Blackberry Q5 - A 'Budget' Phone?

This week, Blackberry’s BBRY newest phone, the Q5, launched in India and while its commendable that the company is at least acknowledging the need to cater to the budget phone market, most agree that it missed the mark in this case.

India is the world’s third largest smartphone market, making it a key battleground for manufacturers. Not only India, Africa is a huge and growing market where showing up with a $600 phone is becoming more like a comedy routine than a business strategy. That might have worked three years ago but not in 2013.

Blackberry’s answer was to develop the Q5—a “budget” phone, to satisfy the need for a cheaper alternative to its already-overpriced Q10 and Z10. Crunch some numbers and you’ll quickly learn why there’s a large degree of comedy in this move as well.

The Q5 doesn’t sell for $600. Instead, the price tag is around $400. Give the company credit for coming in $200 lower than the Q10 but that’s hardly a budget phone in these countries. To reach “budget” status, Blackberry needs to knock at least another $250 off the price. The Nokia NOK Asha 201 costs $78 and the LG Optimus L5, $150.

Or, you could step up to what would be considered a luxury phone like the Blackberry Z10 for $449 and the Samsung SSDIY Note II for $508. (Prices found at Amazon.com AMZN)

Related: What will Mobile Giants do with All of those Used Phones?

The Q5 might be a budget phone in the North American markets but not in emerging markets where the only remaining growth potential lies.

According to AllThingsD, the only hope for Blackberry is that it becomes something of a luxury phone in that market but that’s unlikely.

Blackberry can’t afford a stumble in these markets. Its share of smartphone shipments has already fallen to 5.9 percent in 2012 from 12.8 percent in 2010 and while 2013 statistics might prove a little better since the introduction of the Q10 and Z10, it’s not likely to be significant.

Apple AAPL will have its eye on how the Q5 fares in these markets. The company is planning to launch a budget iPhone but investors are wondering what it will consider, “budget.” Note to Apple: The American version of “budget” is different than the emerging market version. Somebody forgot to tell Blackberry.

Disclosure: At the time of this writing, Tim Parker was long Apple.