On Monday in Mumbai, BlackBerry will launch its new BlackBerry 10 platform to the Indian market.
In an invitation sent to the media, it’s unclear if the company will launch both the Z10, which has a virtual keyboard and the Q10, which boasts the more familiar physical keyboard, simultanenously, or will stagger the release as they did in the UK, Canada and the UAE. The Z10 was released on Tuesday, February 5th in those markets, with the Q10 to follow in March.
Due to extensive carrier testing in the United States, neither phone has been released yet there, but are expected to in March.
India is an important emerging market for BlackBerry, but the company may face pricing pressure. What will the Z10 cost? One website said the Z10 has appeared at a number of online retailers priced at approximately 45,000 Indian Rupees, (more than $800 US Dollars), but the company has not confirmed this price.
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Byron Capital analyst Tom Astle estimates that 45-million of BlackBerry’s 79-million subscribers are in emerging markets. Because many of these markets are less affluent, he says, sales will most likely come via a lower cost model, which is expected later in 2013. He expects just 15% of these users will upgrade in 2013, for a total of 7-million units.
Astle, who has a BUY rating and $18 target on BlackBerry, is modeling 23-million BlackBerrys sold this year, rising to 31-million in fiscal 2015, but says the company could just as easily sell 40-million. His base case model gives him $1.60 in EPS in fiscal 2015, and his price target is based on 11x this number.
In 2011, 3G devices accounted for just 6% of India’s shipped units, and many believe the country of 1.2 billion will begin an upgrade cycle from feature phones to smartphones.
Despite a disastrous 2012 in the United States, BlackBerry managed to add to its subscriber base. The BlackBerry remains the top-selling smartphone in places like Philippines, Thailand and in Indonesia, the UAE, and Africa.
Beginning in 2011, and continuing into last year, BlackBerry’s books revealed an important change was happening for the company’s sales, geographically. Bonnie Tubbs and Nicola Mawson of IT Web pointed out that because BlackBerry doesn’t, beyond the US, Canada and the UK, break down its numbers by location, we are left with the mysterious “other” reported as the major source of RIM’s revenue. RIM’s market share in the US, they point out, dropped from 34.3% of total revenue to 19.8% in the period between November, 2010 and November 2011, and continued to fall throughout 2012. “Other”, meanwhile, accounted for 61.3% of BlackBerry’s total sales in 2011, up from 44.1% a year prior.
In its most recent annual report, BlackBerry broke down the geographic mix with a bit more detail.
“Sales outside the United States, the United Kingdom and Canada comprised approximately 60% of the total consolidated revenue during fiscal 2012. Sales in the United States represented approximately 23% of total consolidated revenue during the year. Sales in the United Kingdom represented approximately 10% of total consolidated revenue and sales in Canada represented the remainder.”
The BlackBerry is extremely popular in emerging markets because its data usage plans are reasonable, its BBM messaging service is a runaway hit, and its phones are cheaper than competitors such as the iPhone.
At press time, shares of BlackBerry on the TSX were down 3.7% to $13.61.