BlackBerry Ltd (BBRY) Shouldn’t Pin High Hopes From Z3

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BlackBerry Ltd (BBRY) Shouldn’t Pin High Hopes From Z3
jieyirain / Pixabay

BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) has finally launched its low-cost Z3 smartphone in Indonesia. While the ailing company claims that Z3 sold out on first day of its launch in Jakarta, a report by AFP says that only a few dozen people had queued up in one of the biggest shopping malls in Jakarta to buy the new device, indicating a lukewarm response. Anyway, actual images of crowd lined up to buy the budget smartphone suggest that demand was quite good.

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BlackBerry shifting focus to software and services

Indonesia is one of the last bastions of BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB). With a price tag of $190, the Canadian company is hoping to attract consumers once again. This new smartphone will be the acid test for BlackBerry even in Indonesia because its fortunes have changed in the past few years. Its market share in Indonesia has declined from 43% in 2011 to less than 4% in the first quarter of this year, according to research firm IDC.

The Z3 is the first BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) device designed and produced by Foxconn Technology Co Ltd (TPE:2354). The John Chen-led company’s partnership with Foxconn signals a new path for BlackBerry. The Waterloo-based company’s smartphone sales have been declining rapidly. In the latest quarter, BlackBerry sold just 1.3 million devices, down from 6 million units in the same quarter last year. But the phone business is still vital to the company’s business as John Chen shifts focus to software and services.

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Without the handset business, BlackBerry will be a very small company

John Chen tried to buy himself some time with the Foxconn Technology Co Ltd (TPE:2354) deal, says the New York Times. ABI Research analyst Nick Spencer said that Chen is sustaining the handset business as he sorts out the future path. But the phone business, BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) will be a very small company. During the latest quarter, the hardware business accounted for more than 37% of its $976 million revenues.

Though Foxconn Technology Co Ltd (TPE:2354) can’t reverse the decline in BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB)’s popularity, it does eliminate several financial risks for the Canadian company. Last year, a big chunk of the company’s $5.9 billion loss was due to writing off unsold devices and phone components. Now Foxconn assumes that risk.

Z3 unlikely to revive BlackBerry’s fortunes

IDC analyst Michael Palma says that BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) will benefit from Foxconn Technology Co Ltd (TPE:2354)’s buying power, and have a clear idea of the cost of a device right from the outset. The Taiwanese company has also shortened the development cycle. BlackBerry is notorious for being slow to develop new handsets. But Foxconn took just four months to design and develop Z3.

Analysts aren’t really optimistic about BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB)’s future in Indonesia, even after the launch of Z3. Its BBM is wildly popular in the country. But once BlackBerry made BBM available on Android, many Indonesian consumers began using BBM for Android rather than buying a new BlackBerry device. Jakarta-based independent analyst Ruby Alamsyah says that even Z3’s lower cost may not be enough. Many Android devices are available at $90, less than half the price of Z3. 

BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) shares inched up 0.34% to $7.28 at 10:26 AM EDT on Monday.

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8 COMMENTS

  1. re: how do we know

    We don’t know, that’s my point. How can you criticize their sales without any real sales data?

    re: why doesn’t BlackBerry present evidence of this and show some numbers?

    They are not selling the phone, a store in the mall is, you should ask them. Besides, the phone has been on sale less than a week, demanding sales figures that soon is completely unrealistic.

    Blackberry provides sales figures in quarterly reports, whether carriers and mall outlet stores provides sales figures is entirely up to them. Although that main mall in Jakarta is supposedly displaying a live sales figure, supposedly over 1200 at the moment…which sounds pretty good, wouldnt you agree?

  2. Charlie how do we know that perhaps only 200 preorders were allowed just so BlackBerry would be able to state “sold out” why doesn’t BlackBerry present evidence of this and show some numbers?

  3. Just like the z10. It’s going to flop, this is due to designing a handset that’s already plentiful in the market place and at half price. And that’s not all those half price Android phones comes with a smart Android OS. As for launching a physical type (classic) keyboard handset next it will flop also as the q10 did. Still to this day BlackBerry shows no interests in taking part in the real next generation smartphone, that the consumer would be willing to pay more then double for. The real next generation smartphone would surpass the popularity of the upcoming iphone 6. If Blackberry were to investigate this claim, SP would double on the hype alone of what’s next. BlackBerry still not willing to try anything to save this company, what a shame.

  4. re:BlackBerry Ltd (BBRY) Shouldn’t Pin High Hopes From Z3

    What else would they pin on a new mid range phone, would they pin their ‘despair’. Lame article.

    They sold out and you provided no evidence to warrant more of the same tired blackberry bashing we’ve heard the past year.

  5. I agree with the article. Blackberry does not plan to stay in head set business.
    they do a very little marketing on Z3. I don’t see any posters on front of any smartphone stores ( I see plenty of samsung’s posters). The only posters is on the floor of Blackberry official store, it is a sticker says Z3 on the floor, that’s it.
    That’s how serious they are marketing the device.

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