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Research In Motion Ltd (BBRY) Faces Tough Competition Here

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Research In Motion Ltd (BBRY)Research In Motion Ltd (NASDAQ:BBRY) unveiled the BlackBerry Q5 smartphone at the company’s annual BlackBerry Live conference in Orlando, Florida. The Q5, the third smartphone running the BlackBerry 10 ecosystem, aims for consumers in emerging markets.

The Q5 is a low-cost version of the BlackBerry Q10 with BlackBerry 10 functionality and a QWERTY keyboard that resembles older BlackBerry Bold and Curve models. The phone comes with a 3.1-inch 720×720 LCD display with 8 GB of internal memory, a 1.2 GHz dual-core processor, and a 5-megapixel camera.

Thorsten Heins, Research In Motion Ltd (NASDAQ:BBRY)’s President and CEO, stated that the Q5 will launch in selected markets in Latin America, Europe, Middle East, and Asia (including the Asia Pacific region) in the beginning of July.

Research In Motion Ltd (NASDAQ:BBRY) has an opportunity to penetrate developing markets filled with consumers wanting to purchase a smartphone, but who do not want to pay the premium price. The ideal price for a phone in North America conflicts the price acceptance in emerging markets where consumers have less disposable income.

Entering emerging markets will help advertise the Research In Motion Ltd (NASDAQ:BBRY) brand and BlackBerry 10 ecosystem across different pricing segments — sustaining revenue growth, subscriber base, and market share in select markets.

If Research In Motion Ltd (NASDAQ:BBRY) wants to see growth, the company needs to attract new customers to the BlackBerry platform, says Charles Golvin, an analyst from Forrester Research.

“If all they’re doing is using the Q5 to retain existing loyal Research In Motion Ltd (NASDAQ:BBRY) customers that’s good — they’re holding the line on market share — but they’re not going to grow.”

Heins did not reveal pricing for the Q5 model. Price is a key figure that will measure the phone’s affordability and profitability in emerging markets against low to mid-range mobile devices. Research In Motion Ltd (NASDAQ:BBRY) needs to establish a price that will yield strong gross profit margins and lure new consumers. The success of the BlackBerry Q5 depends on the price.

Competition in the emerging markets

For years, Research In Motion Ltd (NASDAQ:BBRY) performed well in the emerging markets with its low-cost BlackBerry Curve running on the BlackBerry 7 platform, but it has lost traction in some markets. After analyzing and comparing the company’s revenue breakdown from fiscal 2012-2013, Research In Motion Ltd (NASDAQ:BBRY) gained share in Latin America but remained flat in other select markets. Latin America, with a 19.1% share of its revenue, increased from 14.4%. Europe, Middle East, and Africa earned 40.7% of its revenue, down from 41.6%, while the Asia Pacific region accounted for 14% of its revenue, down 0.5% from the previous year.

Research In Motion Ltd (NASDAQ:BBRY)’s momentum in select markets has slowed down because of Samsung, Nokia Corporation (ADR) (NYSE:NOK), and Chinese handset manufacturers such as Huawei and ZTE that offer cheaper Android and Windows Phone 8 devices. Over the past few years, Nokia Corporation (ADR) (NYSE:NOK) has established itself in the emerging markets for mobile growth. The Finnish company has penetrated the emerging markets, working effectively with Microsoft to deliver Windows Phones, such as its Lumia product line, at lower price points.

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