The Canadian handset maker is faced with myriad barriers in the Chinese market, Tactful strategy needed.
Blackberry – formerly known as Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) – has, for the past several months, received bullish remarks from a wide section of analysts. As we reported at the beginning of February, Blackberry’s new BB10 started off with overwhelming demand in Canada. Although critics advanced an argument that the perceived demand was brought about by supply constraints, subsequent reports have shown that Blackberry is indeed getting some of its old luster back.
Amid the renewed bullishness, discussions relating to Blackberry have seemed to revolve around a BB10 launch in China. Already, Blackberry has set foot in Asia – as demonstrated by the BB10 India launch earlier in the week- and reports from last week suggest that it could launch in China a few months from now. With China being the biggest mobile market in the world, a lot is at stake. Blackberry will need a transformational strategy in order to avert the endless challenges that the potent, yet elusive, Chinese market presents.
Pricing will be a key issue
The first BB10 device launched three days ago in India was priced at $800. Going with the assumption that the Asian price level will revolve around $800, one can’t help but ponder whether the BB10 will truly filter through the Chinese market.
The $800 price tag goes above the 5000 Yuan mark. This will admittedly make the BB10 one of the most expensive phones in the Chinese market. Experts say that more than 60 percent of 3G smartphones in China will be priced below 1,000 ($160) Yuan in the forthcoming year.
China’s warm gravitation toward budget offerings can be overtly demonstrated by Chinese handset maker Xiaomi. Currently one of the big wigs in China, Xiaomi’s meteoric rise in the industry was largely fuelled by its 2,011 Mi-One smartphone. Priced at 1999 Yuan ($320), it caught the market by storm and drove Xiaomi to the top.
A large section of Chinese consumers have an inherent gravitation toward budget smartphones. Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) will therefore have to face an undeniably uphill task of convincing consumers to dip deeper- almost 5 times deeper on average- into their pockets.
Enterprise angle will work against it
In addition to the whole pricing issue, Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) (now Blackberry) will have to root out the whole corporate-skewed image it has worked so hard to build. A large section of Chinese consumers have a slant toward trendy and fun smartphones; a smartphone that extends the best of social media, games and entertainment. As such, Blackberry’s association with enterprise may work against it in this market.
In conclusion, Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) will need an outside-the-box solution in order to get a grasp of China. With reports showing that it had less than one percent market share toward the fall of 2012, the Canadian handset maker will have to change every variable and paradigm it uses in making decisions; it will need a decisive and transformational strategy.