No cheap BlackBerry 10 devices for now, says CEO Thorsten Heins

BlackBerry has launched its Z10 smartphone initially in emerging markets, with some success. But as inexpensive Android devices has proliferated in the market, CEO Thorsten Heins says BlackBerry is not likely to sell $50 BB10 devices anytime soon. Could this break BlackBerry’s attempt to regain its share in the mobile market?

In a question-and-answer session at a conference in BlackBerry’s Waterloo, Ontario home town, Heins says the company is not “getting into the 50-, 60-buck segment,” reports Bloomberg. That is “not BlackBerry,” he says. Heins adds that this does not result in value for the company. “Understand where you are playing and resist being talked into segments that you know will not serve your purpose and will not result in shareholder value.”

Here are a few highlights:

• BlackBerry is focusing on launching flagship products first. Even in emerging markets like India and Indonesia, the company is banking on a trickle-down effect, in which more affluent flagship device users are seen to influence other users in their purchase decisions.
• The Z10 sold out in India only after two days, even as it was priced at an unsubsidized US$800. Heins says BlackBerry was prepared with at least five days of stock when the Z10 launched on February 26, but is “now scrambling to reload those channels.”
• Heins adds that BlackBerry is launching all its new devices with LTE capability. These will have “the whole 10 yards,” and will be “more geared towards those price bands where people need to be.”

BlackBerry has somehow held its market share in places like Indonesia and India, where the inexpensive BlackBerry Messaging Service has become a mainstay. To illustrate, the basic BBM would usually cost in the vicinity of US$2.50 per month for unlimited service, which is cheaper than most data plans and SMS charges. Market share is shrinking, though, especially with the rise of cheap data plans and free cross-platform messaging services.

A good idea?

BlackBerry seems to be holding on to its enterprise-oriented roots in focusing on the higher-end of the market. But given BlackBerry’s ailing market share, is this such a good idea? Here are a few thoughts.

Android skyrocketed to popularity in both established and emerging markets because of the wide array of devices offered within the platform. You have flagship devices like the Samsung Galaxy Note 2, middle-of-the-road smartphones like the LG Nexus 4, and even basic entry-level devices like the Samsung Galaxy Pocket. While it is arguable that this wide array of offerings has resulted in fragmentation and a wide disparity in user experience, there is no question that Android is the market leader in smartphones today (and tablets are rising, as well).

But perhaps BlackBerry wants to continue offering its older devices for the lower-end of the market, much like how Apple services this segment with previous years’ devices. For instance, the iPhone 4S and iPhone 4 are still being offered on contract as either the $100 or free smartphone in the U.S. There is one big difference, however. BlackBerry’s latest BB10 platform would only be supported on new devices. Apple, meanwhile, continues to push upgrades to previous models, as long as the devices are still capable. For example, even the four-year old iPhone 3GS supports the latest iOS 6.1.2.

Is BlackBerry willing to alienate this segment of the market that would not necessarily pay for an expensive high-end device?

Still, BlackBerry will be launching more affordable devices after its focus on the high-end. While this will not necessarily mean devices as cheap as US$50, BlackBerry fans can still expect devices aimed at the mid-range.

It’s a question of keeping the user experience consistent with BlackBerry’s aims. If you’re familiar with how low-end Android devices result in a disappointing user experience, then you will know how that will tend to turn off users.

So it’s a tradeoff between gaining market share and ensuring a consistent user experience. Which will it be for BlackBerry?