Having argued many times that BlackBerry made missteps in its climb back to smartphone relevance; the new product strategy appears sound. I still believe that the physical keyboard version of the latest BlackBerry – the Q10 – was a better way to evangelize the latest platform for the company formerly known as Research in Motion. But with hindsight now, it is clear that the decision did not have the dire consequences for the company's future that were suggested .

The company now has very positive forward motion . You might even say momentum as sales of the Q10 appear to be strong. The consumer market for the Q10 has responded positively. With virtually no competition for the physical keyboard, BlackBerry fans created pent up demand for the new hardware. BlackBerry released its Q1 results this morning. The stock has cratered .

Who can rationalize the response of traders and investors? Blackberry lost money again last quarter. But at $84 million, that's a tiny fraction of the more than half a billion dollar loss experienced in the year ago quarter. According to the Financial Post , revenue was $3.1B up 15 % compared to the previous quarter.

Critically for the future of the company, there is widespread belief that BlackBerry shipped about seven million units. This was well above analyst projections that ranged from 2.5 million to 5 million , estimates that were increasing as the earnings announcement grew closer. However, Blackberry chose not to release unit sales information which could be a big part of the stock market hammering .

My belief is that BlackBerry is well positioned to be successful as long as it can avoid the arrogance of past strategies. Looking back even one year, it should be easy to see that there were huge unanswered questions about whether BlackBerry would still be relevant in the market today. The company has a critically acclaimed new platform, BB 10, that is gaining traction with consumers. It launched a touchscreen model (Z10) that I now have to admit was likely a necessity given the ubiquity of that form factor. There is now a physical keyboard model (Q10) to satisfy legions of die-hard BlackBerry users, many either waiting or naturally entering a hardware upgrade cycle.

At this point, I believe BlackBerry has weathered the storm very well, and they aren't standing still. The company is ready to move lower in the price hierarchy to capture a potentially large mid-range market with the Q5. No pricing strategy has been officially announced, but the lower-cost handset is expected to be priced around half of its more expensive sibling. With good marketing, the Q5 could really complete BlackBerry's comeback.

What makes the Q5 so much less costly than the Q10? Not much it seems. The Q10 has a super AMOLED display while the Q5 deploys a more conventional LCD. Screen resolution specs are identical. I expect many users will care little about the improved brightness and color saturation offered by the AMOLED version, especially with the significantly lower price. The case may also have a less luxurious feel. Would you care?

That sums up the differences in the models. (Okay, I left out the four case color options for the Q5.) The hardware similarities are the real story. As you might expect, BlackBerry will not use different applications processors to save money. That would require far too much re-engineering effort for little cost savings, not to mention a better volume for price negotiations with Qualcomm for the Snapdragon S4 that is deployed to both the Q5 and Q10 . Possibly for the marketing angle, the Q5 clocks the S4 slightly slower – 1.2 rather than 1.5 GHz.

Quickly rounding out the few remaining hardware changes, the Q5 offers 8 GB of internal NAND flash memory storage which is half the Q10. This isn't much of a differentiator in a device that allows additional micro SD memory. Lastly, the Q10 offers an 8 megapixel camera compared to 5 megapixel on the Q5.

BlackBerry appears poised to complete an incredible comeback considering the odds they faced. I offer two pieces of advice. Market the subtle differences between the Q5 and Q10 carefully. Finally be very wary to avoid the hubris that nearly put the company on the skids. Rumors of a phablet (speculated as A10) have been circulating. BlackBerry doesn't need to compete in this niche, and it shouldn't. Let's hope the phablet is just a rumor. If not, it could be the lame sequel to the PlayBook disaster.

 

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