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BlackBerry’s comeback momentum hinges on the Q5

Published Jun 27th, 2013 3:10PM EDT
BlackBerry Q5 Launch Analysis

The handset industry is waiting for BlackBerry’s May quarter report, set to be released on Friday. But it’s the August quarter guidance that may turn out to be the most important piece of information, and that in turn hinges on BlackBerry Q5 shipment numbers. The budget BlackBerry has launched ahead of earlier estimates, with a limited Dubai debut in the third week of June. According to online retailer Clove, the United Kingdom debut is slated for July 1st, again earlier than anticipated.

The Q5’s U.K. non-subsidized launch price is set at £330, which is a hefty 40% below the £550 price of the Q10. A leading British smartphone vendor, Phones4U, is setting its cheapest contract price at £21, roughly £12 below where high-end smartphones tend to debut.

There is now some buzz about the Q5 being launched in India in July. Executing launches in Middle East, Europe and Asia within one month would be atypical for BlackBerry, which has tended to employ staggered international launch patterns. This could also mean that most Wall Street projections for BlackBerry sales for the August quarter rely on overly cautious assumptions about the budget device rollout.

The biggest question mark here is the price. The Q5 is a lot cheaper than the Q10 but it is not a low-end smartphone. The Android vendor race to the bottom means that there are smartphones with far better display quality and camera performance out there selling for half the price of the Q5. The success of the Q5 thus hinges on the willingness of emerging market consumers to pay a relatively steep premium for a QWERTY BlackBerry.

The influx of super-cheap Android phones clearly took Nokia by surprise last winter and created problems for its Asha device range, which is priced far below the Q5. Much is now riding on how BlackBerry manages to justify the Q5’s comparatively high price to budget-minded consumers.

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.