Astle says he was a loyal BlackBerry user until 2010, when he made the switch to the Apple because, he says, he “really wanted a 21st century device.” But he says he always missed BlackBerry’s “messaging strength, the flashing red light and the good keyboard of the BB.” The Byron analyst says current BlackBerry users looking to upgrade will be “thrilled” with the new device. But that’s a low bar, he notes.
If BlackBerry is to make real waves with their new BlackBerry 10 platform, the Waterloo company will have to have some success beyond a basic upgrade cycle. In a research update to clients yesterday Astle broke down where those sales might come from in order from highest level of confidence to lowest. His conclusion is that there is a pretty clear path to 40-million units in 2013 (fiscal 2014).
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Astle says the low hanging fruit for BlackBerry comes from existing BlackBerry users in developed markets. He estimates that this is approximately 45% of the total 79-million subscriber base, a total addressable market of about 35 million people. He expects 40% of this segment will upgrade this year, for a total of 15-million units.
The remaining 45-million BlackBerry subscribers, says Astle, are in emerging markets. Because many of these markets are less affluent, sales will most likely come via a lower cost model, which is expected later this year. He expects just 15% of these users will upgrade in 2013, for a total of 7-million units.
The third most difficult group for BlackBerry to convert, says Astle, are former BlackBerry users who left as the technology lagged. He estimates about 26-million people have left BlackBerry since 2009, himself included. He expects that somewhere between 15%-20% of these people will return to the platform this year, for a total of 4-5 million units.
BlackBerry’s share of first time users in developed markets has slipped to just 4%, and Astle conservatively projects that the company will maintain that share this year, for a total of 4-million units shipped. This will be a key area for BlackBerry. New data suggests its brand is undergoing a resurgence in the United States.
The real growth is the smartphone space, says Astle, is in emerging markets, where some countries have a less than 50% penetration rate. BlackBerry is particularly strong in many emerging markets. But BlackBerry, he reiterates, may need a lower end model to win this business. Astle is projecting RIM will maintain its 4% global share, which translates into 12-million units.
Astle’s own modeling uses just 23-million BlackBerrys sold this year, rising to 31-million in fiscal 2015. His base case model gives him $1.60 in EPS in fiscal 2015. Astle has a BUY rating and $18 target on BlackBerry, which is about 11x his base-case fiscal 2015 EPS.