Recently, US carriers Verizon Wireless and AT&T, as well as retailers like Amazon and Best Buy have slashed the pricing for the flagship BlackBerry Z10.
However, a BlackBerry spokesperson downplayed any concern by telling the WSJ, “It’s part of life cycle management to tier the pricing for current devices to make room for the next ones.”
This much is true and standard practice for devices after a successor is released. However, the upcoming flagship 5-inch “Aristo” isn’t yet released. The Z10’s price cuts has Nomura Equity Research analyst Stuart Jeffrey quite concerned.
“Having price cuts this early before a new product is actually announced seems unusually early to us,” Jeffrey told CNBC. “It seems hard not to conclude there is excess inventory.”
“BlackBerry’s really got two choices,” said Jeffrey. “They can keep iterating, trying to improve their ecosystem, trying to improve the devices, and try to close the gap with Android and iPhone. That’s going to be challenging because they have far more limited resources compared to Google and Apple. The other possibility is to promote this secure workspace they are offering to allow their apps to work on Android and iPhone, and go down the route of being more of a services company rather than a hardware company.”
BlackBerry’s recently announced Q1 FY2014 earnings call revealed the company only shipped 2.7 million BlackBerry 10 devices, which was lower than analysts expectations. Excessive inventory is certainly a concern, but the price cuts are within reason and plan.
We’ve written extensively outlining why there won’t be an entry-level all-touch Z5. Instead, BlackBerry plans to use the Z10 to penetrate the emerging markets once the A10 is released. Do you think these nearly 75% price cuts give rise to concern?