BlackBerry (the company formerly known as Research in Motion) is reportedly seeing solid demand for its Z10 smartphone and analysts appear to be cautiously optimistic about sales.
Whether cautiously optimistic saves the company remains to be seen. Generally speaking, Wall Street analysts seem to be betting that sales of the Z10 will be strong enough to support an upgrade cycle for the installed base.
The themes so far boil down like this:
- Z10 (review) is in the discussion with Samsung's Galaxy SIII and Apple's iPhone 5 for now.
- There are sell-outs in the U.K.
- Reps are a bit mixed on the device and how it stacks up with the competition.
- The research notes about Z10 sales are based on traction in the U.K. primarily.
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Last week, Jefferies analyst Peter Misek started the optimism parade on Z10 sales. In a research note, he said:
Our initial checks indicate that sales in the UK are off to a strong start. Some stores had lineups out front with widespread sell outs of the White Z10 and limited stock of the Black Z10. Also, our checks indicate that pre-orders in the UAE and Canada have had a solid start. While this is not the crux of our call, these initial data points could provide some relief as many thought that the Z10 was DOA.
Misek also noted that the Z10 was out of stock at Carphone Warehouse in the U.K. and carriers were seeing strong demand. Misek followed up his first note on Monday with his checks on 85 stores. He added:
Over the weekend and continuing into today it seems that most stores are selling a couple a day with about 1-3 left in stock. Ongoing replenishment shipments (every day or every other day) are broadly expected to maintain those stocking levels. After an initial surge in demand for the white model, it now appears that the black model is selling better.
The bet is that BlackBerry's staggered rollout will ultimately gain traction.
Not all analysts are upbeat about BlackBerry's sales, but do note that the launch wasn't a train wreck. Brian Modoff, an analyst at Deutsche Bank, said:
We conducted a survey of 30 carrier stores in the UK to gauge the progress of Blackberry’s Z10 sales over the weekend. The early signs indicate that the carriers did not promote the device and more importantly, it appears that sales reps were not completely educated on the merits of the Z10. Every store we called had the Z10 in stock, save one. While we think Blackberry has time to correct this given their staggered launch, the initial signs of this launch do not indicate the strong sales we would like to see.
Modoff's biggest beef is that reps were mixed on whether the Z10 stacked up well with Android and iOS devices. He said that Z10 was often mentioned in the same sentence as a Windows Phone.
And there's the rub. The new BlackBerry devices are a huge improvement and can keep the base. The BlackBerry 10 devices, however, may not land new customers.
GMP Securities analyst Deepak Kaushal said:
We think the Z10 does well to address key functionality valued by loyal BlackBerry subscribers and should drive a solid upgrade cycle. However we see little at this point that will attract subscribers back from competing smartphones.