The price of the recently launched smartphone of Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) was reduced by retailers in United Kingdom over the past few days, which indicates that the sales of the new device is weak.
A report from the Telegraph cited that Carphone Warehouse lowered that price of the Blackberry Z10 on the three networks to £29 per month from £36 per month with a free device on a two-year contract. This means consumers will now enjoy a total discount of approximately £160, if they decide to sign for a two years contract.
On the other hand, Vodafone Group Plc (NASDAQ:VOD) is offering a web-only deal for the Blackberry Z10 for £33 per month, the total discount is around £72 during the entire contract. The price reduction only shows that Research in Motion failed to develop and promote the device as a strong competitor against the iOS and Android smartphones.
Based on the survey conducted by Gartner on the worldwide smartphone sales for the fourth quarter, the market share of RResearch In Motion Ltd (NASDAQ:BBRY) (TSE:BB) declined from 8.8 percent to 3.5 percent.
Pacific Crest analyst, James Faucette believed that the price reduction for the Blackberry Z10 is a sign that the flagship device powered by the BB10 operating system is not good enough to help the company recover.
The analysts speculated that the phone carriers decided to cut the price for the Blackberry Z10 because they think it is not a high-end device compared with the iPhone and Galaxy SIII.
“The case for [BlackBerry’s] recovery has been that in the long run, the company could return to selling high-end handsets that would feature enough profitability that handset profits could more than offset long-term declines in the highly profitable service business,” said Faucette.
He also added, “We believe that meaningful price cuts so soon after launch while probably at the initial discretion of the carriers, is likely to relegate the Z10 to being a mid-tier device with very low gross margins.”
Credit Suisse analysts believed that Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB)’s Blackberry Z10 device failed to impress and it has a limited ability to gain traction in the smartphone market.
On the other hand, a related report from TechCrunch cited a statement from Rob Orr, managing director of BlackBerry U.K. & Ireland that early sales for the Blackberry Z10 has been very positive. According to him, the results were pleasing and the feedbacks from enterprise customers were very good.