BlackBerry Struggles Continue

The other non-surprise is the drop in share for BlackBerry (NASDAQ: BBRY) from 3.6% in February 2012 to 0.7% in February 2013. The worse news for BlackBerry is that there was no uptick in share in February in the United Kingdom, where the company’s new BlackBerry 10 operating system and Z10 smartphone went on sale. A Kantar executive noted:

Consumers just don’t have the same levels of pent up demand for the handset as they did for the iPhone 5. … The [Z10] handset is likely to start selling in more serious numbers once the launch price falls, and BlackBerry 10 in general, when the range is padded out with a number of wallet-friendly mid-range offerings.

That leads us to conclude that at the high-end of the smartphone market BlackBerry cannot succeed. If it has to cut its price to make sales, margins will fall and with them profits. In order for BlackBerry to sell enough lower priced phones to produce a profit means that the company will have to make a fundamental change in its marketing strategy to attract more buyers who are price sensitive. That will not be easy.