BlackBerry's Heins: Initial BlackBerry 10 response is 'beyond expectations'
BlackBerry (NASDAQ:BBRY) CEO Thorsten Heins said he remains disappointed that the company's new BlackBerry 10 phones won't hit U.S. shores until mid-March, but he said early sales of the company's Z10 smartphone in the United Kingdom are blowing past what the firm had expected. The comments fit with early reports of the strong demand for the touchscreen Z10 in the United Kingdom, one of BlackBerry's largest markets.
"It's beyond expectations," Heins said in an interview with the AP. "White is sold out already. The black is hard to stock up again. It's very encouraging. I won't share the number because I need to verify it, but we are getting a substantial number of users moving from other platforms to BlackBerry. That is an interesting data point."
Heins said he knows that BlackBerry needs to regain relevance and market share in the U.S. market in order to be successful. The company's U.S. market share plunged from a peak of 46 percent of the U.S. handset market in 2008 to 2 percent in 2012. "We need to win back market share to be relevant," Heins said. "We have to be aggressive in the U.S. market."
All four Tier 1 U.S. carriers will support RIM's new BlackBerry 10. Verizon Wireless (NYSE:VZ) said it will launch the Z10 for $199.99 with a two-year contract, but did not give a release date. Verizon is the only U.S. carrier to announce firm pricing for a BlackBerry 10 smartphone so far.
Still, the strong reaction in the United Kingdom should be encouraging to BlackBerry, analysts said. "We have grown more confident in the likely success of the BlackBerry 10 launch, supported by low channel inventories, strong operator support and material pent-up demand," said Sanford C. Bernstein analyst Pierre Ferragu, according to AllThingsD. "Initial feedback we have received from distributors on the first days of sales is particularly positive."
Bernstein upgraded its rating on BlackBerry's stock. "We upgrade BlackBerry to outperform today as we believe BB 10 is set for a strong launch," Ferragu wrote in a research note. "Even if the long-term prospects for the platform are very uncertain, we believe all is in place for BlackBerry 10 to enjoy a great debut."
Barclays' Jeff Kvaal also noted strong demand in U.K. retail channels for the Z10. "Our recent store checks suggest that initial sales of the BlackBerry Z10 are off to a solid, if not healthy start in the U.K.," he wrote. "We believe this is a function of strong sell-through versus limited sell-in. … We believe BlackBerry's Z10 is off to a better start than the [Nokia (NYSE:NOK)] Lumia 920. The solid initial demand is a positive step in our view, despite the number of challenges that remain."
In other BlackBerry news, the company announced that it is working with Trend Micro to expand the protection it already provides against malware and privacy issues related to third-party applications. With the cloud-based Trend Micro Mobile Application Reputation Service, both current and new applications submitted to the BlackBerry World application storefront will be scanned for potential malicious behavior.
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