This year's Super Bowl featured an ad by smartphone maker BlackBerry (BB -1.74%) that cost between $3.8 million and $4 million, according to the latest prices from broadcaster CBS. Despite the seemingly astronomical price tag, many industry experts consider the fee a bargain when compared to the benefit garnered by the companies that get their message out to 100 million viewers. But when the primary viewing audience cannot rush to their local retailer and actually purchase the product being extolled in the spot, you must consider if it really is money well spent.
The delay has been blamed on U.S. wireless carriers, including Verizon (VZ -0.89%) and AT&T, each of which have extensive testing processes that can take months to complete. While there is no set time for a device to clear testing, BlackBerry did not get the new Z10 to U.S. carriers sooner than others, which could have made the launch of the smartphone in its largest market timed more in line with other launches. Given this apparent misstep, whether you are an AFC or NFC fan, BlackBerry looks like Sunday's loser.
Super Bowl economics
Where ads once existed in their brief airing during the big game, they are now the subject of social media discussion and widespread rankings. The hype that a single ad can create goes beyond the initial set of eyeballs that sees it. Even on that metric, by price, there is significant value. Senior editor Derek Thompson of the Atlantic wrote: "On a per-person, per-30-second basis, those numbers suggest that a Super Bowl viewer is worth twice as much as somebody watching The X-Factor or 30 Rock (which can be DVR'd, so the ads can be skipped) -- or 33 percent more valuable than somebody watching a Sunday Night Football game." Even with the perceived value, $4 million is a hefty price for a 30-second spot pushing a product that is not yet available for sale.
Testing, testing... is this thing on?
Once a device is approved by the manufacturer, it is sent to the various carriers for testing on their respective networks. Tests cover checks of battery life, signal strength, call quality, data performance, and heat tolerance. Verizon's Torod Neptune explained: "There's really no typical length of time for a phone to go through testing. We have a rigorous and extensive testing protocol, and how long that process takes depends on the device and the issues we may encounter." He further explained that the process can be protracted in cases when the manufacturer is introducing a new operating system.
When BlackBerry announced the delay in conjunction with the rollout of the new device, the market reacted with predictable annoyance, taking the stock down 17% since the news broke. BlackBerry is in make-or-break territory and is counting on the new Z10 to bring it back to relevance in the smartphone arena. CEO Thorsten Heins, while blaming the carriers for the delay, also acknowledged the basis for the situation: "Verizon, AT&T, Sprint, T-Mobile -- they have to comply with certain rules they are subject to. They're trying to speed it up."
Perhaps more important than the delay itself is what it represents. BlackBerry has been delaying this device for some time, meaning that expectations have been high. The device was supposed to be released as much as a year ago, but the company took the time it needed to make sure the product it took to market would be solid. If the company is unable to manage something as straightforward as the launch of its flagship product, however, how can it be trusted to operate successfully in the future? The Z10 will go on sale in both the U.K. and Canada in early February, but the U.S. launch has been delayed until March.
The 100 million Super Bowl viewers who may be impressed by the new Z10 will be forced to wait a full month before the smartphone hits shelves. Even for those who are willing to consider leaving the comfort of their iOS or Android phone, a month is a long time to wait to even consider a new alternative. If BlackBerry does not rack up considerable sales, its days may be numbered.
A few positives
In the maelstrom of head-shaking that has resulted from yet another misstep from the once market-leader in smartphones, there are a few bright spots. The company clearly understands that it not only must produce a great device, but it must convince consumers to consider it before buying something else. In a recent review, David Pogue of The New York Times said the device was complete, meaning that BlackBerry had covered all the bases to put out a product without any major holes in its functionality.
BlackBerry seems to be its own worst enemy with the way it is managing even the basics. If this is the last misstep, there may be hope, but based on this latest gaffe, I would steer clear of the stock until the Z10 is on shelves and selling well.
