Monday, March 25, 2013

Worries Hit RIM After U.S. Launch

For some wireless retailers, the latest BlackBerry is no hero.

The touch-screen phone from Research In Motion Ltd., the Z10, has received tepid marketing support from AT&T Inc. since its debut in stores on Friday, dealing RIM an early setback in its drive to improve sales in the crucial U.S. market.

It isn't clear it will do much better when it rolls out at Verizon Wireless and T-Mobile USA later this week. While RIM has bet its turnaround efforts on the Z10 and a keyboard-equipped phone set to launch later this spring and is backing them with its biggest-ever marketing program, retailers in the carriers' networks aren't planning a heavy push.

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Verizon Wireless launches the Z10 on Thursday. Verizon retailer Diamond Wireless, which is based in Salt Lake City and has more than 200 locations in 17 states, will stock the phone at all of its stores and kiosks and hopes it will do well, said David Thornton, Diamond's director of purchasing. But Diamond won't be giving the phone the "hero" status afforded top devices, and any special marketing support will have to come from RIM, Mr. Thornton said.

"If they're going to provide it and put it up on their dime, we'd be interested, but we don't have anything planned," Mr. Thornton said.

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The Z10 has been available in Canada, the U.K. and some European and Asian markets since February. While RIM hasn't revealed sales figures, company executives said they are pleased with results in those markets and the first weekend isn't an indication of the promotional push for the new phones.

"This is just the very beginning, it's not one store or one location that will define the success of the launch of BlackBerry 10," said Frank Boulben, RIM's chief marketing officer, referring to the underlying operating system upon which the Z10 runs. Marketing materials have just started to be delivered to carriers and retailers and will continue to be delivered in the coming weeks, he said.

Investors will likely get a fuller update on Thursday, when RIM reports quarterly results. The company's shares dropped 4.6% on Monday to $14.23 on Nasdaq, after falling more than 8% Friday, as investors began to worry about the U.S. launch.

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A Blackberry Z10 is displayed at a store in Toronto.

Retailers selling phones and service plans on behalf of T-Mobile USA, which launches the Z10 on Tuesday, said they weren't planning to push the new BlackBerry as aggressively as they expect to push Apple Inc.'s iPhone, which T-Mobile has said it would start carrying, or the new high-end Samsung Electronics Co. phone, the Galaxy S4.

"It's a big wait and see," Saber Ammori, a T-Mobile dealer based in Michigan with 187 stores, said of the BlackBerry launch. "We're not sure how people will react to it."

Todd Heiner, who owns more than 100 T-Mobile stores across the western U.S., said posters featuring BlackBerry 10 wouldn't arrive in his stores until April 11. At that point, he said, the new BlackBerry devices would likely be moved to more prominent locations inside his stores than they will be this week.

That sort of staged launch is "not too uncommon for a non-hero device," Mr. Heiner said.

T-Mobile USA spokeswoman Anne Marshall said the new BlackBerry will be featured prominently in stores the company owns. But hundreds of other stores are operated by independent retailers like Mr. Heiner.

AT&T said the Z10 is finding an audience. "Many consumers took advantage of our pre-sales and we expect it to be popular with our business customers," spokesman Mark Siegel said.

Best Buy Co., which began selling the phone Friday along with AT&T, has started a staff training program specifically for the new BlackBerry and found "a good level of interest" in the Z10 at its stores, a spokeswoman said.

RIM had a rough opening weekend, however, with analysts warning of a bad showing. Goldman Sachs's Simona Jankowski, in a note to clients Monday, said the launch "was disappointing, with limited marketing and tepid sell-through at AT&T and Best Buy stores alike."

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