BlackBerry 10 debut fizzles as U.S. customers left waiting

Shevek, a prospective customer, scrolls through the menu of a new Blackberry Z10  in central London, on Thursday, Jan. 31, 2013. The Z10's U.S. debut has been pushed back to March 1.
Andrew Winning | Reuters
Shevek, a prospective customer, scrolls through the menu of a new Blackberry Z10 in central London, on Thursday, Jan. 31, 2013. The Z10's U.S. debut has been pushed back to March 1.
By Hugo Miller and Scott Moritz, Bloomberg
Posted Feb. 01, 2013, at 6:19 a.m.

NEW YORK — Even Alicia Keys couldn’t get investors excited about the debut of the newest BlackBerry.

The smartphone maker formerly known as Research In Motion stumbled in its introduction of the BlackBerry 10 lineup Wednesday, disappointing shareholders with the lack of a firm U.S. release date and setting a price that may be too high to win back customers from Apple and Google’s Android. The shares tumbled 12 percent after the event, which included an appearance by Keys, a Grammy-winning R&B singer who was given the title of BlackBerry’s global creative director.

BlackBerry 10 phones won’t appear in the United States until March, raising concerns that the company will fall even further behind the iPhone and Android in its biggest market. The lag also means BlackBerry won’t get as much value out of its first-ever Super Bowl commercial, which airs on Feb. 3, weeks before Americans can even buy one of the new devices.

“For the BlackBerry faithful, another month is a long time,” Shaw Wu, an analyst at Sterne Agee in San Francisco, said in an interview. “The execution could have been crisper.”

The investor reaction is a knock to a company struggling to rebound from years of market-share declines and financial losses in three of the past four quarters. The BlackBerry was set to finish 2012 with 4.7 percent of the global smartphone market, compared with almost 90 percent for Apple’s iOS and Android combined, according to estimates from research firm IDC. The Waterloo, Ontario-based company is counting on BlackBerry 10 phones to win back customers and put it back on the road to profitability.

The company, which changed its name to BlackBerry Wednesday to unify its branding, unveiled a touch-screen phone called the Z10 and a version with a physical keyboard named the Q10, both of which will run the retooled BB10 software. The Z10 went on sale in Britain on Thursday, before appearing in Canada and the United Arab Emirates in the next 10 days.

Chief Executive Officer Thorsten Heins, who assumed the role of Steve Jobs-style pitchman at Wednesday’s event, said carriers were responsible for the BlackBerry’s slow arrival in the U.S. The four largest mobile-phone services — Verizon Wireless, AT&T Inc., Sprint Nextel Corp. and T-Mobile USA — are taking longer to test the devices than their U.K. or Canadian counterparts, he said.

“Everybody’s trying to do the job as best they can,” Heins said in an interview. “I would love to see the U.S. earlier, I really do, but what can we do?”

Apple’s new products are usually available within a few weeks of their unveiling, though customers can face several more weeks of delays because of supply constraints. When Apple introduced the first iPhone in 2007, it wasn’t available to customers for six months after the initial announcement.

When the new BlackBerry phones do appear on store shelves, the price may deter some buyers, Wu said. The Z10 will cost $149 to $199 with a wireless contract — a level that doesn’t compare well with the price of Android devices, he said.

“Many Android smartphones are available for $99, $49 or free,” Wu, who has a neutral rating on BlackBerry’s stock, said in a report.

The Q10 won’t appear until April because the company has focused its resources on getting the touch-screen model out first. That means fans of BlackBerry’s once-hallmark feature, a physical keyboard, will have to wait even longer to upgrade.

“Let’s be honest, if they want a full touch screen, they’re going to go for an Android or an iPhone,” Wu said.

At least three analysts reiterated their sell recommendations for BlackBerry Wednesday, with at least two — James Moorman at S&P Capital IQ and Mark McKechnie at Evercore Partners — cutting their ratings to the equivalent of sell from hold. In all, six analysts recommend buying the stock, 20 have a hold rating, and 20 advise selling, according to data compiled by Bloomberg.

Heins has spent the past year overhauling the company, cutting 30 percent of its workforce in a bid to save $1 billion and reorganizing the sales and marketing teams. The stock has more than doubled since late September, reflecting growing investor support for the CEO’s strategy and early buzz about the BlackBerry 10.

BlackBerry executives are trying to distinguish their devices from the iPhone and Android smartphones by touting its interface. The touch version of the phone relies on a virtual keyboard that learns where you usually hit the keys, improving typing accuracy over time. Its software also lets users check their email, calendars and other features without leaving the application they’re running — relying on a “hub” approach.

“Whatever you do, you’re always one swipe away from the heart of your activities,” Heins said at Wednesday’s event.

BlackBerry also announced support for the new platform from makers of applications, including the “Angry Birds” game, Microsoft’s Skype and Amazon.com’s Kindle.

The company has about $2.9 billion in cash, giving it enough money to market the new phones aggressively. The Super Bowl ad could cost as much as $4 million, based on prices cited by CBS Corp.

Heins brought Keys on stage during the presentation, where she extolled the new phones. She said she had re-embraced the BlackBerry as a customer after trying other smartphones.

“I kind of broke up with you for something that had a little more bling,” she said. “Now we’re exclusively dating again and I’m very happy.”

That endorsement probably won’t lure buyers to the new phone, Brian Blair, an analyst at Wedge Partners in New York, said in a televised interview on “Bloomberg West.”

“They are going to look at it, and if it is better, people will purchase it,” he said. “I do not think that is going to be the case for this device.”

Emily Chang contributed to this report.

 

http://bangordailynews.com/2013/02/01/business/blackberry-10-debut-dizzles-as-u-s-customers-left-waiting/ printed on December 28, 2014