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Why is BlackBerry’s CEO being so weird about the low-end market?

Published Mar 11th, 2013 12:20PM EDT
BlackBerry 10 Emerging Markets

BlackBerry (BBRY) executives have a history of making condescending comments to analysts, but this time, Thorsten Heins has really broke new ground in haughtiness. At an Ontario conference, Mr. Heins was asked about the low-end smartphone market and he firmly stated that his company is “not going to get into $50-60 segment,” Bloomberg reported. This, of course, is pure straw man construction. Nobody thinks BlackBerry should or can get into the $50-60 price segment. Mostly because that price segment does not exist. There are no $50 smartphones.

No one believes that BlackBerry should get into the $100-120 price segment, either. The thing everyone wants to know is when BlackBerry intends to enter the $200-250 price segment. This is a real smartphone price segment that exists in the real world. This is the price segment where models such as the Micromax Canvas 2 and Karbonn S1 Titanium are making huge market share gains in regions like Asia. This is the price segment where Windows Phones like Nokia’s (NOK) Lumia 520 are entering right now. This is the price segment where Samsung (005930) and HTC (2498) are triumphing from Brazil to Malaysia.

You see, the biggest problem BlackBerry is now facing is the global subscriber base erosion that started in the November quarter. BlackBerry’s subscriber base shrank for the first time in the company’s history, by a relatively sharp 2 million subscribers. This happened because subscriber growth in markets like Nigeria, South Africa, the Philippines and Indonesia is no longer strong enough to offset the weakness in markets like North America and Europe. That BlackBerry sub growth slowdown in Africa and Asia is directly linked to the loss of competitiveness of its cheap Curve product range against Samsung, Huawei, ZTE, Spice and Micromax… in the sub-$250 price category.

The question of when a competitive, cheap Curve model debuts in emerging markets is thus extremely important. BlackBerry’s future may hinge on when it can get a solid, sub-$250 smartphone out in Africa and Asia. So the decision of BlackBerry’s CEO to brush off this question by a snide comment about “not entering $50-$60 segment” is not only completely inane, it is insulting for the company shareholders.

Nobody is expecting BlackBerry to produce a smartphone that is cheaper than any other smartphone in the world. People simply want to know when BlackBerry intends to enter the price segment where smartphone volume growth is now exploding. Mr. Heins’s defensiveness and shiftiness on this topic is not encouraging.[bgr-post-bug]

After launching mobile game company SpringToys tragically early in 2000, Tero Kuittinen spent eight years doing equity research at firms including Alliance Capital and Opstock. He is currently an analyst and VP of North American sales at mobile diagnostics and expense management Alekstra, and has contributed to, Forbes and Business 2.0 Magazine in addition to BGR.