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As per media reports, sales of Research In Motion Limited’s (BBRY - Analyst Report) new BB10 operating system-based smartphone Z10 has slowed down after the initial good response in the gulf region. The news comes on the back of a poor response for the company’s latest smartphone in the U.S. market, where it made its debut on Mar 22, 2013.

BBRY launched its much-awaited BB10 operating system (OS) based device on Jan 30, 2013 and started selling the phone in the Gulf region from Feb 10, 2013. Initially the device received a good response as it was one of the most anticipated smartphone launches of 2013. However, the initial momentum fizzled out after 15 days of the launch.

According to the Canadian handset manufacturers, the company has received good pre-orders for the phone and are working with its two distributers in the Gulf region to keep pace with the demand. However, one of the two distributors has sold only 300,000 Z10 phones since its launch while a couple of online retailers are selling the phone at a discount of 15%.  

Historically, Gulf, which consists of six oil rich countries, is an important market for BBRY. At the end of 2012, BBRY became the leader for smartphones in the Gulf region, with a market share of 35%. The Canadian company has even left behind Nokia Corporation (NOK - Analyst Report), Apple Inc. (AAPL - Analyst Report) and Samsung Electronics Company of South Korea.

BBRY witnessed a similar fate in the most lucrative North American market, as the company failed to create any meaningful response when it launched the phone with AT&T Inc. (T - Analyst Report) during last weekend.

Despite the negatives there are some reasons to cheer for Research In Motion Limited.  Z10 is now available in 25 countries and according to recent report has done well in its home country. BBRY has also received a record single purchase order of one million handsets from a telecom partner. Furthermore, BBRY is yet to launch its QWERTY-based phone in the Gulf region, which is expected to be more appealing, particularly to business customers.

However, it remains to be seen how the company counters declining sales in the Gulf region particularly when Samsung Electronics will start shipping its Galaxy S4 smartphones from late Apr.

Research in Motion Limited currently carries a Zacks Rank #3 (Hold).

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