BlackBerry (NYSE:BB) has finally given into consumer clamoring for a version of its signature phone with a physical keyboard running Alphabet's (NASDAQ:GOOG) (NASDAQ:GOOGL) Google brand's Android operating system, but it may have made a mistake that dooms the product even before its November 6 launch.
The company, which has seen its market share drop to 0.3% globally as of the second quarter of 2015, according to IDC, has started taking pre-orders for the PRIV, its first phone running Android rather than its own proprietary operating system. That move should, in theory, make it attractive to former customers of the company because it would give them access to the Google Play app store.
A major reason people have left BlackBerry is the fact that its declining market share made it make little sense for developers to create apps for the company's OS. By running Android, but also offering a keyboard and the security features that previously made the company popular with enterprise users, Blackberry might win back some market share.
It's anything but a sure thing, but the struggling brand did have nearly 5% of the market as recently as the second quarter of 2012, according to IDC.
An Android phone is a good idea, and I'm part of the BlackBerry diaspora willing to at least consider coming back as I've missed having a phone with a well-designed physical keyboard. The only problem is that the PRIV will cost $699.
What is the PRIV?
As you can see in the image above, the PRIV offers a new take on the classic BlackBerry design. It has a familiar-looking keyboard, but it slides out rather than always being exposed, like many of the brand's original models.
It has a 5.4-inch dual-curved screen, a 3410 mAh battery with battery life of up to 22.5 hours, according to the company, 32GB of flash memory, a hot-swappable MicroSD slot (up to 2TB), and an 18 MP dual-flash Schneider-Kreuznach certified camera.
Having only seen pictures and not having held one, it appears to be a pretty snazzy phone that, at the right price, might win an audience.
Is $699 too much?
At launch, PRIV will only be sold directly by BlackBerry. It had been reported that AT&T (NYSE:T) would be carrying the phone, but as of October 28, it was not taking pre-orders for it, and a search for the phone on the AT&T website returned no relevant results. The new handset will work on the AT&T and the T-Mobile (NYSE: TMUS) networks, but neither company -- at least for now -- appears to be selling it.
That's important because it means users won't be able to easily finance the $699 cost of the phone. On a two-year finance deal, the cost of PRIV would not seem that different from that of iPhone ($29.12 a month for the BlackBerry versus $27.04 for an iPhone), but having to shell out the full price upfront is likely a deal-breaker for many.
In addition, if BlackBerry had made a deal with T-Mobile, a person on that company's Jump! On Demand program could order the phone, pay for it in installments, and trade it in with no penalty if he or she did not like it. By launching with no partners and pricing its phone at the the top of the market, Blackberry has turned mission improbable into mission impossible (and that only works if you're Tom Cruise).
Really, it's just too much money
Had BlackBerry priced the phone a lot lower, I may have taken a chance on it, but I will most certainly not at $699. The Verge's Vlad Savov agreed with me in his piece "BlackBerry's $699 Android gambit is too much too late," saying that even though the price is not crazy in a broad sense, it makes no sense for the company at this time:
The average selling price of a BlackBerry smartphone today is $240, so whatever handset business it still has is most definitely not in the premium segment. Perhaps half a decade ago, when everyone had to have two devices -- a BlackBerry for work and an iPhone for leisure -- this might have been an appealing proposition where the two converge into one. But that opportunity has already been captured by Apple, whose average selling price for the iPhone is well in excess of $600.
Like most of the company's handset moves over the last five years, PRIV is an idea that might have worked, but it's not one that will work now. Sadly, when PRIV fails and the price falls, as it has on so many other unsuccessful phones, it may find an audience.
It's too bad for fans of BlackBerry's keyboard phones that the company did not recognize where its price point should be sooner.
Daniel Kline has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares) and Alphabet (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.