BlackBerry can ride Q10 in first quarter, but sell-through sketchy

BlackBerry can ride Q10 in first quarter, but sell-through sketchy

Summary: BlackBerry is likely to deliver a solid first quarter, according to analysts. But BlackBerry's success with the BlackBerry 10 platform may ride with the ultimate sell through of the Q10 and Z10.

SHARE:

BlackBerry's first quarter is expected to be strong as the company filled its channel with Q10 devices, but analysts are wary about how those devices will sell in future quarters.

Simply put, the jury is out on Q10 and its prospects going forward. Some analysts did surveys that revealed lackluster U.S. demand. However, the Q10 does court the die-hard Qwerty-BlackBerry fan. In addition, the Q10 may do better in emerging markets and internationally.

Wall Street is expecting BlackBerry to report first quarter earnings of 6 cents a share on revenue of $3.36 billion. National Bank analyst Kris Thompson is projecting that BlackBerry will ship 8.17 million smartphones with 1.25 million BlackBerry 10 devices going to the enterprise and 2.75 million sold to consumers. BlackBerry is expected to sell 4.17 million BlackBerry 10 devices.

It's worth noting that Thompson is a bit more optimistic than consensus estimates.

bbry062713

 

Like all things BlackBerry, there are many prognosticators at the extremes, but few who are neutral to middle-of-the-road.

More: BlackBerry launches Secure Work Space for Android, iOS | BlackBerry Q10: Hardware QWERTY and long battery life have a place in mobile | BlackBerry quietly launches BES 10.1 in the cloud | New BlackBerry full-touch A10 on the horizon, BBM to come preloaded on rival handsets? | Two-thirds of BlackBerry converts tempted to return by Q10 | How BlackBerry is riding iOS and Android to power its comeback

Consider the following outlooks for BlackBerry's quarter. Deutsche Bank analyst Brian Modoff said:

We conducted a round of carrier store checks on the Q10 during its first weekend of sales in the US. In total, we surveyed 60 stores — 20 AT&T and 40 Verizon — and the results were broadly poor. In short, it was the most negative survey result we have tallied in all five that we have completed. We think the results of this survey align with our longer-term view of the company.

Modoff added that the Q10 wasn't outselling the Z10 in most cases. Cowen & Co. analyst Matthew Hoffman also found weak demand for the Q10.

Despite those worries, Modoff said that BlackBerry's first quarter may surprise to the upside.

Jefferies analyst Peter Misek is more optimistic about BlackBerry. Misek is focusing on enterprise demand for the Q10 as well as the company's software focused on mobile device management. Misek said:

Standard pricing for Secure Work Place (the BYOD offering) is $99/year/user; combined with bulk discounts and data savings, we think this is a very attractive option for companies. BES 10 remains a free upgrade for existing BlackBerry enterprise customers. The standard pricing for BBRY devices is $59 per year (or ~$5/month)... We were pleased with our trial of BES 10.1 on our iPhone and a beta of a new desktop VPN service. We believe enterprises could save $3-$10/month/user on data charges as email traffic is especially compressed. We estimate that there are currently 18K BES 10 servers (vs. 12K a couple months ago).

Misek has a point about BlackBerry's mobile device management potential, but those positives will quickly be negated if the company finds itself with a BlackBerry 10 device inventory issue due to weak demand.

Hoffman said BlackBerry 10 devices may lack staying power. He said in a research note:

Our checks show there have been two issues with the BB10 OS that we believe could gate sell-through and lead to lower-than-consensus August results. We have spoken with multiple industry participants over the past month about BB10 and we have two primary take-aways: 1) BB10's limited app support (no Instagram or Netflix, to cite a few) is creating a higher percentage of consumers that are not satisfied with the BB10 experience than some dealers are seeing with Android or iOS and 2) the BB10 OS as adapted on the Q10 is confusing.

Add it up and BlackBerry's first quarter is almost besides the point. BlackBerry will field a lot of questions about the second quarter and the company's future will depend on consumer sell-through.

Topics: Bring Your Own Device, Mobility, BlackBerry, Smartphones

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Talkback

9 comments
Log in or register to join the discussion
  • May

    "..Hoffman said BlackBerry 10 devices may lack staying power..."

    Yes, may. A lot of things may happen. Anything to drive down the stock price.
    Susan Antony
  • The Q5 should do even better

    It's out now.
    sagec
  • I was a rabid RIM fan

    Until they back-peddled on the tablet and left us all hanging. Way to support your loyal customers! I am now contemplating an Android phone since the iPhone I have drops more calls than a 1990's cell phone. I guess most people play Angry Birds while they wait for the phone to work.
    happyharry_z
  • Just let it die...

    ...so we can move on. BB had a good run but it's time to let them fade away.
    Turismo
    • bb will fail 1-2yrs max

      Totally agree. They have nothing to offer for the consumer which is the majority of market which instead is based for business people instead which is just not enough when competition is high. Will end up just like palm os and hp web os.
      ITGuy000
    • Windows Phone: just let it die...

      ...so we can move on. Microsoft had a good run but it's time to let them fade away.
      Troll Hunter J
  • I have netflix on my z10 and it works

    But I had to side-load it, which is pretty easy. If 10.2 gets out it will have jelly-bean support. BB10 does not just support java apps written for android but most of the other native apps too. It is just limited to ICS.

    Hopefully enough Q10s sell so that Netflix and Instagram write native apps for the blackberry. I am seeing a lot of nice game titles being written for BB10. In general, I am quite satisfied with the available apps.

    The phone is a great phone, easier to navigate than android or apple according to my kids. The hardware is pretty decent though not up to S4 or HTC one.
    MeMyselfAndI_z
  • Doom & Gloom

    Dignan has not had anything but doom & gloom for Blackberry. I have read polls etc that say very different than anything he quotes.

    Both the Z & Q are getting rave reviews. It appears to me it is the carriers especially in the US that are the drag. It's the same for anything - go into a store that is asupose to have an item and get "We don't sell many of those." Well I want to buy one. "Oh we don't have any!" Dah! carriers can't sell them if they don't have them.
    TrajMag
  • Q10 is excellent for doing real work

    I'm puzzled by the argument that there are only two viable phone platforms because of the existing app marketplace. I purchased my first Blackberry (the Q10) about a week ago, having used the iPhone, Samsung, and Palm products in the past. The Q10 is definitely worth trying. The physical keyboard is a huge improvement over Apple's virtual keyboard, allowing one to do real work (writing long e-mails and notes). I can easily touch-type on the phone with minimal mistakes. The space bar has more play than I would like, but otherwise the tactile feedback is excellent. Email, contacts, calendar, tasks and notes all sync with Exchange. The multi-tasking actually makes sense, and the UI provides easy access and tracking of multiple e-mail, messaging, and Linked In accounts. Call quality is very good. It would be nice to have more apps (especially when using the phone for play), but the core functionality of the Q10 is first rate.
    rbrx24