BlackBerry's new Z10 smartphone goes on sale in the U.S. this weekend, almost two months after its debut in other countries, putting the company's turnaround plan to the test in its largest single market.
Chief Executive Officer Thorsten Heins is kicking off U.S. sales of the device tonight at a theater in New York's Times Square. The event, where rapper Ludacris and R&B singer Janelle Monae are slated to perform, marks the arrival of the Z10 at AT&T Inc. stores tomorrow. The phone will be offered by Verizon Wireless on March 28.
Heins is trying to reverse BlackBerry's fortunes in the U.S., where the one-time smartphone leader has lost ground to Apple Inc.'s iPhone and Google Inc.'s Android. Sales in the country fell by almost half to $520 million in the third quarter from a year earlier, through the U.S. still accounts for about a fifth of revenue for Waterloo, Ontario-based BlackBerry.
"There's no risk of overstating the importance of the U.S. for BlackBerry," said Ramon Llamas, an analyst with IDC in Framingham, Mass. "It's such an important bellwether market."
AT&T, the second-largest U.S. carrier, will offer the Z10 for $199.99 on a two-year contract, putting it at the same price level as the main iPhone. The phone was first unveiled on Jan. 30, and it's been available for weeks in the U.K., Canada and other markets. Heins has attributed the U.S. delay to the longer equipment-testing procedures of American carriers.
Verizon Wireless, the nation's biggest carrier, has begun taking orders for the Z10 ahead of making it available in stores next week. Sprint Nextel Corp., No. 3 in the market, won't sell the Z10 at all. It's waiting to offer the Q10, a version with a smaller screen and physical keyboard that's coming out later this year.
Early demand suggests that the Z10 will perform as well in the U.S. as in BlackBerry's home market of Canada, Chief Marketing Officer Frank Boulben said in an interview.
"I expect that we're going to hit the ground running tomorrow with substantial pent-up demand," he said.
The U.S. will add to the phone's global footprint, Boulben said. By the end of April, BlackBerry expects the Z10 to be available from 150 carriers around the world. By this time next year, there should be six different BlackBerry 10 models on the market, he said.
"It's not a one-trick pony -- neither from a country standpoint nor a device standpoint," Boulben said.
The rollout of the new phones is supported by the biggest marketing campaign in the company's history. As part of the blitz, BlackBerry splurged on a Super Bowl ad in early February, betting that it could build excitement around the phone even though a U.S. debut wasn't imminent.
Now that the Z10 is finally here, the key to its success will be how well store salespeople can demonstrate how the phone works to both BlackBerry loyalists and others, said IDC's Llamas.
"This is an entirely different platform," he said.
Critics have praised the Z10's features, including its virtual keyboard. It also dispenses with a home button, which is used by the iPhone or Samsung Electronics Co.'s Galaxy S to take users back to the main screen. The Z10 relies instead on gesture-driven navigation to switch between applications and peek at messages while still in the Web browser.
Shares of the company, formerly known as Research In Motion Ltd., have rallied 36 percent this year on optimism that the new lineup can revive BlackBerry's prospects. The stock added 1 percent today, closing at $16.16. Still, it remains down almost 90 percent from its 2008 high of $147.55.
The staggered rollout of the new devices makes it tougher for analysts to predict the impact on quarterly results. Sales estimates for the period that ended March 2 range from as little as $2.41 billion to as much as $3.42 billion. The average estimate is $2.84 billion. While that would represent a decline of 32 percent from a year earlier, it's a smaller drop than the company posted the previous quarter.
Ehud Gelblum, an analyst with Morgan Stanley in New York, raised his rating on the stock this week to the equivalent of a buy, citing the potential for the BlackBerry 10 phones to lift the company's average selling price and profitability.
Still, BlackBerry will struggle to regain lost market share in the U.S., he said. The company will appeal mainly to existing BlackBerry users looking to upgrade, rather than gaining converts from Android and Apple's iOS operating system.