Let’s set the record straight on this crazy price cutting speculative garbage

BlackBerry 10
By Chris Umiastowski on 4 Mar 2013 04:27 pm EST
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Today we noticed an article in The Telegraph and the headline was quite negative, suggesting that retailers are slashing BlackBerry Z10 prices. They also quoted an analyst, James Faucette from Pacific Crest, talking in very bearish terms about all this.

For the record, I have not seen the Pac Crest report, however the way The Telegraph portrays it, the whole thing appears to be very incomplete. It may be misrepresented by the media, or it may be that this analyst is spinning minor news to support his negative rating on the stock without thinking through the facts clearly.

What's really happening? Gigantic UK mobile retailer Carphone Warehouse included the BlackBerry Z10 in their "This Week's Smart Deal" section. They are promoting the Z10 on a £29/month plan and the sticker price of the phone is also set at £29. This plan operates over the 3‘s network in the UK.

Pacific Crest supposedly wrote in their report, "The case for [BlackBerry's] recovery has been that in the long run, the company could return to selling high-end handsets that would feature enough profitability that handset profits could more than offset long-term declines in the highly profitable service business" and also "We believe that meaningful price cuts so soon after launch, while probably at the initial discretion of the carriers, is likely to relegate the Z10 to being a mid-tier device with very low gross margins."

In plain English, this analyst is saying that price cuts to the Z10 probably mean BlackBerry will never be able to position itself as a high end vendor, and they'll only make little money on handsets.

There is SO MUCH wrong with that analysis! I spent some time digging into pricing and conversing with carrier experts who actually live in the UK market to better understand the situation.

First of all, it's important to note that the Carphone Warehouse (CPW)is a weekly promotion. 3's own website does not match this price. It's quite likely that CPW and 3, together, chipped in to support an aggressive sticker price on the phone for this promo period. If you don't need more than 500 minutes of voice, this is a pretty good deal, by the way.

But to call this a price cut that relegates BlackBerry to the low margin segment? That's just crazy. In fact CPW currently has the Samsung Galaxy S3 on an even better promotion. The phone is free with a £21/month plan on a 2 year agreement. That must mean Samsung is dead in the water with negative margins correct? Oh, right ... we shouldn't read too much into individual promotions.

So let's check out the 3 and EE websites, shall we? If you do this you'll see that the Z10 is priced the same as the new HTC One which is a very high end new phone. I'm not sure how anyone can justifiably conclude that the BlackBerry Z10 is seeing aggressive price cuts.

For those of you reading who actually live in the UK and see the retailer pricing behavior every day please let us know what you think. Our take is that promotional pricing at retailers is extremely common, and the Z10 is otherwise positioned alongside other high end phones at this time.

Source: The Telegraph

Topics: BBRY Editorial

60 comments

stevedion

I think only iPhones are solid enough to have minimal price slashing. Even the S3 was available for free less than a couple months after release in Canada. Only normal they start to decline in price. Doesn't take away from value of phone.

idlin

Not after a month...

Vic_Franklyn

Lets face it, there are always going to be nay sayers and downright jealous little turds out there who are iSheep who are gonna say bad things about BB10.

Technology reviewers are NO exception and they all have either a personal or professional agenda.

Saying BB10 is being heavily discounted puts the idea into people's heads BB10 is sub standard, which is a 180 from the actual facts. Truth of the matter is anyone who has 1 gram of brains knows IOS is a 6 year outdated OS who's time is coming to an end.

________________________________________
I’d rather be a Black Sheep than an iSheep any day.

GeneralHerzog

But....but....but, it's been a few weeks since we saw the last negative headline.

I'm with ya Umi!! This crap is what feeds simple minded folk who don't read real headlines with fact based content.

In fact, I'm now waiting for my simple minded one headline reading coworker to come in and pass on this death blow headline to me. He was ALLLLLL over the BlackBerry is getting out of the consumer market headline (we all remember that one)

Umedon

this James Faucette is the same turd that said “We believe BB10 is likely to be DOA,” back in Nov.
I'm guessing that he is one of those people that have shorted Blackberry stock and is now sweating.

Scorces: http://www.bloomberg.com/news/2012-11-07/blackberry-10-phones-will-be-do...

AngryEdmontonian

Only response I have to Pacific Crest is;

Liar, liar "shorts" on fire.

Canaccord Genuity analyst Mike Walkley - Nuff said!

Shorty's are gonna get burned very soon.

I Bleed Black & Berry

AngryEdmontonian

No se permiten pantalones más mi amigo

I Bleed Black & Berry

savingblackberry

Shorts will burn but Thorsten needs to take his head out of his ass and make a statement. Silence makes things worse. Have a press conference tomorrow and tell the world whats up with Z10 in the first month of its intro.

CakeQuestEdin

As the first poster said, only the iPhone holds up well enough to avoid very heavy discounting. Its early in the phone's life to get a cut but the market in the UK is highly crowded in terms of handsets, networks and resellers.

Three don't have the greatest rep for customer service and network reliability and are up against two highly established networks (Voda and O2), who have the market cornered in terms of business/bigger spend users as they were the two first mobile networks. EE is in the middle of a massive marketing campaign to try and entice users as they had to pay big money for the first 4G licence. And they have to pay Kevin Bacon for the adverts. I bet he wasn't cheap.

Hence the aggressive pricing by Three and EE. Its the same on all handsets really. The iP5 can be had on a similar deal for only £4 more a month.

morganplus8

Heins can clear this all up with some numbers, and, he could announce the launch date for the US. Bring it to America and let's look at those numbers over here. What ever happened to the media of old?

Thunderbuck

It's irresponsible reporting. There's no indication that Z10 prices are coming down in anything other than isolated cases, and in pretty much all of these it looks like it's in the context of a specific offer.

Iamanonymous62

Is it not important to this article to know what the price was before the "cut"?

imcurved

Never thought the number 10 would look that stunningly dramatic like the one in the picture.

elicash

Chris,
Why are the analyst unit estimates all over the map? With some claiming 275-300k units and others in the 750k - 1mm range for the Feb quarter? What kind of channel checks are really being done to get such varying results?
The Canaccord situation was particularly bizarre...cutting from 1.85mm to 300k, and then raised to 800k in a 2 week span. Presumably there was U.S. launch units in his original estimate which was conveniently ignored by the media.
All the bearish analysts seemed to have cornered the same 275-325k range while others are closer to 750k.

BruvvaPete2

When the good sales numbers come out those bears will feel like they've been punched in the face and guts. If they keep their jobs their employers/bosses should be canned too.

MoolahMitch

What is also missing is the fact that the prices were raised after launch as they didnt have enough to sell so these prices bring them back in line to launch!

blackberrykeeper

I'm not trolling.
The fact is though - Blackberry bottled the launch of blackberry 10 and the phones. For one thing playbook owners are still waiting for the 10 update till now. Why wasn't the update released before the z10 launch? Why are we still waiting for it? For another thing why weren't both phones released at the same time on the same day? The company is clearly still struggling. The staggered launch for the Q10 release and the america dates is just exhausting.
I was so skeptical about the launch I simply got a 9900 bold on a two year plan because I thought I would be waiting till june/july for a new phone.
Finally, the fact is - while the new bbOS and the phone specs are just about right for me personally....this business of sideloading apps...? NOT SO HOT AT ALL. I mean, blackberry had months to try to get the apps issue sorted. Apps dont matter to the fans but it matters to the iphone and android faithful who would have converted and they couldn't get that sorted. That is a real pity.
As to the price, well only apple gets to set a premium price for their phones and get away with it because thats how things are. Apple fans think they have value for their buck. Android countered this by producing a phone that is incomparable in specs. Despite a poor OS.

Blackberry apart from the new OS hasn't done anything that justifies the premium price tag. I don't care about apps or specs but I know alot of people who do and they are the converts that blackberry needed.

A price cut on current devices till blackberry can produce a phone that will compare more than favorably with apple and android is not such a bad thing. Especially for the non BB faithful.

Finally as for this sideloading nonsense. I'm sorry blackberry but u got that wrong. Other OS users do this for fun while for blackberry its absolutely necessary? RUBBISH.
BB bold 9900/PB 32gb - still waiting on the 10 update.

BruvvaPete2

So many things wrong with your post it's not funny. It's like you've only been paying attention to half of what's been going on and why BlackBerry has done what they have.

chammer101

100% agree, love his statement "side loading, Other OS users do this for fun while for blackberry its absolutely necessary?"
HUH? I have not sideloaded an app yet, nothing I really care to have that I must side load.

He would be the same person screaming for not including the ability to side load if it was not there.

You just keep chiving on with your 9900 my friend, Z10 would probably be to complicated for you anyway.

blackberrykeeper

@chammer101,
@bruvvapete2,
@bbinplay

I would like you three to look at all the reasonable, well thought out responses on here and ask yourselves between you and me who sounds like a troll?
If you had any issue with what i wrote or a reasonable rebuttal why not just address it? what does any of your responses have to do with this post, the issues raised by it or my response.

Are either of you three even capable of coherent thought or reaction or are you just idiots looking to provoke a spontaneous reaction from people like yourselves? As you can see you three failed. UR COMMENTS ARE A JOKE.thankfully people here stay on the issues raised.

@Abhishek Vora - +1. that's the issue in question. people should answer that question candidly.

I hope BB get the numbers and they will. The Z10 is doing well here in the UK but I also want Blackberry to get things right. Whats wrong with that?

BB9700 to BB9900 + Playbook 32GB - still waiting on the 10 update.

BBInPlay

You are a troll. We can identify you by your astonishing ignorance.

I think the shorts are getting a little bit ansy. It won't be long before the numbers are released for feburary and when they come in at above 1.5 million z10's sold and with positive traction indicators the shorts crap will have less stickiness. R

blackberrykeeper

@chammer101,
@bruvvapete2,
@bbinplay -I love your incredible intellect

I would like you three to look at all the reasonable, well thought out responses on here and ask yourselves between you and me who sounds like a troll?
If you had any issue with what i wrote or a reasonable rebuttal why not just address it? what does any of your responses have to do with this post, the issues raised by it or my response.

Are either of you three even capable of coherent thought or reaction or are you just idiots looking to provoke a spontaneous reaction from people like yourselves? As you can see you three failed. UR COMMENTS ARE A JOKE.thankfully people here stay on the issues raised.

@Abhishek Vora - +1. that's the issue in question. people should answer that question candidly.

I hope BB get the numbers and they will. The Z10 is doing well here in the UK but I also want Blackberry to get things right. Whats wrong with that?

BB9700 to BB9900 + Playbook 32GB - still waiting on the 10 update.

Gekko

i think the Z10 is following the same trend line arc trajectory with the same terminal velocity as the Playbook did.

BruvvaPete2

Holy crap. I forgot people can be this stupid.

mrimg

3 have always ran rock bottom price promotions, compared to the other networks they are still in their infancy yet developing pretty quickly. They put out cheap plans to entice the "may be" consumer who has little brand loyalty and will take up the offer to take advantage of such a cheap cost compared to the other networks.

Let's not forget only a few weeks ago you could have picked up an iPhone 5 on o2 from Phones4u for approx £30/pm with no handset fee, the Telegraph article is unwarranted to say the least.

Rootbrian

Blasted liers. He is going to end up losing his job.

blueblood2013

There is one thing for sure blackberry got the lanch in ireland wrong absolutely no publicity . launched last friday on o2 network only for 1st month not only did I go to buy one and was told by the staff member that they won't be out for weeks clueless ! They are selling them for 239 euro on two year contract on crap plans .so I took to twitter and asked why are o2 In uk same company giving them away free , never got an answer.
Whoever in blackberry is in charge of the Irish market is doing a prity shite job.I so want one be refuse to pay o2 there rip off prices and crap plans . I rember the same store having poeple q up to buy the iPhone not that I would ever buy ,but somthing is wrong in the way blackberry aload o2 to drive people away from its brand with rip off prices here in Irelandpp .

trevorgauntlett

Z10s were free on O2 in the UK until February 13th or 14th with a 2 year contract. Then both the free offer and the discounted monthly rate disappeared. The grass always looks greener.......

Posted via CB10

elicash

Faucette was also quoted as saying that price cut was equivalent to a GBP160 reduction in overall price of the phone that blackberry would ultimately eat. not sure the math on it.

melb_me

If big retailers are using YOUR product as a lost leader on major ads...its all good....all good. I would be positive Blackberry spread around tons of promo cash for these guys.

samuelwhatshisface

Chris, I hope that this sheds some light on the subject! There are plenty of companies here that get deals with networks to essentially 'bulk buy' contracts at a discounted price, and use this discount to give lower prices and incentives to the customers. Websites like buymobilephones.net also do this, but CPW has the advantage of high street prominence and a well established brand.

The 'price cut' is likely a result of this, just like I can find a better deal on the aforementioned website for an iPhone 5 16GB on a £31 contract with Orange than directly with Orange, as the buymobilephones.net offers the phone for free while Orange charge an additional £179 for the phone.

Note, the price won't ALWAYS be cheaper on these websites, as they might have bought them at a price and need to stick to that for their 'batch', while Orange, O2, etc., may change their prices as they see fit.

Sources: http://www.buymobilephones.net/apple/apple-iphone-5-16gb-black
http://shop.orange.co.uk/

The Selected Fruit

Hi Chris,

I always enjoy reading your well reasoned and balanced articles here on Crackberry.

Yes, you are right that there are frequent promotions by all carriers. I call them flash sales! Even as I write this, the iphone 5 is being marketed for £33 by Phones4U on a 2 year contract with 600 minutes and 500MB data per month.

In fast changing industries largely influenced by technology such as mobile telecoms, it is extremely difficult for the telecoms analysts to forecast the future direction of the industry never mind predict quarterly sales. Having said that, there are one or two analysts who ought to hang their heads in shame for the poor research notes that they publish.

I still laugh at the bullish analysts who have $1000 PT for Apple though.

okkio

I don't really like to talk about my store (and I won't say the name) but I am selling accessories for phones and tablets pc. I am not selling phones because it is too hard to compete against the big ones! However I have access to stock from my suppliers. One has Z10 in stock (they are the supplier for Phones 4u, Carphone warehouse etc...), and today I receive a special offer with a price drop on the sim free Z10 (around £8 discount wholesale price). OF course if you buy a lot the discount would be higher. I don't know this is normal but i find a bit early for a discount already from suppliers. On the other hands I agree with some comments. Why they didn't sell the Q10 at the same time? Blackberry is well known for Qwerty Keyboards. Thats what can differenciate them from the rest. I understand that less people wants qwerty keyboard but I personally believe it was a mistake not to sell both option since day 1. I am in the same situation as Blackberrykeeper. My contract was ending and I needed an upgrade. I tried a lot of phone in the past but lately my phone was the Curve 9320. I really wanted the Q10, but as it is not available I choose the Sony Xperia Z thinking I would love the phone. The phone is great, even spectacular in lot of aspects..but not good for what I need. I am sending it back and tomorrow I am receiving my Bold 9900. Also, I personally hate Samsung because their phones looks cheap. The Bold 9900 has a really premium feeling, but the Z10 not at all. For me it looks and feel like a mid-range Android. That's my opinion.I don't know if sales of Z10 are going very well here in the UK. But the fact is that I never seen anybody with a Z10. But I can see still a lot of people with a Curve 9320 or Bold 9900. Blackberry 7 is still very popular here in the UK. One last thing, I sell the Tech 21 cases for the Blackberry Z10 and so far 85% that I sold are for customers from Europe or Canada and the 15% are for UK customers! I hope it helps. I see Blackberry 10 with plenty of potential..but I think they started with a wrong device or at least not PRemium enough!

Jimcmf

This James Faucette guy is a joke
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He is a BBRY basher and has no idea what he is talking about.
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In Canada, Telus and Rogers raised the price of the Z10 to $149.99 on a 3 year contract, which is up $10.00.
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The analysts don't do any homework. They just report bashing numbers because they have taken a short position, and need to get the price of the stock down so that they can cover.
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This stock just may pop $10.00 per share over night, and then we will see who is up the creek .... without a paddle.
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aha

Not everyone is as smart as you Umi.

angrybear123

All good points, but let's take a step back here and consider that we all want the Z10 and BB to succeed. Naturally, I think we may have a little bit of "confirmation bias" of the phone doing well (eg. the report about x% of sales coming from non-bb users, and the best launch in Canada ever type or stuff), and perhaps we are overly discounting the bad stuff (eg. this).....

I mean, I think the Telegraph story is a little overstated, but I do think it's a little bit early in a phone's life cycle for anyone to be offering it at a discount like this, wouldn't you agree? We are less than a month in, and presumably this third party retailer is already using discounts to clear out some stock? I think you shouldn't discount the possibility that maybe after a strong launch, demand fell off very quickly....

On another note, I'm also kind of surprised that with all the talk about how well the Z10 is doing, I'm yet to spot a single one in the wild. I am concerned this is looking like the Playbook all over again.....

BBInPlay

READ PLEASE WHOLE ARTICLE.

Explains the rational quite well. And then you mention "the playbook all over again" the unless statement, which has nothing to do with the z10's launch have. Nothing!

Shorty shorty!

angrybear123

@BBinPlay, I DID read it.

I am merely suggesting that there are both positive and negative views on the Z10 story. There have been both positive and negative data points. Reading through these posts and articles, it seems that Blackberry fans put undo weight on the good data points, and dismiss the bad ones. This is human nature, so it is to be expected, but it could lead to some very bad analysis regarding what's happening with the Z10.

.... and for the record, I'm long. And rapidly losing faith.

pepe68

Hey Chris, who wrote the article in the Telegraph? I think he needs to do his homework properly before making statements that do not support the facts!

The only other thing I can think of is this individual is BIASED. This is my take on the information you posted here.

In the end, his own (the reporter or journalist) integrity is on the line and therefore, he has demonstrated the lack of.

I would like to see the article in question. Can you post a link here?

RubenDM

Well , something strange happend to me yesterday.
I got an e mail from the blackberrycenter where i pre-ordered my bbz10 white (Belgium).
A month ago i paid 649euro to pre-order it. short pain , jist directly pay the full price.
Yesterday he told me that i would get at least 20euro back. Because the price is lower than expected....

Ofcourse , it is just a little difference , and nothing to worry about.
But for me ? it's a nice one :p

Blackberry by choice , bold 9900 & BB playbook

Russell McNeil

I am sitting hear in Canada listening to Mozart on streaming radio from Prague via the Nobex radio app which I downloaded to my new WhiteBerry Z10 earlier today. The phone is housed in its beautiful hand-stitched leather holster with the swivel bulldog grip which I relied upon for three years with my old Curve. I am a bicycle commuter and have travelled many miles with a BB glued to my side. Last year I took a fall on black ice and fell squarely onto the case as I slammed onto the road. The grip detached from its leather case but the phone withstood the shock and saved me from a nasty bruse or worse by cushioning the fall.

I look at this particular combination of phone and case in its understated tough and practical elegance as a fine thing. The Z10 has class. Discerning eyes see this and see too that the appearance is mirrored in the elegance and practicality of its bug free and seemless navigation. It's a cool thing.

The Z10 is cool (excuse the dated expression but I go back to an earlier era).

As a former science writer I am disconcerted that some tech writers (they too are science writers) seem to be deficient on research skill, or worse, short on ethics. Ethics is paramount for anyone purporting to be doing a journalistic service. To misrepresent or omit - or lie - about information that readers expect to be true is not what real journalists do. I am greatful for forums like this which eventually expose deceit where it exists - crowdsourcing does work.

BBInPlay

+1000 luv your response, short sweet and articulate. Nice!

BoldWorld

Btw on Amazon.com the price of the Z10 has been falling on average $5 a day

Abhishek Vora

The question is not what the Blackberry Z10 is worth. The question is, do you (BB) have the credibility to pitch yourself against heavy weights like iphone & Android devices at such a high price? The credibility which you have lost. BB might have old fans and loyals (one being myself) but many of them have shifted. Isnt your first step to win them back instead of jumping right up to sitting in the same space as iphone ? thats absurd.

Even if you want to project yourself in the higher end smartphone bracket; in your given situation and market position, from where you have to not only win back old fans but also create new customers, from iphone and SIII and keeping them away from considering galaxy SIV, iphone 5s,6 and other new exiting phones, this price tag of Z10 is not only absurd, it is impractical in terms of the company's revival.

Bottomline is : Anything between $650 to $700 (for unlocked) would have been perfect sense in all aspects.

arts02

The truth is this, if this had happened when the I phone 5 was released you guys would be all over it saying the I phone has lost its mojo etc a month in and a reduction in price already...I'm not an I phone fan at all....I have had a blackberry for the best part of 5 years plus (I still remember when I first got the pearl with the roller ball and thought this was the greatest thing I’d ever seen along with the bb messenger) but the reality is this, there has been no I phones esq queues outside stores for the Z10 (here in the UK anyhow)

As for the sales numbers they haven’t been released for a reason they’re just not that good, when was the last time you heard of a company with holding back through the roof sales figures?

I currently have a curve 9360 and if it didn’t freeze as much I would have no reason to upgrade. I toyed with the Z10 and unfortunately it didn’t take me in as much as I thought it would. I have always preferred having a keyboard and one of the main reason for me not having a touch screen phone is purely because when writing e mails having a cursor has always proved handy to scroll through between words to edit them and this was just a lot harder to do with the Z10 and don’t see how this is going to be solved with the Q10, it definitely needs some form of track pad.

But the truth is as mentioned earlier any form of price drop this early into a launch for a phone isn’t good news along with a major (ish) Os update already to preserve battery life and better camera shots in lesser light isn’t ideal and you would have to be foolish to say otherwise....as for now I’ll stick with my curve until the right phone comes along and it pains me to say it just isn’t the Z10

mmik9900

I believe that this is all part of Apple's unfair marketing tactics. Assholes like that are being paid off for running BlackBerry down.

dansus

Plus £29 pm isnt cheap in the UK, its very average.

elicash

James Faucette controls BBRY's share price. He had another negative piece out today. Its become a daily occurrence. Why do we hear so often from this guy and never from Bernstein, GS or Scotia?

http://www.forbes.com/sites/ericsavitz/2013/03/05/blackberry-z10-invento...

mandony

The monthly service charge for US TM is about UDS$20 (13 pounds).

So, in UK they want 29 pounds (USD$44) per month. 29 pounds -13 pounds = 16 pounds over the US TM monthly charge.
For two years: 16 pounds x 24 months = 383 pounds (USD$582) more than US TM for the same period.

US TM will charge $200 for the same phone on the same 24 month period.

The difference in the phone 200-44= (minus) - USD$156
The difference in the two year contract is (plus) + USD582

USD$582 - 156 = USD$426
The UK carrier is making USD$426 extra for the service and 'discounted' phone!

mandony

Fact.
BB makes their money on service charges and appWorld sales.
Samsung and Apple make their money on phones and app sales.
These are different cash flow models.

PastyBap

Bearing in mind that the 3 network is absolute shit. You couldnt even give the contracts away for god sakes! Network coverage is very poor in certain parts of the UK

DSPARKA

http://celebdsdish.blogspot.com/
There's also an app in BlackBerrys Appstore.
I have to first say I like the new look CrackBerry!
Ok to comment on this article I must agree on most of the comments posted about people bashing BlackBerry and the Z10. There is absolutely no phone out there like it. I know newer phones will have advanced features but why can't everyone agree for the time being the Z10 is the the phone to get? I sometimes wonder why the negative blogs and comments about BlackBerry and the Z10. Is it because people do not want see the BlackBerry succeed? Just give the company a chance to get back where it belongs. It is clearly not for everyone but there are plenty of people that likes what the Z10 has to offer. So don't be negative because you have positions in a certain stock or have your favorite. Comment on truth and be fair. Sorry about the rant but it's frustrating seeing the bashing especially when it's false information.