Ronnie05's Blog

Is Blackberry looking at the wrong end of the market?

Posted in Mobile Devices and Company Updates by Manas Ganguly on February 3, 2013

OS- Smartphones 2009-2013

Continued from an earlier post: Why am I so deeply sceptical of BB10 as RIM’s comeback kid?

The Smartphone sector looks to be one of the most extreme oligopolies of the 21st century- even while the market is exploding at 35% YoY (700 million in 2012 versus 490.5 million in 2011) – there is little room left for any one but Android and Apple.

Apple and Android contribute to 92% of the Industry Volume and 102% of the Industry profits! All others combined for 8% of the market volumes but were edged out of the profits – leaving little space for investments into devices and the markets. The thing about market share is that it is liable to change rapidly in a rapidly growing market.However, with the base of 700 million it is possible that growth rate would have topped out. On the other hand, North Americas and Europe are visibly saturated in volumes/and growth is slowing down; and with maturity are only driving Revenues and profits as people tend to purchase more high-end smartphones, including the more expensive Android variants and the iPhone.

Blackberry with its Z10 and Q10 is targetting the high end of the smartphone market – The space that is dominated by Samsung Galaxy SIII, Apple iPhone, Nokia Lumia 920 alongwith handfull others. Instead of beating its competitors out on price, it wants to offer a genuinely quality product that the most tech-savvy consumer would be happy to purchase. This part of the market is by far the most cutthroat, and also the slowest growing.Ergo, even if Blackberry succeeds in creating space in this segment, it will be just a niche! Blackberry is trying to sell an expensive smartphone with a high margin, but it is competing against the most entrenched players imaginable. The part of the market that Blackberry is choosing to enter will not grow much, and RIM will face vicious competitors from every angle. There isn’t room in the lucrative high-end smartphone market for small fry ~ a $8billion Blackberry for instance! (Refer to the Blackberry Torch as an example – well crafted – but it didnot take BB where it was designed for)

POGUE-popup
Unveiling the new Blackberry!

On the other hand, the smartphone market is growing super because Android is powering the low end of the market. These markets are typically the South East Asian regions, Indian subcontinent, China and Africa. Even while Blackberry has a strong presence in nations like India, it is the Android army that it has to content with in such markets – and currently Blackberry’s portfolio in the low end is only based on the 4 year old Blackberry Curve which is appearing a little jaded and last generation.

Thus Blackberry really needs to be focussing on low end innovation, pricing, volumes and markets – currently there is no visibility of it doing this. Hopefully it gets its act together before its too late. A flagship device is one thing – numbers, profits, revenues is quite another.

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