After taking so long to transition to its next-gen OS platform, the company formerly known as RIM has an awful lot riding on its first BlackBerry 10 handset, the Z10. The handset launched at the end of January in the U.K. and early February in Canada (and is due to make its official U.S. debut this month). Not a great sign, then, that some U.K. phone retailers appear to be cutting the price of Z10 tariffs, a mere month after launch — suggesting demand isn’t as strong as hoped, and that the device isn’t as competitive against the high end of Android and iOS as BlackBerry needs it to be.
Both Carphone Warehouse and Vodafone have slashed tariffs, according to the Telegraph. It also appears that Phones 4u is offering cheaper deals now. BB10 is BlackBerry’s attempt to turn around its sliding smartphone fortunes by offering a device to compete with the likes of the iPhone and Samsung’s Galaxy SIII. BlackBerry’s global smartphone marketshare fell to just 3.5 per cent in Q4 2012, according to analyst Gartner, down from 8.8 per cent in Q4 2011, while Samsung and iOS took 52 per cent of all smartphone sales in Q4 2012.
Carphone Warehouse initially priced the BlackBerry Z10 from £36 per month on pay monthly contract, bundling the cost of the handset into that tariff. It is now offering the phone from as little as £29 per month, although that tariff includes a £29 up-front free for the handset. The Telegraph also says Vodafone has introduced a new web-only deal for the Z10, costing £33 per month (this tariff also requires an up-front fee of £129). Phones 4u is also offering the Z10 on a £29 per month contract (again with a £29 charge for the handset), having initially launched the phone on contracts starting at £36 per month. It is also offering even cheaper tariffs, of around £20 per month, but with a much higher up-front fee for the device.
The Telegraph quotes James Faucette, an analyst at Pacific Crest, who said the tariff cuts move the Z10 away from the highest margin segment of the smartphone business. “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,” he said.
BlackBerry has been making a lot of noise about Z10 sales but hasn’t backed up its hype with any hard numbers, saying only that demand had exceeded expectation and that the Z10 is selling in “large numbers“. We’ve reached out to BlackBerry, Carphone Warehouse and Phones 4u for comment on the tariff reductions and will update this story with any response.
Asked how sales were going in the Z10’s launch market, the U.K., at the Mobile World Congress trade show in Barcelona last week, BlackBerry’s U.K. & Ireland MD Rob Orr also shied away from sharing any numbers, saying he was unable to provide much detail ahead of BlackBerry’s quarterly results.
Early sales in the U.K. have been “very positive”, he told TechCrunch, adding: “I’m in a quiet period so I’ll caveat my statement with the fact that our fiscal year ends on [March 1st] and we publish results on the 28th. Regulated from a quiet period perspective I can’t share too much detail but I’m very pleased with the results, the partners are very pleased with the results. Take a look at some of the feedback on Phones 4u’s site or Vodafone’s site are very positive.
“The feedback from our enterprise customers has been brilliant. Really really good. They love what we’ve done with BES 10, they’re aligned with the approach that we’re taking, they’re cracking on with all their internal trials and their user testing and all the stuff that enterprises do before they do mass rollouts. So I’m really pleased. Couldn’t really have asked more from the support I’ve had in the market.”
Expect to get more concrete details on exactly how positive (or not) the BB10 launch has been when the company announces its fiscal Q4 and fiscal full year results at the end of this month.
While the introduction of cheaper monthly tariffs may not help BlackBerry’s bottom line in the long run, it may help to drive a few more Z10 sales in the short term to help buoy up its results. In the mean time, all the vague, non-quantifiable statements aren’t helping dispel the sense that RIM isn’t yet doing enough to dig itself out of the smartphone doldrums.