The Research In Motion Ltd (NASDAQ:BBRY) Z10 had barely hit store shelves in the U.S. when the launch was decried by analysts as “disappointing” and “lackluster,” apparently due to the lack of a glossy advertising campaign such as Microsoft Corporation (NASDAQ:MSFT) put on for Windows Phone 8. Then Research In Motion Ltd (BBRY) released its earnings report for its fiscal year, and, surprise! The obituaries for BlackBerry had been premature.
Surprising resilience
I’ll admit that I’ve long discounted BlackBerry as an early casualty of the smartphone wars. When BlackBerry 10 was unveiled last year, I didn’t buy into the hype of glowing previews and investor expectations of a turnaround. It all seemed too little, too late, especially compared to Windows Phone 8. Microsoft had publicly set its sights on being the “third mobile ecosystem” and that meant rolling over poor little Research In Motion Ltd (BBRY), the Poland of World War Mobile.
My attitude started to change when Gartner published its smartphone OS market share results in February for Q4 2012. Microsoft had actually not managed to overtake (then) Research In Motion Ltd (BBRY). Given that everyone in the universe knew that BlackBerry 10 OS devices were coming in early 2013, I expected RIM sales to utterly collapse. RIM edged out Microsoft by 7.3 million devices to 6.2 million. Not bad for a dead mobile OS.
BlackBerry’s fiscal year results continue to be encouraging. BlackBerry sold about 6 million smartphones, including 1 million BlackBerry Z10s, and I expect this to be better than total sales of Windows Phone 8 devices, which I expect to drop from the holiday season. Given that the Z10 had launched in February in only a few markets (Canada, U.K., U.A.E), a million units was a respectable showing.
Ecosystem strengths
I also continue to be encouraged by the strength of the Research In Motion Ltd (BBRY) ecosystem and the loyalty of BlackBerry subscribers. Despite shedding users, BlackBerry still has 76 million subscribers, a user base that Microsoft can only dream about. True, most of them aren’t BB10 users, but that will probably evolve rapidly now that BB10 devices are available.
If most of the existing subscribers can be transitioned to BB10, this solves a chicken/egg dilemma that Microsoft is currently struggling with: MS can’t attract users without a better WP8 app selection, and can’t attract app developers without a larger user base. Alexandra Chang belabored this in her recent Wired piece, which although a little over-the-top, made a valid point.
Device strength
Despite Adrian Covert calling the Z10 a noble failure, I regard the phone as being perfectly competitive with the current WP8 flagship, the Nokia Corporation (ADR) (NYSE:NOK) Lumia 920. Covert seems to be a little confused about the Z10 hardware, claiming that “its brains—a 1.5 GHz dual-core processor coupled with 2 GB RAM—is already a generation behind what’s been announced by rivals so far this year.” In fact both the Z10 and Lumia 920 use nearly identical QUALCOMM, Inc. (NASDAQ:QCOM) MSM8960 1.5 GHz Snapdragon S4Plus processors. There’s some tailoring that Qualcomm can do by way of graphics processing within the 8960 line, so I can’t tell if they’re exactly identical, but the Z10 offers 2 GB of RAM vs. the 1 GB of the Lumia 920. Clearly, the Z10 qualifies as a flagship smartphone.
