May 14, 2013 5:01 pm

BlackBerry entering into emerging markets good, but no savior: expert

Shares of BlackBerry (TSX:BB) plunged nearly 26 per cent in early trading after the smartphone maker's latest results fell short of analyst expectations

AP Photo/John Raoux

TORONTO – BlackBerry CEO Thorsten Heins announced Tuesday that the Canadian smartphone maker will release a third new phone to its lineup this summer, aimed at emerging markets.

The physical keyboard phone, which will run the company’s latest operating system BlackBerry 10, will be available to consumers in Europe, the Middle East, Africa, Asia and Latin America starting in July. The phone will not be available in North America.

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The announcement, made at BlackBerry’s annual tech conference in Orlando, Florida, comes at an important time for the Waterloo, Ont.-based company – who has been trying to regain some of its lost market share with its new line of BlackBerry 10 smartphones.

“When you look at all the competitors that sell smartphones BlackBerry is selling the least,” said John-Kurt Pliniussen, marketing expert and professor at Queen’s University School of Business.

“We know that the real growth in the next five years is going to be in the emerging markets, as their disposable income increases, as cellphone coverage increases.”

Read More: Blackberry announces new Q5 smartphone for selected markets

Pliniussen believes that BlackBerry has turned its attention to emerging markets for two reasons; they needed to move to another market after losing their competitive edge in North America, and to catch up with competitors like Microsoft and Samsung who are already entering emerging markets.

“That’s why they are doing this – they are trying to catch up with other smartphone makers who are already making inroads into those markets,” said Pliniussen.

As the North American market becomes saturated, emerging markets are key to growth.

Most reccently Microsoft teamed up with Chinese phone maker Huawei to launch the Huawei 4Afrika in February. The phone runs Windows Phone 8 and comes pre-loaded with applications designed for the African market.

Read More: Microsoft and Huawei launch phone aimed at growing African phone market

According to research from the International Telecoms Union (ITU), there are almost as many cellular subscriptions as there are people in the world, with more than half in the Asia-Pacific region – 3.5 out of 6.8 billion total subscriptions.

Mobile-cellular penetration rates stand at 96 per cent globally – 128 per cent in developed countries and 89 per cent in developing countries.

ITU’s data shows that African markets hold the most potential for mobile companies.

BlackBerry has already experienced success in Africa, thanks to its BlackBerry Messenger service. According to research firm Canalys, BlackBerry held 51 per cent of the South African mobile market share in 2012.

Although Pliniussen believes that a phone tailored to an emerging market is a good move for BlackBerry, he does not think this will be the company’s saving grace.

“It won’t hurt, but this is not a savior – this is a ‘we will just keep floating’ initiative,” said Pliniussen.

Pliniussen compares the battle for smartphone market share to the car sales business – once a sales person successfully sells someone a certain brand of car; they are likely to buy another car from the same manufacturer.

But he suggests that BlackBerry just isn’t good at getting new people in the driver’s seat.

A large key to BlackBerry’s success with the Q5 will lie in the pricing of the phone, Pliniussen said. He notes that if they use a marketing technique called “penetration pricing” – setting a low entry price on the phone initially to lure in new users – they could see better results.

BlackBerry has not yet announced prices or plans associated with the Q5 in any of the countries in which it will be available.

“They key is coming out with something that is perceived to be really cool, really sexy and at a great value. If they did that in all of the markets, they could catch up and start stealing market share from some of the others,” said Pliniussen.

© Shaw Media, 2013

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