Even with a late rollout, the one million Z10s sold in Research In Motion Ltd (NASDAQ:BBRY)’s recent fiscal Q4 is marginal at best, particularly for a company fighting its way back from obscurity. It needs a home run, not a base hit, which is why Research In Motion Ltd (NASDAQ:BBRY)’s turnaround hinges on the Q10.
The rubber meets the road
According to sources, delays in formatting Research In Motion Ltd (NASDAQ:BBRY)’s new BB10 OS to the Q10’s smaller screen took a bit longer than expected, leaving customers with a few choices: Forget the keyboard and grab BlackBerry’s Z10 touchscreen smartphone, wait for the Q10, or opt for one of the other smartphone alternatives out there. Problem is, even if Research In Motion Ltd (NASDAQ:BBRY) fans are waiting on the Q10, the overall market for keyboard phones is shrinking fast.
According to IDC, of the 62.8 million phones with keyboards sold in 2012, Research In Motion Ltd (NASDAQ:BBRY) garnered 47% of the market: That’s the good news. What’s discouraging for BlackBerry isn’t the market share of its keyboard smartphones, it’s how much smaller the overall market has become. The 62.8 million units that the IDC reported sold worldwide in 2012 was down nearly 40% from the 100 million keyboard devices sold the previous year.
Does the Q10 have enough oomph to put an end to the shift toward touchscreen smartphones? We’ll know soon enough, as Research In Motion Ltd (NASDAQ:BBRY) prepares to roll the Q10 out in Canada on May 1, the U.K. shortly thereafter, and in the states within a few weeks.
Not alone
The high-end, keyboard-enabled smartphone market is where the Q10 resides, but it’s hardly the only option out there. Samsung, Motorola, and Nokia Corporation (ADR) (NYSE:NOK), among others, offer keyboards with some of their many phone models. Nokia Corporation (ADR) (NYSE:NOK)’s recently released Asha 210 is a low-priced phone with a keyboard, and HTC is another phone manufacturer fighting for a piece of the declining keyboard phone market.
Research In Motion Ltd (NASDAQ:BBRY) and Nokia Corporation (ADR) (NYSE:NOK) are often mentioned in the same breath, as the once high-flying device makers work to reinvent themselves. A marked advantage that Nokia has over Research In Motion Ltd (NASDAQ:BBRY) is the ability to continually introduce new devices targeting different price points, markets, and touchscreen or keyboard users. Research In Motion Ltd (NASDAQ:BBRY) plays strictly in the high-end smartphone niche, competing more directly with industry-leading Apple Inc. (NASDAQ:AAPL) and its iPhone. Making a dent in Apple Inc. (NASDAQ:AAPL)’s smartphone sales – 37.4 million iPhones sold last quarter alone – is a tall order, even as industry pundits bemoan Apple Inc. (NASDAQ:AAPL)’s lack of innovation and declining margins. Despite recent pressures, Apple remains a worthy competitor, and if Research In Motion Ltd (NASDAQ:BBRY)’s going to make a dent, it looks like the Q10 will have to do it.
Going forward
Based on the 6% jump in share price since Research In Motion Ltd (NASDAQ:BBRY) announced earnings in late March, investors either viewed the one million Z10s sold as a win, or brushed that aside to focus on other news, and there were a lot of positives. Research In Motion Ltd (NASDAQ:BBRY)’s profitable quarter took many by surprise, and word that 55% of Z10 buyers came from other platforms bodes well for both the Z10 and Q10. Gross margins also impressed, jumping to 40.1%, and let’s not forget the winning combination of zero long-term debt and Research In Motion Ltd (NASDAQ:BBRY)’s $2.6 billion in cash and equivalents.
The decline in Research In Motion Ltd (NASDAQ:BBRY)’s service subscribers took a bit of the luster off fiscal Q4 results, as did the drop in revenues, sequentially and compared to last year. And with CEO Thorsten Heins’ commitment to ramp up marketing costs by as much as 50% this quarter, breaking even will be a challenge.
The challenges facing Research In Motion Ltd (NASDAQ:BBRY) aren’t insurmountable, as last quarter demonstrated. But one million Z10s, limited production time or not, isn’t going to get it done. For Research In Motion Ltd (NASDAQ:BBRY) to become relevant again — not just stay afloat, but become a genuine threat to companies of the smartphone world like Apple, Google Inc (NASDAQ:GOOG), and Nokia — it’s up to the Q10, keyboard and all.
The article For BlackBerry, It All Comes Down to This originally appeared on Fool.com and is written by Tim Brugger.
Fool contributor Tim Brugger has no position in any stocks mentioned. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple and Google.
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