It would seem that struggling former smartphone star BlackBerry (BBRY +2.58%) is making a last-ditch attempt to regain relevance as a premium smartphone vendor.
The company has apparently begun taking preorders for a device known as the BlackBerry Priv. The BlackBerry Priv looks pretty reasonable on paper: a Qualcomm (QCOM +1.17%) Snapdragon 808 processor, a high-resolution AMOLED display, large battery, and even a physical keyboard.
And -- get this -- it even runs Alphabet's (GOOG +3.56%) (GOOGL +3.57%) hugely popular Android operating system. All of this can be had for a mere $700 without contract.
This device, in my view, is going to be yet another commercial failure for the struggling company and I wouldn't be surprised if it is the last smartphone this company ever makes. Here's why.
Overpriced for the specs, sketchy software support
Today, one can go and buy a Nexus 6P running the latest version of Android for $499. This device includes a higher-end Snapdragon 810 system-on-chip rather than the Snapdragon 808 inside of the BlackBerry, a fingerprint reader, and a modern and attractive industrial design.
BlackBerry, on the other hand, is seemingly trying to peddle a device with an inferior processor, an awkward physical keyboard, and an older version of Android. Yes, this device is actually expected to ship with Android 5.1. By no means is there anything intrinsically wrong with Android 5.1, but for $700 I'd want the latest version of Android out of the box.
Oh, and I would be very wary of BlackBerry's ability to consistently deliver software updates in a timely fashion for this device if it couldn't even ship the phone with the latest version of Android.
Very stiff competition
At the $700 price point, BlackBerry faces very stiff competition. For just $50 more, a customer could buy an iPhone 6s equipped with 64 gigabytes of storage. Or, if one absolutely must have an Android device, a Galaxy Note 5 with 32 gigabytes of storage can be had unlocked for around $650.
As I noted above, the BlackBerry Priv already seems like it would be a poor value at around $499 given the existence of the Nexus 6P, but when compared to the other devices in the BlackBerry Priv's price range, it would seem the decision makers at the company are simply out to lunch with respect to pricing.
Putting a prediction out there
I believe the BlackBerry Priv will prove a commercial failure at current pricing. My guess is that the company will get some sales from BlackBerry loyalists/enthusiasts at the $700 price point, and I don't fault BlackBerry for attempting to maximize revenue and profits in this fashion.
My belief, though, is that once the few buyers actually willing to pay $700 for this device do so, BlackBerry will have to aggressively cut prices -- Fire Phone style -- to try to buoy sales of this product. The clock is ticking fast here as the top Android makers will surely be preparing new devices for launch in the first half of 2016.
Then, once the failure of this device in the marketplace becomes painfully evident, I'm looking for an announcement from BlackBerry stating that it will be exiting the smartphone business altogether. If this happens, the move should allow BlackBerry to significantly cut costs as I'm sure designing these phones and the associated software isn't cheap.
From that point forward, I expect BlackBerry will no longer be a hardware story, but instead a software and services play. That, in my view, might actually be a story worth following.
