BlackBerry BB10 devices refuse to leap off shelves

Any time now, just wait for it ... wait for it ...


So you’re an ageing push-email legend finally selling phones with a shiny modern new operating system, relieving years of pent-up demand. Wouldn’t you want to SHOUT about how many people want them?

BlackBerry spurned the opportunity to do just that in its earnings releases today, covering the first full quarter selling BB10 devices. The information was eventually dragged out of company executives in the subsequent conference call.

The Canadian company reported a narrow loss in Q1 2013 (the period ending 1 June) of $84m ($67m adjusted) on increased revenue of $3.1bn, and shipped 6.8m BlackBerry phones into the channel - and 100,000 PlayBooks. Cash on hand was slightly up at $3.1bn. That confirms that BlackBerry halted a dramatic nose-dive three quarters ago, stabilising its fortunes. Now it needs to be showing revenue growth from its all-new platform. So, is it?

BlackBerry has launched two BB10 devices this year: the full touchscreen Z10, and the more familiar and well received Q10, a device with a classic physical keyboard. But the two modern newcomers only made 2.7m shipments into the channel. (Real sell-through can only be guesstimated).

Wall Street had expected stronger BB10 performance. Blackberry-friendly Morgan Stanley analyst Ehud Gelblum had estimated 3.5m BB10s and Citigroup’s Jim Suva Citigroup’s Jim Suva 3.25m. And ominously, BlackBerry said it will produce at least one new BB7 device this year, to sate demand for the older models.

The company said subscriber numbers were down 4m, to 72m. BlackBerry is gradually moving away from bundling its BIS data service with its phones, whereby operators pay BlackBerry a small fee. The new BB10-based phones don’t require (or even support) BIS.

BlackBerry’s share price fell 20 per cent on the results, reflecting earlier warnings.

BlackBerry argued that the BB10 roll out is still at an early stage: AT&T and major European markets only got the Q10 in late May and June. The tardy start also reflects the positioning of the two new phones, which have top-of-the-range price tags, and the purchasing habits of BlackBerry’s odd demographic mix. BlackBerry has both a lot of low-end consumers – for whom the new devices are too expensive – and enterprise customers, who take their time making long-term buying decisions. In addition, businesses looking at BB10 devices will have to upgrade their infrastructure to BlackBerry Enterprise Server (BES) 10 in order to take advantage of the Balance feature, BB10’s most attractive corporate selling point. BlackBerry says 60 per cent of the Fortune 500 customers are already trialling BES 10. But these things take time.

The company confirmed it would cease development on its flop QNX-based PlayBook tablet, and the more mature BB10 would not appear on the device. ®

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