Ronnie05's Blog

Requiem for the Blackberry Dream

Posted in Mobile Devices and Company Updates by Manas Ganguly on September 21, 2013

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Blackberry has finally cuts its jugular and the ride has winding down. Its been in the making for over 3 years now. The revenue and device shipment numbers are pretty surprising given how weak it is – the situation at Blackberry is much worse than anticipated. A couple of questions to be answered for Blackberry at this critical moment…

BB rise and fall

Where Blackberry disconnected?

1. An ageing portfolio that never saw much in terms of innovation – There were always a handful of Blackberries – Storm, Bold, Curve, Torch – 4 devices through 4 critical years when Apple and Android stormed the markets.
2. The customer experience was very below average – The BES and BBM were great services – but Blackberry was mighty bland in designing experiences around the customer and these services.
3. In an age where Applications are key and must be scalable across platforms, BlackBerry apparently provided no incentive to port many older BB7 business apps that enterprise companies use to run on BB10 on launch. That was being stupid.
4. Blackberry misread the BYOD wave in enterprise, blinded by its past glory of securitized enterprise solution. The segment where Blackberry was unassailable till sometime back -has simply moved on to other solutions from companies like include Citrix, MobileIron, Maas360, Microsoft and Airwatch.
5. Customers today are averse to be bogged down in their choices- to a hardware with a service bundle. They value flexibility in terms of choosing their own device and “Appizing” it with enterprise and security features.
6. The Q10 and Z10 was a case of wrong targeting – Blackberry could have probably done better with mid level and entry level phones for the customer – Their carrier commitments would have given them some solid seeding in the market and made numbers happen. As the portfolio is now pruned, it is interesting to note that within 7 months of launch, the Z10 is now being re-positioned as a mid tier device for emerging markets. The concern still remians that Samsung is eating everybody’s lunch in the mid segments across markets.

What do the current set of actions at Blackberry signify?

Cutting the headcount hardly addresses any of Blackberry’s pressing needs of the day.However, I don’t think anybody could do much better with it. The current cuts helps cleans things up for any type of potential deal or acquisition that they’ve been very forthright about seeking. Beaten on Hardware and pushed out of its enterprise security space- It’s probably going to find limited value for most potential buyers.Cutting operating expenditures deep is the best they can do to try to stabilise this ship.

Is Blackberry Attractive? What parts?

Even if Blackberry were to dissolve its hardware arm and its services arm and use its services arm – it would hardly be a cake walk as one would otherwise expect. The BYOD and the Apps space has cannibalized Blackberry’s USP. It is hardly the incumbent in the enterprise market.

Blackberry’s agreements and contracts with hundreds of mobile operators could be valuable to someone who has an intent to engineer a new mobile global network of devices or services (Apple, Google, Visa, Mastercard).

So, what can Blackberry expect?

The best Blackberry can hope for is a Nokia-style takeover, though who would actually take over is tough to imagine.

The other possibility is that a leaner BlackBerry will abandon the consumer market once and for all and get rigorous about becoming a niche company focused on a particular customer — one that needs security, control, and a few particular tasks done remarkably well, possibly even as a software rather than a hardware company. If the company is deciding to evolve to a service company, Blackberry needs to act small and become innovative like a startup

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It has been a pleasure. Au Revoir Blackberry!

Posted in Mobile Devices and Company Updates by Manas Ganguly on September 21, 2013

Nokia is selling off. Blackberry is winding down. Too Many other Asian Smartphone Vendors are churning out of business- the seismic level activity in Smartphone Industry is beginning to take its toll

Blackberry’s white knights – Z10 and BB10 haven’t brought the moolah home. In the Q2 pre-released earnings call, Blackberry has said that it will take a $1 billion pre tax hit on the their bottomline. Much of this – about $950-$995 million is to do with unsold inventory of Z10 at Blackberry. Worse there is a 40% workforce cut on the cards. In Q2, Blackberry sold close a 5.7 million units to end customers. BlackBerry is now predicting total second-quarter revenue of about $1.6 billion, compared with Wall Street’s forecast for $3 billion. Interestingly enough the revenue from the BB10 devices has not been accounted for – and all the revenue is mostly from the legacy BB7 platform. I was always skeptical of Blackberry’s comeback attempt with the Z10 and BB10. Always felt that Blackberry was looking at the wrong end of the market to stay relevant.

The good news is that it has a solid $2.6bn in cash and is debt free. The other is that the BBM would be made available to Android and iOS to increase its customer reach.

BB is seeking the current strategic alternatives –
1. Split the company. Spin of BBM as a services group
2. A sell out to a possible suitor for the hardware business – BB becomes a services company

OR

1. Sell out the unit as a whole.

Going forward, BB is not only pruning its workforce but is cutting down its portfolio also, focussing on enterprise and prosumer-centric targeted devices, including 2 high-end devices and 2 entry-level devices in all-touch and QWERTY models. Blackberry is also supposed to be refocussing on end-to-end solution of hardware, software and services for enterprises and the productive, professional end user. This means that Blackberry is exiting the consumer market and getting back to its fort- the enterprise.

In any case Blackberry now ceases to be the force it was in smartphones. Blackberry had its moments in smartphone folklore and history – and yet again the example of a mobile phone company – which was out innovated in the game.

Read other posts:
2012: Make or Break for Yahoo!, Blackberry and Nokia
Blackberry share prices fall below book value
Blackberry: Past Perfect, Present Tense, Future Unsure : Part 1, Part 2, Part 3, Reprise

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