BlackBerry is facing some trouble. Just yesterday, we heard that a few U.S. carriers and retailers slashed the price of the BlackBerry Z10 and Q10 smartphones to $49. A new report from Barron’s today claims that the company will be slashing production of the two BB10 devices, due to weak sales.
One analyst, Stuart Jeffrey of Nomura Equity Research lays out his opinion on what actions BlackBerry could take now:
“The company has said that such things are part of normal lifecycle management of preparing for new devices that will be coming out. We do believe there is this new A10 device coming this fall. However, having price cuts this early before a new product is actually announced seems unusually early to us. It seems hard not to conclude there is excess inventory. The problem for BlackBerry include their not having enough apps, and missing some of the key apps. They’ve really got two choices. They can keep iterating, trying to improve their ecosystem, trying to improve the devices, and try to close the gap with Google’s (GOOG) Android and [Apple’s] iPhone. That will be challenging given that they have far more limited resources compared to those two. The other possibility is to promote this secure workspace they are offering to allow their apps to work on Android and iPhone, and go down the route of being more of a services company rather than a hardware company. We’re a little bit cautious about that dynamic, because half their revenue in hardware is coming from places such as the Middle East and Africa. As Android penetrates those markets, we think the hardware business goes away for BlackBerry there, and those are not the kinds of markets that are most likely to take up BlackBerry’s services offers. So they’re really dependent upon Europe and North America. The other question is, we don’t know if they can make their services work properly on the iPhone. And they face competition for mobile device management from the likes of Good Technology and Mobile Iron.”