BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) may launch its first low cost 3G smartphone, based on BlackBerry 10 software, made in collaboration with Foxconn in April 2014. The device would probably be made for Indonesia. Foxconn has already invested in Indonesia and Mexico to a great deal, and BlackBerry’s decision to produce a device for Indonesia would benefit Foxconn. However, whether or not the decision to woo the emerging markets would prove good for the Canadian Smartphone maker is not known yet.
A long term partnership
BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) -Foxconn Deal extends beyond just assembling the smartphones as the latter would also design phones for the Canadian firm, which is a next level in the value chain. It is a lucrative scenario for Foxconn, which would get an opportunity to enter the highly populated Indonesian market along with playing a bigger role in the global mobile device market. Both the companies entered into 5 year deal where Foxconn would assist BlackBerry in hardware designing while the Waterloo Ontario based company would remain focused on the software.
BlackBerry is looking forward to produce many new phones in Indonesia, and the first such model is dubbed as “Jakarta.” Foxconn or less popularly known as Hon Hai Precision has been for long waiting to set up a manufacturing facility in Indonesia, As of now, the company would manufactures smartphones for BlackBerry in its China Facility.
Intense competition all around
BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) would face competition from local as well as international brands that have expertise in making low cost phones. Chinese Brands like Xiaomi is known for their skills in making cutting edge phones at considerably less price. BlackBerry would have to face a margin cutting and devastating battle in the segment. Colossal smartphone makers like Apple Inc. (NASDAQ:AAPL) and Samsung are already facing the heat from the Chinese gadget market and other developing markets. Xiaomi stated that it would penetrate in the Southeast Asia primarily where Foxconn and BlackBerry would start the first phase of their partnership.
In recent times, BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) failed miserably in the Western markets, but it still holds a strong turf in developing markets like Asia and especially Indonesia.
“I’ve got a really good bill of materials right now because of Foxconn – you know their volumes. I can’t buy components at prices anywhere close to the ones they buy at,” BlackBerry CEO John Chen told reporters.