Dropping Prices So Soon, BlackBerry?

Less than four months ago, the folks at BlackBerry  (NASDAQ: BBRY  ) were nervously anticipating the U.S. launch of their first BB10-enabled smartphone in the touchscreen-only BlackBerry Z10. Then, late last month, the company also launched its second BB10-enabled device in the U.S. with the physical keyboard-touting BlackBerry Q10.

With both devices originally priced at $199 with a two-year contract at Verizon or AT&T -- on par with the price of Apple's (NASDAQ: AAPL  ) iPhone 5 smartphones -- BlackBerry bulls had hoped the new devices would serve as a solid starting point to help their stock regain at least some of its former glory in its well-publicized fight back to sustained profitability.

Unfortunately, shares of BlackBerry suffered a one-day drop of more than 27% a few weeks ago, after the company posted dismal quarterly earnings, in which they announced that just 2.7 million of the 6.8 million total smartphone units shipped last quarter featured its BB10 operating system.

Money talks
And though BlackBerry's CEO begged for patience at last week's shareholder meeting, effectively telling analysts at the time that none of the metrics they're using to gauge BlackBerry's success actually show how it could create shareholder value over the long term, The Wall Street Journal this week astutely noticed that prices for the Z10 are already falling.

Sure enough, if you take a peek at your local Verizon or AT&T store, you'll find the Z10's contract price has just been cut in half to $99.

What's more, consumers who take the time to look around will find that Amazon.com is now offering the Z10 with a two-year AT&T contract for just a penny, and Best Buy is now willing to give it to you for free. 

And while the Q10 still goes for $199 when purchased directly through Verizon and AT&T, you can also pick it up from Amazon.com with a Verizon contract for a mere $99.

For reference, Apple's iPhone 5, which was launched in September, 2012, is still $199 at all major carriers, and the older iPhone 4S, launched in October, 2011, still sells for $99. Then again, Apple's even older iPhone 4, like the Z10, can be had for free with a contract through Verizon or AT&T, but that's no surprise since the iPhone 4 was released more than three years ago -- and remember, as I wrote back in April, around half of the 4 million iPhones Verizon sold last quarter were either Apple's iPhone 4 or 4S models. 

Call me crazy, but that certainly doesn't seem to bode well for those hoping BlackBerry's Z10 and Q10 sales would pick up going forward, especially considering Apple may be gearing up to roll out its next line of iDevices this fall, the plans for which could very well include a cheaper version of the iPhone to grab market share outside Apple's existing wheelhouse in higher-end devices.

Of course, The Wall Street Journal also noted that a BlackBerry spokesman already issued a statement regarding the new prices, saying that "now is the right time to adjust the price" of the Z10 as BlackBerry readies its next round of BB10 devices.

In addition, the statement elaborated: "It's part of life cycle management to tier the pricing for current devices to make room for the next ones. This is just one element of our marketing strategy that will ensure we remain aggressive in a very competitive market landscape."

Competitive indeed.

But however they try to spin it, I'm sure I'm not alone in remaining unconvinced that this is nothing more than a reaction to a continuation of worsening sales results for BlackBerry.

Foolish takeaway
Sure, BlackBerry CEO Thorsten Heins rightly pointed out last week that BlackBerry is more than just a device company, and a there's a chance the BlackBerry Messenger platform could provide some value even as the company's smartphone sales wane. However, as fellow Fool Evan Niu noted yesterday, the success of BBM is far from assured, as it has plenty of competition of its own.

In the end, while BlackBerry's $3.1 billion cash balance offers a compelling reason to buy given the company's $4.8 market capitalization, all that dough won't mean much over the long run if BlackBerry can't stem its market-share losses soon.

Truth be told, if you really want to get in on the smartphone phenomenon, one company sits at the crossroads of smartphone technology as we know it. It's not your typical household name, either. In fact, you've probably never even heard of it. But it stands to reap massive profits no mater who ultimately wins the smartphone war. To find out what it is, click here to access the "One Stock You Must Buy Before the iPhone-Android War Escalates Any Further."


Read/Post Comments (9) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 16, 2013, at 11:16 PM, Grumpycat wrote:

    This just in:

    The iphone 5 is now just 1/2 price $99 w/c at Walmart and other outlets. Also, Verizon has so many that they're trying to unload but can't they will owe Apple billions.

    It's not just Blackberry.

  • Report this Comment On July 17, 2013, at 1:00 AM, le2o wrote:

    OMG really Sherlock? Everyone's waiting for the iPhone 5S. Why buy the iP5?

  • Report this Comment On July 17, 2013, at 2:33 AM, Rockthebest wrote:

    Hehe 5S! an extra column of icons? Lol

    iPhone 5s is doomed or in another word DOA.

    Trust me.

  • Report this Comment On July 17, 2013, at 3:42 AM, melegross wrote:

    We should trust you Rockthebest? Why, we don't even know if you're an adult! You don't post like one.

  • Report this Comment On July 17, 2013, at 9:25 AM, infektu wrote:

    $99 is 50% off the face price, but 15-20% off the whole price.

    The S4 is also cheaper by some $50 bucks already, and it was released in May.

    This is not to say that selling the Z10 is smooth, but just to keep things in perspective.

  • Report this Comment On July 17, 2013, at 11:08 AM, Rockthebest wrote:

    @melegross. And u r an adult urself? Ur reply sure sounds like a moron with grade 6 education.

  • Report this Comment On July 17, 2013, at 5:52 PM, le2o wrote:

    @melegross

    Ignore this RIMtard. Rockthetard just want attention.

  • Report this Comment On July 19, 2013, at 12:40 PM, MPF94025 wrote:

    The news today is full of doom and gloom for Apple, Microsoft (and direct link to Nokia/Lumia) due to lack of desire for it's new mobile OS products, and Samsung and HTC as Android devices have all, ahead of earnings, released reports indicating that they will miss estimates.

    There is a broader process taking place here namely due to lack of major innovation in devices that make users want to purchase them. Most Samsung and iOS purchases are "me too" sales.

    BBRY is introducing a new OS that could prove just as unfixable as Win 8, or we could look back and wonder why no one saw the potential importance of a brand new OS, BB10 OS just stretching its legs. Anyone thinking that BBRY has shown its best face, and is using that argument for the death of BBRY, is not thinking through things. The advertising campaign was a dog (the only campaign worse was the Microsoft dancing fools, though they were entertaining), marketing predictions were way off, T Heins vacillated between irrational exuberance and doom and gloom, and there are clearly growing pains to the new OS that are widely reported.

    Over the past month the ad company has been fired, and individuals in leadership posts for many of the missteps at BBRY are gone. Developers are working long hours to address issues. The BBRY community is rallying. A surprising number of new apps are coming along. As a concurrent user of an iPhone 5 with 150 apps, this has been a pleasant surprise.

    We also have the entire sector of BES10 and Secure Work Space monetization that other platforms lack.

    There are many pieces to the smartphone sector. Writing articles solely based on price drops is (Motley) foolish. Yesterday, my inbox had an offer for $200 off a Samsung tablet from AT&T.

    Microsoft got spanked today, and there is good probability that Samsung, HTC, and Apple are due for the same in the coming month. The entire sector is in a vortex and it is hard to predict how things will look 3 to 6 months from now.

  • Report this Comment On July 20, 2013, at 9:46 AM, MPF94025 wrote:

    Also, Samsung Galaxy S4 is $149 at CostCo, while S3 is $29......

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