareholder could love?

Reviewers say the BlackBerry Z10 offers a new interface and attractive software functionality. But many also note that the product does not offer a distinctive 'must-have' feature.

Reviewers say the BlackBerry Z10 offers a new interface and attractive software functionality.
But many also note that the product does not offer a distinctive “must-have” feature.

So far, technology reviewers indicate that the Z10, which will be available for $199.99 on a two-year contract, is a stylish device with a new interface and attractive software features. But many also note that the product does not offer a distinctive “must have” feature that will drive sales or create buzz in the market.

Indeed, BlackBerry's problem is one that is common to smartphone manufacturers: The company has fallen victim to the innovation and ingenuity of Apple (Nasdaq: AAPL). BlackBerry's difficulties in the smartphone market began in 2007 when Apple introduced the iPhone.

RIM shot
RIM, the company's name at the time, was incapable of adjusting its supply chain to quickly manufacturing a competing product. In fact, the iPhone changed the way original equipment manufacturers (OEMs) developed smartphones and caused consumers to switch their preference from the BlackBerry to Apple's iPhone. Smartphone users quickly embraced a multitude of apps, welcomed sophisticated features like voice and gesture recognition, and enjoyed the handheld camera.

Today, Samsung Electronics Corp. (KRX: 005935) and Apple dominate the smartphone market. Other players such as Nokia (NYSE: NOK) have struggled, and smartphones from Chinese OEMs like Huawei Technologies Co. Ltd., and ZTE Corp. are competing on price and features in emerging markets. In the meantime, BlackBerry has failed to offer a plethora of apps that users want. Furthermore, newer versions of smartphones from Apple, Samsung, and Google come with enhanced security features for the corporate market, which is where the BlackBerry smartphone once had a loyal following.

Projections for the global smartphone market
The BlackBerry Z10 and the Q10, which has a smaller screen and physical keyboard and will be introduced later this year, are coming to the market at a time when the company is grappling with the loss of global market share. According to IDC, BlackBerry, which once dominated the global smartphone market, held just 10.3 percent of that market in 2011 and only 4.6 percent in 2012.

Still, the company is looking to grow market share, and there's still room for improvement. IDC estimates that smartphone vendors will ship a total of 918.6 million smartphones in 2013, up 27.2 percent from the 722.4 million units shipped in 2012. For the forecast period 2013 to 2017, shipment volumes will grow at a compound annual growth rate (CAGR) of 16.0 percent before reaching a total of 1.5 billion units shipped in 2017.

According to Ramon Llamas, research manager with IDC's Mobile Phones practice, there will be a strong demand for smartphones during the next four years. Consumers can also expect an increase in the selection of products from vendors:

    We expect Android and Apple iOS to stay out front at number 1 and number 2, respectively. The race for number 3 between BlackBerry and Windows Phone will bear close observation as BB10 launches and Windows Phone gains greater salience in the market. Finally, Linux will get more attention than ever this year as multiple variations get set to launch.”

Fighting for third spot isn't the best position to be in. According to IHS:

    Together, Apple and Samsung account for a staggering 81 percent of industry gross profit. In comparison, the next most profitable manufacturer—at a very far remove—is Nokia, with a miniscule 4 percent share. All other handset brands split the remaining 15 percent, with no single entity holding more than 3 percent. BlackBerry, formerly known as Research In Motion, is another casualty of the smartphone wars—once having an impregnable position, but now struggling to remain relevant even after rebranding.

It will be interesting to see if BlackBerry can turn its fortunes around in the coming years, but this will depend on many factors such as product innovation, supply chain execution, meeting supply-and-demand goals, and setting a course to develop a smartphone that differentiates itself from other products on the market at competitive prices. Are you thinking about buying a BlackBerry Z10? I'd like to know.

10 comments on “Can You Fall in Love With the BlackBerry Z10?

  1. HM
    March 27, 2013

    would try. have been using blakberry normal phone. How about the all apps, would it be easily accessible ..what is the price quoted.

  2. Himanshugupta
    March 27, 2013

    It seems that the only entry point of a smartphone is compelling hardware with all the necessary software (apps) at a very marginal profit price. I think once people start to get hang of a brand then they try to go with it for an upgrade unless a competitor is providing a much better alternative at lower cost.

  3. Brian Fuller
    March 27, 2013

    Excellent point, @Himanshugupta. I'll take it one step further. That “walled garden,” whether it's the Apple environment or the Android environment will win the consumer. This is a real challenge for hardware vendors because the innovation won't be at the hardware level. (Or I should say the hardware innovation won't be as valued as what advancements the services bring). 

    Since Apple owns its garden and its hardware, this isn't such a bad deal. But companies that are selling Android devices have a tough road ahead of them. 

    Blackberry's proposition is a third walled garden and “better email security.” I don't think that dog hunts, as they say in Texas. 

     

     

  4. mfbertozzi
    March 28, 2013

    For now, it appears RIM has adopted a good strategy: good product, right price, proper mix of innovation. Thanks to that, they are meeting with a positive trend, after a very long time. And several users are falling in love with the product, sales' trend is really good abroad.

  5. Himanshugupta
    March 28, 2013

    I have not seen the new BlackBerry phone so cannot comment on the innovation but i think hardware has always been good. Its also true that most of the phones can match the hardware on paper but the ture integration with software is innovation. 

  6. mfbertozzi
    March 28, 2013

    I see…anyway if you are interested in, I leave here (for the community to) a great link for keeping an eye, http://bit.ly/170Gln6

  7. Brian Fuller
    March 28, 2013

    @mfbertozzi, good link. 

    I'll add another, a glimmer of good news for BB on the earnings front

  8. mfbertozzi
    March 29, 2013

    @Brian: thanks, great article, it summarizes exactly where the company is, right now; only a few months ago, it was unpredictable and speaking for myself, I am happy for them and for the market, because the market needs absolutely good competitors for providing endusers with best products.

  9. The Source
    March 30, 2013

    mfbertozzi,

    I agree with you that the smartphone market needs strong competition. It will be several quarters before we can get a clearer picture of how these new phones will impact BlackBerry's revenues and market share. In the meantime, the Apple/Samsung duopoly in the smartphone market seems to be firmly entrenched. 

  10. t.alex
    April 2, 2013

    I am not sure if for Z10, BlackBerry developers would have trouble with a different screensize as compared to when they develop for previous models? Can previous apps run on the new Z10?

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