The Blackberry 10 rollout: Death by a thousand paper cuts

By Michael Carney , written on March 4, 2013

From The News Desk

It’s been only one month since the company formerly known as RIM publicly debuted the Blackberry 10 platform and corresponding flagship devices (on which its comeback hopes rest), and yet there are already serious cracks in its foundation. While the devices aren’t yet available for purchase in the US, early sales figures in the UK have been underwhelming, despite early buzz. Add to that the fact that several key developers have publicly shunned the platform, and recently reported security vulnerabilities that throw into question the one thing that supposedly set Blackberry apart.

Today the platform received yet another in a series of recent body blows when Netflix announced that it had “no current plans for a BlackBerry app.” The announcement comes just two weeks after Instagram gave it a similarly cold shoulder, with a source close to the company telling AllThingsD, “There will be no [native] Instagram for BB10 for now. Frankly, I’m not sure there will ever be.”

While the absence of Netflix may not be the biggest killer on Blackberry smartphones, it could be a non-starter for many considering any forthcoming Blackberry 10-powered Playbook tablets which have been rumored. Without access to iTunes, Hulu, or Amazon Instant Video, such a devices would be severely handicapped from a video entertainment perspective. Blackberry has begun to sign its own studio partnerships to make content available for download, but for consumers already spending money and amassing libraries on other platforms, the lack of compatibility will be a tough pill to swallow.

On launch day, Blackberry shocked most by announcing that its new platform would launch with 70,000 apps, including Facebook, Twitter, LinkedIn, and Evernote – which are baked directly into the OS – as well as Foursquare, Skype, Dropbox, Kindle, WhatsApp, ESPN Scorecenter, Rdio, and Angry Birds. This is a good start, but it’s heavily slanted toward the professional crowd. There’s not a hot new product in the bunch. In addition to Netflix and Instagram, there’s been no mention of teen favorites Tumblr, Snapchat, Spotify, and Pandora, among others. As our Nathaniel Mott initially concluded, Blackberry seems “caught between the consumer and the enterprise markets.”

As Y Combinator partner Gary Tan concluded via an online survey of approximately 1,000 respondents, the most popular social platform among 13 to 25 year olds is actually Tumblr, followed in order by Facebook, Twitter, Instagram, then Snapchat. Blackberry would love to round out its collection of the top five, but its limited audience and unknown future aren’t doing the Waterloo company any favors in wooing high profile developers.

Adding insult to injury, it’s not just entertainment-focused users that got bad news about Blackberry in recent weeks. A memo from a Canadian federal agency called Public Safety Canada warns users against using “PIN-to-PIN messages,” – aka BBM, aka the single most popular feature of the platform. The memo calls the messages, “the most vulnerable method of communicating on a BlackBerry,” and cautions that messages sent over the network could potentially be read by any BlackBerry user, anywhere in the world.

This warning may or may not affect sentiment around the new devices, but it’s hardly the ringing endorsement that the company would have liked from the very hometown government that should be its biggest cheerleader. The company followed up the news with its own announcement of a security vulnerability, rolling out a critical update for the way the messaging app processes TIFF images. In isolation, the report seems trivial at best, but as a continuation of this unseemly post-launch period, Blackberry isn’t doing itself any favors.

Shortly following reports of “strong demand” during the company’s initial UK launch, further digging revealed that most retailers received significantly limited supply creating artificial scarcity. According to some analysts, retailers received only five to ten units to be allocated to walk-in customers and 20 to 30 units for pre-orders. Most stores reportedly sold out these units over a period of two to three days, a far cry from the millions of units typically sold on the launch weekend for a flagship Apple or Samsung handset. Faucets estimated that the flagship Z10 device would generate quarterly sales of just 100,000 to 150,000 units. AllThingsD arrived at similarly flaccid conclusions when polling 60 Canadian smartphone retailers.

Following these tepid launch assessments, the Telegraph reported that numerous retailers began discounting the new devices significantly after only the first month. The moves led a Pacific Crest analyst to say, “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.”

More recently, Sprint, the third-place US carrier, confirmed that it wouldn’t carry the touchscreen-only flagship Z10 device, opting instead to carry only the QWERTY keyboard-equipped Q10 model. There’s been no word yet on how the big boys AT&T and Verizon will proceed, but every lost ally stings, be it a carrier or the developer of a hit app.

It hasn’t been all rocky news. Blackberry revealed current tests around an intriguing real money messaging product that aims to beef up its popular BBM platform and compete with the likes of Western Union and MoneyGram. At the same time, the above-mentioned rumors of an imminent Playbook tablet at least reiterates Blackberry’s commitment to the platform and gives hope for a well rounded hardware ecosystem.

But the promises of future improvements are much too little, too late. Believe it or not, I had hoped that Blackberry could pull off some manner of comeback, if only for parity’s sake. Unfortunately, there’s mounting evidence that Blackberry is just too far behind and that despite two plus years in the oven, the new platform won’t give developers or consumers enough incentive to take a bite. At this point, the only suspense seems to be what will be the straw that ultimately breaks the camel’s back?

[Image courtesy Vector Hugo]