New BlackBerrys Face Many Challenges
TORONTO (CP) -- Several months ago the smartphone industry was preparing for an all-out brawl over technology and innovation, but a knockout device hasn't hit the market yet and some say that could give BlackBerry an opportunity.
The Waterloo, Ont.-based company could have been pulverized earlier this year by competitors after it unveiled its two new smartphones, which were considered more catchup than game-changer.
But a mix of fortunate timing and a lacklustre slate of new phones from other developers has given the company a bit of a boost in its quest to return to the game, likely as the No. 3 smartphone player.
"We thought we were going to get more competition in the market, but we haven't seen that," said Mark Tauschek, senior research analyst with InfoTech Research Group
"The smartphone market has kind of levelled off. You don't see the sort of innovation that you did in the first few years after the first iPhone."
Already this year, sales of the Windows Phone have been considered a bust while the consensus on Samsung's Galaxy S4 suggests it's only a modest improvement from the previous model. Apple isn't likely to announce another version of the iPhone until later this year and it isn't expected to revolutionize the industry either.
On Wednesday, BlackBerry launches the keyboard version of its latest phones on the BlackBerry 10 operating system in Canada.
The BlackBerry Q10 marks a throwback to the company's more traditional smartphones, and raises questions about whether the company could deliver respectable sales numbers for a belated refresh of something that many consumers find so familiar. Business users, who use their phone mostly for work, are considered the biggest customer of the device.
"Because the market has sort of levelled off a little bit in terms of innovation, it puts BlackBerry in a better position to capitalize on that," said Tauschek.
The Q10 phone arrived in the U.K. over the weekend under an exclusive launch at department store Selfridges, and early sales are encouraging, according to anecdotal evidence.
While the company hasn't released official data, BlackBerry chief executive Thorsten Heins told Bloomberg TV on Monday that he expected the Q10 device to sell "several tens of millions" of units.
After Heins made the comments the company's shares closed ahead 3.5 per cent, or 53 cents, to $15.78 on the Toronto Stock Exchange.
RBC Capital Markets analyst Mark Sue said the "modest crowds" in the U.K. prove there was "a bit of pent up demand for the new Q10."
"With reviewers uniformly praising the Q10's physical keyboard, fast browser, and modern user interface, the Q10 is likely to appeal to the numerous existing enterprise and message-centric BlackBerry users," Sue wrote in a note.
But he also said that momentum for sales of the BlackBerry Z10 touchscreen phone is starting to subside from its initial February launch in most markets.
Sue has "shifted forward" his estimates for stronger BlackBerry 10 phone sales in the current quarter to 2.75 million, up from two million, though he is maintaining full-year estimates at 10.7 million, which suggests that the phone's loyal users will buy the device soon after its release.
Analysts have suggested that sales of the BlackBerry Z10 are falling in some markets, and never really took off in the United States where it hit stores last month.
Wedge Partners analyst Brian Blair believes that production expectations have been pulled back by BlackBerry for the rest of this year.
"We estimate that the company may have trimmed Z10 production units by 4-6 million units for the year," he wrote.
"If accurate, these cuts would mark a meaningful hit to Blackberry's own expectations and full year units will come in well below consensus views."
BlackBerry will face another round of questions about its future next month during BlackBerry Live, its annual gathering of thousands of developers, analyst and other industry players at a hotel complex in Orlando, Fla.
The market is rapidly changing once again, with technology like smartwatches that operate like phones, and Google Glass, a computer that users wear like a pair of glasses.
"It's going to be really hard for them to even keep up with the innovation that's going on today," said Tauschek.
"Unless they are very agile and nimble, they'll quickly get left behind again because this is going to be a year of some interesting innovations."