BlackBerry 10 Launches, Faces Stiff Challenges

By Joseph Palenchar On Jan 30 2013 - 2:10pm

Vivek Bhardwaj, head of BlackBerry's software portfolio (left), and president/CE
Vivek Bhardwaj, head of BlackBerry's software portfolio (left), and president/CEO Thorsten Heins demonstrate the BlackBerry Z10 with BlackBerry 10 OS.


New York — The maker of BlackBerry smartphones pinned its survival on today’s global launch of its first two BlackBerry 10 OS smartphones.

However, the company faces major headwinds in its make-or-break effort to survive even though the company narrowed the quality gap with competing smartphones, analysts said.

Research In Motion, which today changed its corporate name to BlackBerry to reflect the brand’s global awareness, unveiled the Z10 full-touch smartphone with a 4.2-inch display and the Q10, which features physical QWERTY keyboard and a 3.1-inch touchscreen.

The company will kick off a promotion campaign with a Super Bowl add featuring BlackBerry 10. “This is one of the biggest launches in our industry,” said president/CEO Thorsten Heins.

The BlackBerry Z10

All four national U.S. carriers have agreed to carry BlackBerry 10 phones, and three of them will offer the Z10 in mid-March, said Heins. For its part, Sprint said it would sell the Q10 sometime “later this year” but didn’t disclose Z10 plans. Heins said he expects the Q10 to be available in April but didn't state in which countries.

Verizon Wireless announced a $199 price for the Z10 with two-year contract in black and in an exclusive white version. Verizon also said it would carry the Q10.

AT&T said it would carry both phones.

Both phones feature 1.5GHz dual-core processors, 2GB of RAM, 16GB of internal storage and an expandable memory card slot. Both feature a MicroHDMI port for presentations, nearfield communications (NFC) and NFC ability to exchange information by tapping phones.

The phones feature all-day battery life, Heins said, but for power users, the battery is removable so the battery can be replaces by the user with a fresh one.

The Z10’s screen has 356 ppi resolution.

Versions of the BlackBerry Z10 and BlackBerry Q10 will be available from carriers to support their respective 4G LTE or HSPA+ networks, the company said.

The Z10 will be available first in the U.K. on Jan. 31, then Canada on Feb. 5, followed in mid-March in the U.S. The phones will launch later in the U.S. than in other world markets because of U.S. carriers’ rigorous testing procedure, Heins noted.

In tablets, Heins said the company plans to offer BlackBerry 10 OS upgrades for consumers’ existing PlayBook tablets and plans to remain in the tablet market. The company, however, is looking at offering value-added services with its tablets for vertical markets to deliver profitability in a low-profit tablet market, he said.

Key advances of the new OS over current BlackBerry OS include BlackBerry Balance, which lets users switch between personal and enterprise profiles at the flick of a finger. The feature will let enterprise users carry one phone instead of a personal and business phone. The enterprise profile lets users securely access the enterprise’s network and access only those apps approved by the enterprise. Apps from the personal and enterprise profiles can run simultaneously.

Also new is BlackBerry Flow, which lets users move seamlessly from app to app and feature to feature by swiping, making it unnecessary to go to the home screen to switch apps.

BlackBerry Peak lets users push an app to one side to view the content of the BlackBerry Hub, which aggregates incoming messages from email, social networks and the like into one screen view.

The OS also lets people using BlackBerry’s IM service to switch to a video call by swiping, and the ScreenShare feature lets users share what’s on their screen — from pictures to PowerPoint presentations — with other BlackBerry 10 users, with the presenter in control of what appears on other phones’ screens.

A BlackBerry Remember feature lets users toss documents, emails, web links and the like into the same folder for future reference.

The camera’s Time Shift feature captures a person’s image over a few milliseconds so the user can choose the best shot.

The Z10’s virtual keyboard is designed for one-thumb typing, and the phones’ predictive-text entry lets users flick suggested words to the sentence being typed.

The Z10 launches with the “largest catalog of apps ever for a first-generation mobile OS,” said Alex Sanders, developer relations VP. More than 70,000 are available now, and more than 100,000 apps will be available in time for the U.S. launch. Apps coming to the platform include Skype, Kindle, SAP and Angry Birds. Apps already available include Facebook, Twitter, LinkedIn, Cisco Webex, BMC, and vertical apps for healthcare, finance and government.

These features narrow the quality gap with Apple and Android phones, analysts agreed. “This is the first time in years where someone buying a BlackBerry need not fear ridicule from someone with a Samsung Galaxy whatever,” said Avi Greengart of Current Analysis.

 The new phones and those to follow, however, won’t propel BlackBerry back to the No. 1 smartphone share that it once enjoyed, Greengart and other analysts said. What BlackBerry 10 must do for the company, they contended, is reverse the company’s subscriber declines and return the company to profitable growth as a third smartphone platform next to alongside Apple and Google. But that will be a major challenge, they said.

BlackBerry’s next wave of phones in the second half, said Neil Mawston of Strategy Analytics, “should be to deliver significantly improved devices and services that offer something tangibly different and that have the potential to overtake Apple, Samsung or Nokia’s products.” However, he continued, “even that is going to be an enormous challenge. It may be too late. [BlackBerry] cannot compete with the depth and breadth of Apple and Google’s mature ecosystems, so it needs to convince some consumers that the unique communication-and-task-centric philosophy is enough for them to buy a Z10 instead of an iPhone or Android phone. Some of that hinges on [BlackBerry’s] marketing, which I have not seen yet.”

 Jan Dawson, Ovum’s chief telecoms analyst, is pessimistic about BlackBerry’s chances in the long run.

“We believe that much of the installed base in mature markets has delayed upgrading while BlackBerry 10 is pending, something that has unfortunately dragged on for far too long, thus lengthening the upgrade cycle and depressing results in the interim,” he said. “If BlackBerry 10 delivers, it should produce a nice fillip in RIM’s results in the first two quarters of 2013 at least as this pent up demand finally meets supply. Longer term, [BlackBerry] will return to its recent patterns of decline.”

Although the new platform “should have significant appeal to existing users, we don’t expect it to win significant numbers of converts from other platforms,” he explained. “There is little in the new platform that suggests it will have the compelling apps, content stores, or the broader ecosystem that consumers have come to expect in a competitive smartphone platform.”

Ovum doesn’t expect a quick end to BlackBerry. “With no debt, 80 million subscribers and profitability in the black in at least some recent quarters, the company can continue in this vein for years. But its glory days are past, and it is only a matter of time before it reaches a natural end.”

The floundering company in January reported a third-quarter net income of $9 million following three consecutive quarterly net losses, but net income resulted from a one-time $226 million income-tax benefit. The company posted an operating loss of $230 million for the quarter compared to year-ago operating income of $328 million.

 BlackBerry’s all-time market share in global smartphone shipments peaked in 2009 at 20 percent and fell to 5 percent in 2012, marking the company’s lowest level since 2003, Strategy Analytics said.

In 2012, the company sold fewer than 14 million BlackBerry phones in Western Europe and North America combined, Informa Telecoms and Media said. At one time, Ovum said, the company shipped between 12 million and 15 million devices per quarter worldwide.

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