BlackBerry Z10 sales get off to slow start at AT&T, but more U.S. carrier support coming

Sales of BlackBerry's (NASDAQ:BBRY) flagship Z10 smartphone got off to a relatively slow start over the weekend at AT&T Mobility (NYSE:T) stores, according to analysts and media reports, but Verizon Wireless (NYSE:VZ) and T-Mobile USA will also start selling the phone by the end of the month.

AT&T Mobility BlackBerry Z10

AT&T is featuring the Z10 on its website.

"This morning we visited and called stores to survey early demand for the BlackBerry Z10," said Hudson Square Research analyst Daniel Ernst on Friday. "We found no lines, no signage announcing the launch and clerks told us they had very few pre-orders."

AT&T started taking pre-orders for the Z10 March 12 and began selling it in stores Friday for $199.99 with a two-year contract. The touchscreen Z10 is the leading edge of BlackBerry's attempt to regain market share with its new platform, which has numerous new software features designed to appeal to both existing BlackBerry users and new customers, many of whom may have switched from BlackBerry to smartphones running Google's (NASDAQ:GOOG) Android and Apple's (NASDAQ:AAPL) iOS. 

According to the Wall Street Journal, when a customer asked to see the Z10 at an AT&T store in downtown San Francisco, a retail sales representative had to get the device from the back. The Z10 was not put on display at the store's opening because of trouble in setting it up, a store employee said, according to the Journal.

A BlackBerry spokeswoman did not immediately have a comment. An AT&T spokesman declined to comment.

There are several reasons for the sluggish traffic. One is that AT&T had been taking pre-orders for 10 days, which might have cut down on lines. Another is that BlackBerry is putting a great deal of emphasis on the enterprise market, which would not necessarily translate into long lines at retail stores. Additionally, the Z10 is not an exclusive device to AT&T, which likely led to less prominent displays at stores.

"I think the U.S. will be a challenge for BlackBerry more so than some of the countries where they have already launched," Morningstar analyst Brian Colello told Reuters. "The momentum for iPhone and Android is too strong here. I still think they can win over some enterprise users, but the U.S. is a country where BlackBerry's brand has been greatly diminished."

Research firm comScore found that BlackBerry captured 6.4 percent of the U.S. market in December 2012, down from 8.4 percent in September 2012.

Other analysts were more optimistic. "Our conversations with store representatives indicated some stores saw good demand while others saw limited traffic though overall discussions support our view that Z10 sales were solid within its target consumer installed base," wrote Wells Fargo analyst Maynard Um. "Based on units received by each AT&T store we checked, we believe Z10 shipments could be above our 115k units per launch carrier assumption we initially calculated for the February quarter. This excludes shipments to retailers such as Best Buy, which we believe also saw solid sales."

BlackBerry CMO Frank Boulben told FierceWireless Friday that the company is confident in the support it will receive in terms of marketing at the retail sales level from U.S. carriers. BlackBerry's own TV commercials for the Z10 started airing this weekend and commercials from carriers will be coming in the next few weeks.

"You need a very comprehensive training effort and I'm pleased to report we've done our most comprehensive training program ever with the U.S. carriers," Boulben said.

BlackBerry is also doing something aggressive in its "real-time marketing campaign." According to Forbes, BlackBerry has been working with advertising agency BBDO and several digital agencies from within Publicis group like Razorfish on a campaign to "take over" consumers' PC desktops and iPhone and Android screens to showcase specific features of BB10. The mobile takeovers will start this week.

"I expect [buyers coming from other platforms] to be a substantial minority of sales in every market and I don't see why the U.S. would be any different," Boulben noted to Forbes.

For more:
- see this Reuters article
- see this WSJ article (sub. req.)
- see this separate WSJ article (sub. req.)
- see this Forbes article
- see this ZDNet article

Related Articles:
BlackBerry 10 lands in U.S. as AT&T begins selling Z10
BlackBerry wins order for 1M phones, touts new security features for Android, iOS
Report: Sprint to offer touchscreen BlackBerry 10 phone later this year
AT&T, Verizon to sell BlackBerry Z10 for $199, T-Mobile prices it at $249
Sprint will not sell flagship BlackBerry Z10 smartphone
BlackBerry seeing one-third of BB10 users switch over from other platforms

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