Research in Motion’s BlackBerry Bold 9900 is selling for high prices at launch, which may make it hard for the company to regain traction as it competes in the U.S. smartphone market.
The Waterloo, Ontario-based company will be selling its latest Bold at relatively high prices on all four major U.S. carriers. Verizon, Sprint and AT&T plan to charge $250, and T-Mobile on Wednesday announced it will carry the Bold for $300 after a $50 rebate.
The new Bold may be one of the flagship BlackBerry devices on the market, but the pricing strategy is strange for a handset considered to be a transition to a new range of smartphones based on its QNX platform, set to launch next year.
The Bold’s specs may entice faithful BlackBerry fans, as it boasts a 2.8-inch touch screen, trademark QWERTY keyboard, new BlackBerry 7 OS and NFC capabilities. But the phone’s the high price will likely not attract new consumers, and even diehard customers may wait for RIM’s new QNX devices, which should bring RIM up-to-date on apps and user experience.
The Bold is still about a year behind current market standards in both hardware and software. While the bulk of a smartphone’s lifetime cost is usually factored into its monthly plan pricing, the Bold 9900?s upfront cost may still seriously affect its success or failure in terms of sales.
The Bold’s high starting prices are odd given its dated specs and also considering RIM’s earlier comments. In June, co-CEO Mike Lazaridis described forthcoming BlackBerry 7 devices as best suited for “lower-cost” markets “where cost is premium.”
The high price may be RIM’s attempt to stay in the premium high-end market, but the company is struggling to compete as consumers shift to app-centered, touch screen devices. Formidable competition like Apple and the slate of devices running Google’s Android platform have found their niche in this area, but those slow to react, like RIM and Nokia, have faltered. As a result, RIM’s profits are stalled and even its stronghold in the enterprise market has begun to ebb away.
In terms of individual devices, RIM’s average selling price (ASP), the full sales price paid by consumers and carriers, has been flat to declining over the past few years, going from $371 to $309 and dropping 18 percent from 2009 to today. Some speculate the high price of the Bold is RIM’s attempt to boost its ASP, especially since RIM still shows increases in sales, although it falls short of overall market growth.
Carriers may also be to blame for the Bold’s cost, since wireless operators ultimately determine handset price by subsidizing the market cost in exchange for locking in customers into contracts. The price may reflect an unwillingness to subsidize a phone they believe will find a limited audience, or RIM’s unwillingness to accept lower subsidies on the part of carriers.
The Bold may still find an audience, but RIM must play a delicate game in pricing. High prices may dissuade consumers from the Bold and push them to cheaper phones, but low prices eke away at profit margins that companies must make up through high sales volumes. Given this predicament, RIM may find it hard to expand its user base and win consumers away from rival handset makers.
RIM may yet offset the Bold’s high price with future releases. The new Torch handset will likely refresh at cheaper price tag, and two new BlackBerry 7 devices are set to roll out later this year. But with the Apple’s iPhone 5 out this fall and new Android devices flooding the market, the Bold faces fierce competition. Its high price will do it no favors, not even among RIM’s faithful.
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