BlackBerry (NASDAQ:BBRY), as it considers various strategic options, including a possible sale, has been banking on strong sales of its BlackBerry 10 smartphones to help revive the company's fortunes. However, according to a report in the Wall Street Journal, sales of one of the company's flagship products, the Q10 with the firm's iconic physical keyboard, are in the gutter.
The report, which cited unnamed carrier executives and retailers in the United States and Canada, said sales of the Q10 are "dismal." BlackBerry pushed the Q10 out to the market in the late spring and early summer, after the touchscreen Z10, since it argued it could afford to wait because of BlackBerry users' love of the physical keyboard. BlackBerry CEO Thorsten Heins also blamed the delay on carrier testing and approvals. Some carriers, such as Sprint (NYSE:S), still haven't launched the phone (Sprint will do so tomorrow for $200 with a two-year contract). Verizon Wireless (NYSE:VZ), AT&T Mobility (NYSE:T) and T-Mobile US (NYSE:TMUS) have been selling the Q10 in the U.S. market for several weeks.
BlackBerry said it sold 6.8 million smartphones in its fiscal first quarter, which ended June 1, up from 6 million in the fiscal fourth quarter but down from 7.8 million in the year-ago period. The company said it shipped 2.7 million BlackBerry 10 devices in the fiscal first quarter; the company did not break out specific sales figures for different models.
A BlackBerry spokeswoman declined to comment. The company is also in a quiet period ahead of announcing earnings on Sept. 27. A BlackBerry spokesman pointed out to the Journal that the company inked recent agreements to carry BB10 devices with customers including Univision Communications, the Department of Defense and ADP.
Heins played up expectations for the Q10 this spring. "We have very, very good first signs already after the launch in the UK," Heins said in an April interview with Bloomberg Television. "This is going into the installed base of more than 70 million BlackBerry users so we have quite some expectations. We expect several tens of millions of units."
Since then, Heins has acknowledged that the company has faced difficulties. In July, at the company's annual investor meeting, Heins disagreed with an investor's characterization that the U.S. launch of BlackBerry 10 had been "a disaster," but he admitted that the U.S. market is very competitive.
However, so far sales have failed to meet expectations, the report said. "I think we'd all say that the Q10, the one we all thought was going to be the savior, just hit the ground and died," an unnamed executive at a Canadian carrier said. "It didn't drive the numbers that anybody expected."
The report also said used phone dealers are not reporting the flood of old BlackBerrys that typically arrive when new models are unveiled. Jeff Trachsel, CMO at NextWorth, which buys used electronics, said both the Z10 and Q10 launches were "nonevents" from a trade-in perspective.
Verizon and AT&T declined to comment, but Sprint spokeswoman Michelle Leff Mermelstein told the Journal there is interest in the Q10, especially among business customers. "We get asked quite often about phones with a Qwerty keyboard," she said. "So we know there is a demand for it."
The continued uncertainty about the future of BlackBerry's business could also give carriers, developers and consumers pause as they wait to see (and buy), looking for signs of whether the BlackBerry ecosystem will survive long-term.
- see this WSJ article (sub. req.)
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