BlackBerry is Struggling to Gain Traction in a "Very Well Saturated" Market

BlackBerry BBRY, the cellular device manufacturer that once ruled the smartphone industry, is having a very difficult time at retail. The company recently announced that it sold 700,000 fewer handsets than analysts expected. Related: BlackBerry Sold 3 Million Z10 and Q10 Units Last Quarter "It's hard because the entire market has a real saturation problem," James Faucette, Senior Research Analyst of Mobile and Payments Technologies at Pacific Crest, told Benzinga. "If you look at Samsung SSNLF -- Samsung put out disappointing results. HTC put out disappointing results. "We don't know what Nokia NOK did in the second quarter yet but their first quarter was disappointing." BlackBerry is "basically trying to gain traction in a market that's very well saturated at this time," said Faucette. That might be an understatement. Between the hundreds of Android phones that ship all over the world each year, the annual iPhone upgrades, the numerous Windows Phone handsets from Nokia and the advent of the Firefox OS and Ubuntu mobile, there are more than enough smartphones to purchase. Many investors hoped that BlackBerry could find a way to stand out from the crowd and sell a large number of units immediately upon release. That has not been the case. Now there are some concerns that BlackBerry may look to sell its handset division. While analysts from Pacific Crest and William Blair do not expect BlackBerry to break up the business, the company may not have much of a choice if the sales continue to decline. There are rumors that some retailers may begin to pull new BlackBerry handsets, or may simply choose not to order additional units when the current shipment sells out. In that scenario, BlackBerry could be in trouble. Though investors may beg to differ, the company should be safe for the time being, The manufacturer can afford to sell a small number of devices and still turn a profit, especially if it cuts back on wasteful ad campaigns. Mainstream audiences seem to be more interested in the iPhone anyway. Microsoft's MSFT Windows Phone platform could make things worse for BlackBerry. The mobile OS has been slowly but steadily gaining steam in overseas markets -- including places that BlackBerry used to dominate. There aren't any BlackBerry stores left in North America, so the sales decline is unlikely to cause any American retailers to go out of business. Globally it is a whole other story. If the brand dies off, BlackBerry-specific retailers are bound to suffer. The independent locations will need to transform quickly if they expect to survive. In America, one of BlackBerry's biggest problems could be the rise of its competitors' retail presence. Apple has had a special hub within hundreds of Best Buy BBY locations for several years. Samsung opened its own Best Buy hubs this summer. Soon Microsoft will launch a store-within-a-store at virtually every domestic Best Buy location. BlackBerry has little hope of doing the same. Louis Bedigian is the Senior Tech Analyst and Features Writer of Benzinga. You can reach him at 248-636-1322 or louis(at)benzingapro(dot)com. Follow him @LouisBedigianBZ