Supply not Demand Drives Initial Blackberry Hype

by Jeff Wiener on February 7, 2013

It was May 1st, 2003, when U.S. President George W. Bush boldly proclaimed “Mission Accomplished,” regarding the country’s ongoing war in Iraq. If only he knew the conflict would continue for almost a decade. With that in mind, despite the news that early sales in the UK have been strong–with many retailers already sold out of the company’s new Blackberry Z10 smartphone– perhaps Blackberry may want to hold off on its own victory parade.

With the fate of the entire Blackberry enterprise riding on the success of its new OS and new smartphones, analysts were keen to jump on this sliver of hope, a sliver that sent Blackberry’s shares up 1.8 percent over the last two days. But not everyone is drinking Blackberry’s newly rebranded Kool-Aid, with some pointing to the fact that recent product sell-outs may not have anything to do with demand, and everything to do with supply.

In fact, on the surface it looks as if Blackberry has attempted to tear a page from Apple’s playbook, limiting the initial run of a highly touted device in an effort to drive up consumer demand. But here’s the difference, people know and like Apple’s iPhone while they’re suspicious of Blackberry’s new product, meaning perhaps a marketing strategy based on education, awareness, and availability might have been a more useful tack for the struggling Canadian company.

While some are sure to say that sell-outs in the UK are a sure sign of the resurgent popularity of the Blackberry brand, as Canaccord Genuity analyst Michael Walkley states, those initial sales numbers might be misleading.

“Limited initial supply was cited as the reason for early post-launch stock-outs at some carrier stores versus overwhelming demand,” Walkley said in a research note issued today. According to Walkley, in a survey o fUK stores carrying the new Blackberry Z10, most retailers stated they received around 15 units, limited stock that easily sold in the first day or two, leading to these widely reported sell-outs.

But of course such conclusions remain speculative; particularly given the fact Blackberry will likely never release the numbers of its initial production run nor the numbers of units sold.

“While we are impressed with the features of the new BB10 OS and Z10 smartphone, we believe BlackBerry has only closed the gap with more mature smartphone OS platforms and offers limited differentiating services or features to win back customers from more mature ecosystems,” Walkley said.

To wit, while many sales representatives admit that Blackberry’s new BB10 OS is a major improvement over previous Blackberry platforms, many of them continue to recommend the iPhone or Samsung’s Galaxy S3 over the Z10. What’s more, according to Walkley, many reps have complained they don’t know enough about the Blackberry OS to confidently sell the product, uncomfortable about showing perspective customers a user interface they didn’t know well.

As I said, desperate to be like Apple it seems initially Blackberry has already faltered, failing to realize that its once dedicated user base has already moved on to bigger and better things.

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Blackberry Release Misstep Ruins U.S. Market Hype —
March 7, 2013 at 5:46 am

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