BlackBerry Ltd (BBRY) Pricing Strategy Failing In India

BlackBerryjieyirain / Pixabay

BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB)’s pricing strategy seems to be failing in India, which is perceived as one of the most important markets for the company, believe analysts. The strategy of the Canadian firm to give a premium price tag to its devices appears to have backfired as users have flocked to low cost Android devices.

BlackBerry price cuts in India

BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB), which was the market leader, now holds just 0.2% share in the Indian market as of December 2013 versus 4.3% in December 2012, according to data from research firm IDC.  In India, which is a highly price-sensitive and competitive market, BlackBerry should have priced its devices lower or should have offered a larger portfolio of devices with all price ranges, believe analysts.

In India, BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) offered its Z10 for the Rs 43,990 (approx $700), which was much higher than the expectations. Later in September 2013, the smartphone maker slashed the Z10’s price to Rs 29,990 (approx $500) and again on February 25, this year, lowered the price to Rs 17,990 (approx $300) under a limited time offer.  Apart from Z10, the company also lowered the price of other devices like the Z30 and Q10.

In its defense, the company said that the strengthening of the rupee against the US dollar allowed the company to lower the prices; however, BlackBerry also admitted that higher levels of inventory are partially responsible.

CEO pleased; analysts not so much

For the latest quarter, BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) posted a less than expected loss of -$0.08 per shares versus the CIBC analyst’s estimate of -$1.04. According to CIBC analysts Todd Coupland and Robin Manson, the “material surprises” in the earnings report card were operating cost cuts of $265 million, channel inventory of 2.1 million, which is still being sold off, and BES 12 not being available until November 2014.

BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) CEO John Chen was quite optimistic after the company’s latest financial results last week. However, some of the analysts were not so pleased and questioned the future prospects of the company.

In a note on Monday, Radio Free Mobile founder Richard Windsor said, “The problem remains unchanged in that there is no room left for BlackBerry.” According to the analyst, the installed base is the only asset that the company is left with, and that too is evaporating fast. “I continue to believe the only real future for BlackBerry is a break-up,” Windsor said.

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About the Author

Aman Jain
Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at [email protected]

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