It seems BlackBerry’s big bet on the BB10 platform has not transformed into the success that the company was hoping for. In its recent Q3 FY14 earnings report, the company admitted that sales of BB10 devices continued to decline through Q2 and Q3 FY14. An effect of this was a build-up of inventory, which has led to a primarily non-cash, pre-tax charge against inventory and supply commitments of approximately $1.6 billion in the third quarter of FY2014, said the company, attributing this charge primarily to its BlackBerry 10 devices. The company also cancelled the launch of two new devices and said that it will “reassess and revise” its future demand assumptions for finished products, semi-finished goods and raw materials.
The BB10 stable currently consists of four smartphones – Z10, Q10, Q5 and Z30. exchange4media had earlier written about how the company was offering various schemes and offers to entice customers (BlackBerry sets festive offers as market share falls ) and it seems that this strategy is set to continue through 2014. Currently, the Z10, Q10, Q5 and Z30 retail at Rs 25,000, Rs 36,000, Rs 23,000 and Rs 40,000, respectively, in online stores (all prices are approximate). The Z10, in fact, has seen its price slashed by around 40 per cent since the time of its launch. Prices of other models have also been reduced heavily in recent months.
Apart from the reduction of its inventory costs, it seems the Canadian smartphone maker is also keen to reduce its existing inventory as much as possible. This would be in keeping with the company’s plans to create a leaner structure, what it terms an ‘operating unit organisational structure’, as it seeks to reduce operating costs. The recently announced five-year joint development partnership with Foxconn, of Apple fame, where the Taiwanese OEM will not only manufacture new, cheaper smartphones, but also assist in design and look after their inventory, is yet another step in this direction. The first smartphones from this partnership are expected to be launched in April 2014 in the Indonesian market. Other fast-growing markets (India is likely to be included in this category) will also be target markets for the new Foxconn-manufactured smartphones.
Under its interim CEO John Chen, BlackBerry seems to be heading back to its roots – enterprise consumers. In Chen’s vision for BlackBerry, the smartphone (hardware) business has been relegated in priority, with the focus back on secure enterprise services and messaging. For the smartphone consumer, it probably means cheaper BB10 phones in the future. It also won’t be surprising if the company tries to woo SMEs in India with cheaper, enterprise-grade offerings (something similar to Tally, which has created a niche for itself among SMEs with its accounting and ERP solutions).