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Analyst: BlackBerry should stick to low-end phones

Posted: , by Alan F.

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Analyst: BlackBerry should stick to low-end phones
Wedge Partners analyst Brian Blair decided to write an open letter to BlackBerry CEO John Chen. The bottom line is that Blair believes that BlackBerry would be best served by forgetting about the high-end smartphone market and sticking to the low-end. He adds that the Canadian OEM can use its highly regarded physical QWERTY as a differentiator.

Blair points out that the low end is where the growth is at, and looking at how well the entry-level Nokia Lumia 520 and Nokia Lumia 521 did this year, there might be some truth to that comment. The Lumia 520 became the best selling Windows Phone handset in 2013, and the analyst sees BlackBerry successfully selling over 100 million units if it follows his plan. So what is the plan? Blair wants BlackBerry to stop producing high-end and even mid-range devices, and focus on manufacturing low-end phones for the emerging markets.

The analyst also notes in his open letter that BlackBerry should give up trying to compete with its software. There are three big tech giants in Apple ( iOS), Google (Android) and Microsoft (Windows Phone), each one able to throw unlimited amounts of money into OS development. BlackBerry needs to give up a battle it cannot win and to prove this, Blair points out that BlackBerry has been unable to attract enough developers to produce enough apps for BlackBerry World. That alone should be a signal that it is time for a change.

As a suggestion, Blair says that BlackBerry should offer BlackBerry 10 models priced at $99-$199 without a subsidy. Aiming for a 25% gross margin at that price, the analyst suggests that BlackBerry combine the QWERY-equipped BlackBerry Q5 with the futuristic looking Porsche Design BlackBerry P'9982. In his open letter, Blair says that, "BB10 in a $149 sleek Porsche-designed Q5-like device could be your 2014 breakthrough." He would like to see BlackBerry stick to offering the top 25 apps around the world and pay to get them developed if necessary.

Blair thinks that if BlackBerry heads in this direction, it should focus on carriers in emerging markets where smartphone penetration is low. He sees areas like Latin America, India and Southeast Asia perfect for his plan. Offering the popular BlackBerry QWERTY on such a low-end model will really help sell the device to the featurephone buyer who wants to buy a smartphone to experience apps like Twitter, Instagram, Snapchat, Netflix, YouTube and more. As Blair puts it, "This is where you come in and where the keyboard can be a huge plus. All some people want is access to the most popular apps and the feel of tactile keys."

"The fact is, you have no choice but to move to where the growth is and where the playing field is more level and the chances for success are on your side. Remember there are plenty of examples of companies who survive and even thrive by getting this lower-end approach right. Your biggest challenge if you move in this direction will be doing it proudly and profitably."-Brian Blair, analyst, Wedge Partners

Blair closes out the letter by suggesting that BlackBerry push BBM more and develop apps focused on emerging markets. To those who would point out that BlackBerry would be receiving less revenue per unit sold if it were to follow his game plan, the analyst says that this is the direction that the company is headed in anyway, even if it sticks with high-end models. Selling entry-level phones will allow BlackBerry to make it up in volume. The question is whether a company like BlackBerry, which has a history that it is immensely proud of, can move to the low-end of the smartphone market without feeling like a failure.

source: BGR

15 Comments
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posted on 19 Dec 2013, 17:17 1

1. Sesameopen (Posts: 106; Member since: 02 Aug 2013)


NEVER!

posted on 20 Dec 2013, 00:31

10. corporateJP (Posts: 1587; Member since: 28 Nov 2009)


"Brian Blair, you no good mother******, the Iron Sheik will put you in the camel clutch, bend you over, **** you in the ***, and make you humble!"

Sorry...couldn't resist...

posted on 19 Dec 2013, 17:54 3

2. downphoenix (Posts: 2359; Member since: 19 Jun 2010)


The analyst has a good point, but I just dont see them doing this.

posted on 19 Dec 2013, 17:55

3. jellmoo (Posts: 691; Member since: 31 Oct 2011)


The dude should probably look up the notion of correlation not implying causation.

posted on 19 Dec 2013, 19:03 3

4. DerryAhmad (Posts: 245; Member since: 05 May 2012)


That's actually a very good suggestion. And exactly what I've been wanting Blackberry to do. Producing low end BB10 that priced at $99-$199. I don't think they should give up on Flagship models tho. But they definitely have to add those low end BB10 models to survive.

But first.. they need to lower down their flagship models' price. The Z30 is more expensive than Samsung's GS4 in my country. That's just not right.

Blackberry is still doing great in emerging markets and its home country (Canada) but their market share is still decreasing time by time. If they do not correct their pricing strategy. They'll be gone in 1-2 year.. maybe even faster

posted on 19 Dec 2013, 20:47 1

5. ArtZGraphic (Posts: 16; Member since: 04 Sep 2013)


i agree.. so, what's your country? Maybe we have the same country haha.

posted on 20 Dec 2013, 09:49

14. pradeepreddy (Posts: 45; Member since: 01 Apr 2013)


it's pricing strategy is same everywhere.
they still think they can overprice their phones (i guess comparing themseleves to Apple which has TOTALLY Diffarent strategies & strong hold)

posted on 19 Dec 2013, 21:27

6. sri_tech (Posts: 188; Member since: 21 May 2013)


Its a good suggestion but they should have done an year ago.
Instead they priced their handsets like Z10 as high as iPhone and failed miserably.

Nokia even with much better hardware didn't do such stupid things.

posted on 19 Dec 2013, 22:12

7. cripton805 (Posts: 944; Member since: 18 Mar 2012)


Start small with a low end device and update the hardware on the keyboard models to where they look good and classy. If they had a premium one at mid range pricing, it would probably do very well. Keyboard and touchscreen combined with a better UI. And slowly make the transition to the touch screen models with the current UI.

posted on 19 Dec 2013, 22:17

8. cripton805 (Posts: 944; Member since: 18 Mar 2012)


There is an open gap for smartphones with a qwerty keyboard. Thats a money pit that nobody is claiming. The android phones with a keyboard suck.

A good looking touchscreen BB with a keyboard would be nice!

It just needs the apps like the article says!
I would much rather use physical keys if the handset performed well and looked just as good.

posted on 19 Dec 2013, 23:34

9. itsdeepak4u2000 (Posts: 2694; Member since: 03 Nov 2012)


Yes, he's correct.

posted on 20 Dec 2013, 04:12

11. mariosraptor (Posts: 110; Member since: 15 Mar 2012)


I only can agree that BlackBerry should lower just a bit their prices but I don't agree that they should drop making flagships.
They only need a better marketing plan, and imo the best way to do that is to make the Store more popular.
They need to focus on making deals with great devs to make apps.
And on the OS area of course they should not stop developing the safest OS in the world.

posted on 20 Dec 2013, 06:04

12. shihte (Posts: 10; Member since: 02 Sep 2013)


no,bb10 is already better and much much modern then ios,wp and android alltogether and that guy forgetting about jolla and ubuntu touch new era os!!! comming just agree with low cost bb phones 100-200euro otherwise recommend everyone to try this briliant os and guarantee that never go back to wp or android,i know what i am saying after 10 droids and wp also once tried iphone

posted on 20 Dec 2013, 08:34

13. kindlefireowner (Posts: 408; Member since: 05 Dec 2011)


The high end phone market is not worth being in anymore. Apple and Samsung have it locked up. Ask HTC. BB wasted billions of dollars and time on the Z10 and Q10.
The low end prepaid market in the USA would buy BB phones. Not sure why they would not release low end phones in the USA.

posted on 20 Dec 2013, 10:17

15. MarkArigayo (Posts: 240; Member since: 18 Dec 2013)


BB 30 is highly overpriced. I'm from Indonesia where a "2011 specs" BB 30 much more expensive than the mighty LG G2. It's crazy but so really that Blackberry digs its own burial site.

Perhaps BlackBerry and its QWERTY will be a legend soon enough. Vaya con dios BB.

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