I was just reading a market scan on Forbes.com about disappointing BlackBerry 8700 sales. I am taking it with a grain of salt however… Piper Jaffray analyst T. Michael Walkley is blaming flat to down BlackBerry sales at Verizon on the fact that the Treo 700w outsold the BlackBerry 8700. (I would think so seeing how Verizon doesn’t carry a BlackBerry 8700)
Walkley states that “Research in Motion has failed to deliver on hopes for near-term growth due to increasing competition that could drive lower margins on devices and slow down earnings growth in 2007“. That is probably true, but, let me really tell you why the BlackBerry 8700 doesn’t sell as well as you think.
The BlackBerry 8700 really doesn’t do all the much more than older BlackBerry models. Lets see, it has a brighter screen, is a bit smaller, and has better battery life. There is nothing so groundbreakingly different about the 8700 that would cause companies to swap out their existing devices with a new 8700. Sure, new corporate BES users may get the latest and greatest device, but the millions that already have an older model aren’t going to suddenly get upgraded just because a new model that does exactly the same thing and little else than they one they currently have is out.
The 8700 has better battery life? Not on our units it doesn’t – I’ve been caught out once and now charge daily which is quite different to the 7290 I had which I charged once a week. Under heavy use (email only), my 8700 barely lasts 3 days.
Let’s tackle the flaws in this analysis. The biggest one that I see is that the analysts for Piper Jaffray, in an effort to gauge sales of this device, simply went to Cingular stores and spoke with store managers. The problem with that is that BB’s are enterprise focused devices, and so I imagine most of their sales come through corporate accounts with corporate reps, outside of the retail stores. So of course BB’s lag in sales in the stores…they always have.
I agree with Robb’s analysis that the 8700 represents incremental progress, not a giant leap forward. Therefore, most enterprises will just stick with their current models as long as they meet their corporate needs.
Ironically, for the 8700 to have really taken off in sales, what RIM should have done is introduced the model through Verizon with a CDMA version. Then they could have taken advantage of Verizon’s 3G EVDO service, which would have really highlighted the screen advantages of this device. I for one would love to have a 3G 8700, if only to take advantage of web browsing with broadband speeds and a beautiful screen. If RIM wants this device to be noticed more, bring it out in a CDMA EVDO version for Verizon…then it will really have a chance to shine.
Let me also add that as long as RIM just releases enterprise focused devices, without camera, multimedia, etc…they really can only make incremental improvements in their devices.
All they will be able to do with those devices is come out with better screens, better design aesthetics, etc. Of course, adding 3G capability will allow the screen advantages to become apparent. Right now the only 3G BB in the US is the 7130e, which doesn’t have the most impressive screen.
My guess is that RIM will follow a two-pronged approach: keep the enterprise segment, but start releasing more exciting devices for the consumer. Hence the rumors regarding a clamshell BB, made by Samsung, with camera, music player, etc. I do think if RIM comes out with the multimedia consumer device, they want the form factor to be clearly differentiated from their enterprise devices.
2 schools of thought:
1) Release more consumer oriented devices (You can keep the same form factor) with a good camera and multi-media capabilities.
1b) Get the carriers to lower the cost of the BIS for the non-enterprise consumers. Why is Cingular $49.99 (whether you use it strictly as a email/data device or you have a voice plan) and yet tmobile has it for $19.99 if you add it on to your voice plan or 29.99 as a data device?
Verizon and Sprint are just as inconsistent and that is part of what drives consumers away.
2) Cost is another factor. since the units are essentially $350 and up, dependant upon your carrier, most consumers shy away unless they have a pressing need for a “data” device.
Selling the consumer on having a all-in-one convergant device is easy, especially considering the problems with the Treo 650/700, so most consumers would love to have a stable (read as fewer resets and lock-ups) device that allowed them carry all their contacts, access the web and email, reply with a qwerty keyboard, and have decent call clarity with Bluetooth capability…