It’s Confirmed… RIM Practically Giving BlackBerry Devices Away To Maintain Share

You don’t have to look far to find a good deal on a BlackBerry these days.  It is almost as though the deals are “too” good to be true.  T-Mobile has set BlackBerry Bold 9780 pricing at $129.99.  That’s 130 bucks for one of the highest end BlackBerry devices you can get.  I hinted at this in the last episode of the SMRpodcast, but, it is now crystal clear to me that Research in Motion is in market share protection mode.

The current crop of BlackBerry devices are doing well with consumers that already want BlackBerry devices, but, at the end of the day, Research in Motion is getting their lunch handed to them by Apple, Google,  and,  soon to be, possibly even Microsoft in the consumer market.  For a lack of a better word, these other mobile operations systems just offer more…  They offer more stuff that consumers want and the hardware and software in the current wave of BlackBerry devices coming out cannot compete on features an functionality.

Where RIM can compete is on price and, to me, it looks like they are going to practically give BlackBerry devices away to try to maintain as much share as they can until QNX is ready to run on much beefier hardware that I imagine we will start hearing rumors and seeing leaked documents about before years end.

One thing that RIM has going for them is that a lot of consumers still aren’t ready to shell out $300 or $400 to get an iPhone 4, or a high end Android device.  Inexpensive BlackBerry devices are very compelling around the holidays and I fully expect RIM to sell boatloads of them. This probably isn’t a bad move for RIM in short run because, as I’ve said before, they’ve got to compete where they can…

Comments

  1. bluehorseshoe says

    Robb,

    I have to disagree with your statement that “RIM has one thing going for them…” People are willing to spend the money on Phones and Android devices, otherwise RIM wouldn’t be taking this approach and Apple and AT&T wouldn’t be rocking record sales. Android is also the fastest growing of all the phones out there. And even webOS looks like it’s primed to make a comback.

    I love my BB, but reality is going to give RIM a swift kick in the ass. They got lazy and it’s showing. Purchasing Palm may have been an alternative they should have seriously considered, but obviously it’s too late for that. Hopefully they’re already working on OS7 and some new hardware designs.

    • Ross says

      They didn’t buy Palm but they did buy QNX. Given the penetration QNX already has for hardware in many, many industries (health, motoring etc) I’m looking forward to some cool integration between existing solutions and the BlackBerry PlayBook. This will mean real solutions in real industries.

      Also given QNX is easy to develop apps for (watch for Droid apps being ported to the PlayBook) and is super robust, the future for RIM is very promising.

      Maintaining market share in the mean time makes sense to me.

      • bluehorseshoe says

        I’m not positive on the outlook for RIM’s Playbook. Unless it can operate outside owning a BB, I think it’s doomed.

        • DavidB says

          Why? All indications are it will operate just as well “outside owning a BB” as the wifi only model iPads or the plethora of upcoming Android tablets that are wifi only. Verizon for example seems to think there’s a market for tablets without integrated cellular since they now sell the wifi only iPad.

          • bluehorseshoe says

            From my understanding, it will only have Wifi models to begin with, and to get push email you need to have a BB paired via bluetooth in order to take advantage of the feature (if you’re a Verizon or Sprint customer, using the tablet for email or data (unless you have access to wifi) while on a call would be impossible if paired to the device). Plus, the application lineup is awful. If it were released today, I’d pass. BB needs to step it up with developers before the release. And personally, I’m looking for something a bit larger in size (7 inches isn’t even 3 inches larger than some of the phone devices out there…I need a step up, closer to 9 or 10). I’m sure folks will go out and buy it, I’m just not sure it will be in the droves that RIM expects.

          • bluehorseshoe says

            They sell the “wifi” only iPad…bundled with the MiFi. Cha-ching, data services. I don’t think they believe there’s a market for tablets without integrated cellular service if you’re only option is to purchase one with a MiFi.

    • says

      I am not saying that that that there aren’t any consumers willing to shell out the big bucks for a smart phone. Clearly is not the case… Smartphones, however, have just under 20% penetration at this point. I’ve heard too people who don’t have them say that they aren’t willing to shell out that kind of cash to get one to think that price is not a major factor for a lot of the 80% that RIM, Apple, Google, MS, and Palm are trying to convert.

      • bluehorseshoe says

        Soon consumers will have a very limited choice outside the smartphone arena. I’m even witnessing those folks finally converting over to the sector. This is just another area where RIM isn’t capturing the market. Outside the business professional or individual who values email and a keyboard, I really don’t see them going forward. Stock price is beginning to reflect it as well. RIM needs to create a device that is evolutionary from what they currently offer and move away form the mold they’ve created. And finally, the biggest issue that I believe plagues RIM…they need to reduce their cycle of concept to market from three years down to one. Ever catch yourself saying “nice device…for 2008.” That’s what I said about the Torch.

      • DavidB says

        I honestly don’t think the price of the device itself has much bearing on someone deciding to buy a smartphone. The price of the device is a drop in the bucket relatively speaking. It’s that $30/month data plan requirement for two years ($720) I would say holds more people back from going smartphone in this economy than the price of the device itself. Heck, you can go on Wirefly or Amazon or numerous other places online and get a smartphone for under $50 (and very often less or free!) when you sign up for a two year contract. Why do you think the carriers are almost all moving to tiered data plan pricing? People are afraid to commit to those high monthly contract fees. The carriers see that and think their best move is to sacrifice a bit of ARPU (average revenue per user) in order to lock folks in for two years.

  2. DavidB says

    The flaw in this argument is that RIM isn’t selling you the device for these low prices, the carrier is, on contract. If there was truly the “Fire Sale” you imply, off contract BlackBerry pricing would be down. Its not.

    • Chris Leery says

      The flaw the with comment is that RIM is actually selling selling units to the carriers for less and, although I am not sure about Verizon, AT&T, T-Mobile, and Sprint, are paying less to RIM for BlackBerry Internet Service. Carrier advertising for BlackBerry devices has fallen of the cliff. Much of what you see these days, especially for the BlackBerry Torch, is sponsored directly by RIM…

      I don’t know that I would say fire sale because RIM is still making money… lots of money… on unit sales, but, I think the author is dead on that RIM is in market share retention mode.

      • DavidB says

        “RIM is actually selling selling units to the carriers for less”
        The evidence for this is what?

        Quarter Date Revenue Units Device Revenue ASP
        11Q2 9/17/2010 $4,620,000,000 12,100,000 $3,649,800,000 $301.64
        11Q1 6/24/2010 $4,240,000,000 11,200,000 $3,349,600,000 $299.07
        10Q4 3/31/2010 $4,080,000,000 10,500,000 $3,264,000,000 $310.86
        10Q3 12/17/2009 $3,920,000,000 10,100,000 $3,214,400,000 $318.26
        10Q2 9/24/2009 $3,530,000,000 8,300,000 $2,859,300,000 $344.49
        10Q1 6/18/2009 $3,420,000,000 7,800,000 $2,770,200,000 $355.15
        09Q4 2/28/2009 $3,463,000,000 7,780,000 $2,884,679,000 $370.78
        09Q3 12/18/2008 $2,780,000,000 6,700,000 $2,251,800,000 $336.09
        09Q2 9/25/2008 $2,580,000,000 6,100,000 $2,115,600,000 $346.82
        09Q1 6/30/2008 $2,240,000,000 5,400,000 $1,836,800,000 $340.15
        08Q4 3/1/2008 $1,883,000,000 4,372,000 $1,523,347,000 $348.43

        If there IS a “Fire Sale”, it’s been going on for over a year. To say that it’s just kicking in now is a bit of a reach.

        • Samuel says

          Doesn’t this chart kind of reinforce Chris Leery’s point that BlackBerry prices are going down, or, I am I reading the numbers wrong?

          • DavidB says

            What the numbers tell ME is the RIM reduced their ASP (Average Selling Price) well over a year ago. There are many factors that could go into that, such as selling more of the lower priced models (the Curve line remains very popular), RIM able to cut their manufacturing costs and thus pass the savings along to their carrier customers, selling vastly increased numbers in overseas markets, etc.

            The thing you have to remember is that unlike Apple, RIM doesn’t sell BlackBerry devices directly to end users. The carriers are RIM’s customers, not we who use their product. A reduced sales price to the end user means the carrier has decided they want to keep BlackBerry sales up, and are willing to take a reduction in the profit they make selling a device because they know they are locking the user in for two years of monthly contract fees. Remember, the carrier is essentially taking a loss on every device they sell on contract. When the ASP is near $300 but you get the device for $130 or $30 or even free, it’s the carrier that is carrying the loss, not RIM.

            Of course, come December RIM could report an ASP drop. My point is, to say that NOW is speculation.

  3. DavidB says

    @bluehorseshoe:
    “They sell the “wifi” only iPad…bundled with the MiFi.”
    Verizon is selling the plain wifi -only iPad’s for exactly the same prices as Apple, BestBuy, whatever. Yes, for $120 more you can get it bundled with a MiFi (exactly the same prices as the 3G iPad’s direct from Apple), but you don’t have to do that.

    • bluehorseshoe says

      I stand corrected. Didn’t see the little “buy iPad only” icon at the very bottom of their site. Nonetheless, it’s VZW’s intent to sell the data with the iPad, as illustrated heavily on their site.

      The iPad sale is just the preview of the relationship between Apple and VZW. The iPhone will be out next year on VZW, and the final testing stage is occurring right now as we speak and should wrap up no later than December. It’s the whole purpose as to why VZW is attempting to roll out voice/data via CDMA simultaneously. Apple pretty much demanded it.

  4. DavidB says

    @bluehorseshoe:
    Regarding the inability for Verizon and Sprint to support simultaneous voice and data on their networks, perhaps you missed this news:
    http://www.fiercewireless.com/story/verizon-working-simultaneous-voice-and-data-cdma/2010-10-11
    which includes:
    “August 2009 the CDG announced that specification, called SVDO. The new service will allow CDMA2000 devices to access EV-DO packet data services while in an active 1X circuit-switch voice call.”

    Plus we’ve also seen news (several months ago) from Verizon that 1st half of 2011 they will have several LTE smartphones coming to market, one of which they stated would be from RIM. Verizon’s LTE network is reported to support simultaneous voice and 4G data, so the tie in between a 4G BlackBerry and the BlackPad should be interesting to see develop. But of course, early adopters might get soaked on data charges until 4G is more ubiquitous and the data pricing stabilizes.

    • bluehorseshoe says

      You realize that it’s in “production.” My sources at Qualcomm haven’t confirmed that it’s complete. As of now, it’s only an “assumption.” I don’t deal with them until they come to fruition.

      As for LTE, now you’re talking about subscribers going out and buying new devices, which will eventually happen, but not immediate for many (they may be on contract, which may require them to wait 1-2 years before they get an LTE device). Plus, RIM doesn’t have an LTE device at the moment.

      As for Sprint, it’s dead water. Previous post still applies.

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