Tuesday, October 13, 2009

The treacherous heart of the BlackBerry

This is why carriers like the BlackBerry -- and why you won't (emphases mine)...
BlackBerry Aims to Suit Every User - NYTimes.com

... The company has also cut the manufacturing cost of BlackBerrys by using variations on its existing designs that have allowed retailers to sell the devices at prices matching much simpler phones. For example, the BlackBerry Curve, R.I.M.’s most popular phone, is offered at Wal-Mart for about $50 with a contract. About 80 percent of R.I.M.’s sales this year have been to consumers, not to employers.

Mike Lazaridis, R.I.M’s other co-chief executive, says that the low cost of BlackBerrys allows cellular carriers to make more profit from the BlackBerrys than from other touch-screen handsets.

“We help carriers be profitable,” he said. “We gave them a way to get into the data business. Now we are giving them a way to manage their costs when they are worried that all they have to sell is highly subsidized smartphones.”
The BB is very profitable for carriers, because it costs very little to produce, it comes with a mandatory data services account and a 2 year contract, and it's such a crummy net device that it makes no demands on carrier capacity.

So consumers get a "free" phone that costs a bundle and delivers very little value.

Great stuff for the carriers, but eventually consumers will catch on.
Update 10/14/09: On the other hand, when AT&T moves to bandwidth adjusted pricing, the BlackBerry will be rehabilitated. It’s costs will move inline with value delivered – a productivity oriented low-bandwidth consumption platform. At that point, however, it won’t be nearly as appealing to the carriers.

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