Some weeks ago, BlackBerry announced that a major customer had ordered a million Z10s, which BlackBerry noted was an internal sales record of sorts. The identity of the customer, interestingly, has remained a mystery, with BlackBerry never identifying who the purchaser was. Well, a million devices is a million devices, regardless of the buyer. Right? And BlackBerry certainly wanted to convey a sense of having pulled off a sales victory - and even though it wasn't clear if the order meant an immediate purchase and shipment or an order that would be delivered and paid for over time, we want BlackBerry to have that sales win.
Keep that in mind.
Last Friday, after a fairly significant delay beyond the announcement date of the Z10 back on January 30, 2013 (hard to believe, but after having waited so long for that date to arrive, it now feels like a part of ancient smartphone history) the Z10 finally launched in the United States. That means the launch comes hot on the heels of Samsung having just announced the Galaxy S4, and with delivery of both the S4 and the HTC One just around the corner, one has to wonder what sort of impact it may have had on the buying patterns of potential consumers.
We don't really have much to wonder about it - unless one went into the phone store specifically to acquire a Z10 or someone is already favorably disposed to buying one, we very much doubt that the fairly pedestrian look and feel of the Z10 (that's our opinion after putting it to some use) would scream out at those non-predisposed to buy one too. Friday and the weekend came and went, and we can safely note that there wasn't any sort of overwhelming demand for the Z10 in the United States.
We will note as well that BlackBerry has put a huge marketing campaign behind the Z10, though "huge" is a relative term. BlackBerry may have mustered $30 million or so for the campaign, but in light of Samsung spending $400 million and Apple having spent about $335 million in 2012 - with both budgets no doubt trending higher in 2013, the BlackBerry campaign won't deliver much of a punch.
Analysts at both Goldman Sachs and Citigroup have weighed in following the weekend and both referred to the US Z10 launch as disappointing. Goldman specifically cited poor positioning and poor overall market support. That analysis does come from little more than having checked a variety of stores - as we did ourselves. We certainly concur with Goldman's observations. It's safe to say that BlackBerry did not overwhelm the consumer segment of smartphone users.
Monday afternoon, BlackBerry’s shares (which trade as BB.TO - and we note that the company's name under which the shares trade is Research in Motion Limited) were down a bit, but there were no major shifts in the stock's price. That suggests most investors had already factored in the unlikely scenario of a big BlackBerry sales weekend.
Goldman itself has downgraded the stock. Goldman analyst Simona Jankowski issued a research note that, among other things, noted that, “While we thought the international launch was solid, the U.S. launch is critical for BlackBerry’s ultimate success. Our retail checks at over 20 store locations since March 22, including at AT&T Best Buy, and Radio Shack, revealed a surprising lack of marketing support and poor positioning of the product. We also saw limited advertising around the launch.” One would think that BlackBerry would have known it needed to do a lot more with the US launch.
Brightstar - the Secret BB Admirer?
Meanwhile, adding to the poor weekend showing, the Wall Street Journal reports that Detwiler Fenton & Co. analyst Jeff Johnston is now claiming that he believes the big million device order we noted above came from Brightstar. Brightstar distributes smartphones to retailers. Brightstar is known to be a partner not only with BlackBerry, but with most of the smartphone vendors.
Brightstar was founded in 1997 and is ranked 58 on Forbes' List of America’s Largest Private Companies. The company has the mantra of having "global reach and local insights" and delivers value-added distribution, supply chain solutions, handset protection and insurance, buy-back and trade-in solutions, multi-channel retail solutions and financial services. Essentially, it helps to smooth out the entire end to end mobile value chain.
Unfortunately, if the million Z10 order came from Brightstar it absolutely means that those devices are going to end up being spread piecemeal throughout Brightstar's collection of customers. So what appeared at first to be a "ringing" endorsement for the Z10 from a single entity (e.g. a large carrier) in fact it isn't any such thing at all.
Brightstar clearly believes that there will be enough of a market to consume a million Z10s but that consumption will happen over time, and Brightstar's role will be to ensure there are devices in the supply chain to meet any of its customers' requests - which can come from any collection of retail and carrier sources. In other words, the sales will be entirely fragmented and likely spread out over many months, if not an entire year. Detwiler's Johnston certainly believes the order will be spread out over multiple quarters, and that isn't a line of thought that is easy to contradict. No doubt it's true.
We continue to wish BlackBerry well, but it is going to have to step up its game. Especially as the Galaxy S4, the HTC One, Nokia's Lumia 920 successor and the inevitable rumors of the next iPhone create an environment filled with extravagant mobile noise, it's going to be tough for BlackBerry to stand out. It's a tough crowd indeed it's trying to play with.
Edited by
Brooke Neuman 
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