As bad as we think? #BlackBerry

It was announced recently that Windows phones overtook BlackBerry for the number 3 position in the world. This news came at a very bad time for BlackBerry as its own sales numbers weren’t nearly as high as expected. The fact many people seem to be overlooking is that BlackBerry 10 has only been available for 7 months while Windows phones have been available for just about 2 years. To compare a phone that has over a year in maturity to a new operating system seems ludicrous. The fact that there are 3 vendors pumping out Windows phones against a single vendor is another issue that needs to be taken into account. The news has been so willing and eager to jump on the father of smartphones that its like their waiting for any screw up. A new phone, new OS, lack of apps, poor marketing and terrible media have all contributed to a slower then expect start of sales. So it is truly as bad as people think? Lets take a quick peek at some numbers and see if its truly as bad as the news makes it out too seem.

The first full quarter of Lumia sales seen 2 million unit shipped. Blackberry 10 sales were roughly 1 million in the first quarter with the Z10 only being available in markets like Canada for 1 month. The Lumia sells more phones in the first quarter then BlackBerry 10.

The second quarter of Lumia sales seen 4 million units shipped to market compared to the 2.7 million units of BB10 that were shipped. The Q10 was only available in a couple markets again for a short period of time before the quarter ended. This is expected to be the biggest seller as many BlackBerry faithful have the qwerty keyboard phone.

BlackBerry 10 sales have only lasted through 2 quarters and it is extremely tough to predict the sales for the upcoming quarter. But if we were to continue to see the same growth as occurred from Q1 to Q2 then we could expect that 4.4 million units would be shipped in Q3. So lets see how that number compares to the Q3 sales of the Lumia lineup.

The third quarter of Lumia sales sent another 2.9 million units to the market. This is a 30% drop in sales from the previous quarter as the company transitioned from Windows 7 to Windows 8 phones. If we were to see the growth continue at 1.7 million units per quarter for BlackBerry then the Q3 numbers would see 4.4 million BlackBerry 10 devices sold. This means that in their respective quarters BlackBerry would sell almost 2 times what Nokia did if they had started sales together.

Obviously this number is based on the previously quarterly growth and would be subject to chances in the market, sales, etc etc. This simply proves that it isn’t all that bad when it comes to the sales of BlackBerry 10 devices. There is always room for improvement and many people were hoping to see much higher numbers then we have seen but it takes time. I believe that continuing with BlackBerry 10 till their first year portfolio runs out is the way to go. Thorsten Heinz said he wanted to take the company through the process and quitting while their are still plans on the table isn’t the right option.

There is also the issue of the company behind the product. The decline of BlackBerry has been well noted in tradition media and every step taken has been marred with bad press. In North America there isn’t the same press about the issues that Nokia is facing which may be much worse then BlackBerry. Nokia lost 98.8 million dollars in the last quarter even though they sold 7.4 million Lumia devices. The 9 months prior to the Q2 2013 results they had lost 4.1 billion dollars which included many restructuring charges as they cut massively into their employment pool. 24,500 workers will have lost their job come the end of 2013 as the company works to keep its head above water. While they have a large pool of cash they are consistently burning through it with their restructuring and quarterly losses. The position at BlackBerry while slightly better could be headed the Nokia way if things don’t start to turn around. Blackberry lost 84 million dollars in Q1 2014 as issues in Venezuela negatively affected the regions sales. Blackberry too has cut around 6,000 jobs in the previous months as they restructure the company in order to become more cost effective.

I try to write my blog posts as unbiased as possible but I will admit I have time/money invested in BlackBerry so I am biased. I don’t believe that comparing sales of Lumia devices which are in their second generation to first generation BlackBerry 10 devices is fair or accurate. Truly when we break it down the numbers are similar and with growth in the market of BB10 devices the company will continue to grow and proper. Truthfully I don’t believe that BlackBerry can take on Apple or Google but they can take on Windows and win the battle. We simply need more time to develop and push BB10 devices to market.



Service revenue over hardware sales?

Blackberry announced at BlackBerry Live that they would be brining BBM to IOS and Android which ended the rumours over the last couple years of such a move. The announcement immediately sparked reaction on both sides of the BlackBerry World both for and against the move. One side said that it would bring BBM back to relevancy and the other side said that it killed BlackBerry’s competitive advantage. BBM is a huge feature for BlackBerry and one of the reasons that it is so popular in developing countries. Of course in the end we will have to wait to see if the move works for the company but both sides in this argument have points that are important to look at. I am on the fence with this move as of right now, I can see it either working extremely in BlackBerry’s favor but also see the potential for negative results.

The adoption of BBM on Android and IOS will be important to the future of this venture and will determine if it is a success or failure. With BBM losing its exclusivity the people who were staying for BBM now have options to look elsewhere. The impact could be felt in hardware sales as people who were tied to Blackberry specifically for BBM are now free. Hardware sales likely wouldn’t be affected in the developing countries as older phones are still popular and selling like hotcakes. The number that would be hurt the most would be the subscribers which is a factor for investors looking to the health of the company. The next couple quarters could be very good for Blackberry and be reminiscent of 2008 but a declining service income and subscribers could scare investors away. If the adoption rate of BBM amongst android and IOS users isn’t good then BlackBerry needs to be ready to pull the plug. I believe that BlackBerry is looking at BBM on other platforms in this fashion.

In today’s market many companies are unwilling to provide a phone for a employee. Many employees also hate having to carry around 2 or 3 devices to be able to keep their personal and work lives separate. Companies want a secure way to transmit information from 1 device to another and in the world of Bring your own device (BYOD) an app like BBM provides that. BBM on an individual Android or IOS device wont really do anything to help the companies bottom line, in fact it may hurt it. If BBM is able to spread to hundreds or thousands of these BYOD company phones these companies may consider hoping onboard BES10 and providing BlackBerry with a new service revenue. I believe that BlackBerry is willing to lose some hardware revenue to Samsung and Apple as they have been for the last couple years in order to steal away potential service revenue from other management companies. Getting BES10 into these companies that may have used BlackBerry in the past will allow BlackBerry to show the potential of BB10 and the QNX system. This may help to rekindle the love that companies once had for BlackBerry and help to cement the #1 position they have in fortune 500 companies and governments across the world. The initial loss of hardware sales to get the service revenues should help to reduce or eliminate any losses if they can get into enough new businesses. If this is BlackBerry’s plan then they are hoping that the old BlackBerry users remember and still love BBM and will be willing to adopt it on their new phones.

This is a risky move for BlackBerry but a very necessary one. If BBM can grab even 20-30 million more users through IOS and Android then it becomes more relevant and a bigger asset for the company. I know there are 76 million BlackBerry subscribers and that many of them use BBM but the application has lost its luster. It needs a boost in term of tricks, features and most importantly people. As an investor I am leaning towards this being a good sign but I do hope that BlackBerry has its finger on the kill switch if they don’t see it going their way.

Could HTC and Blackberry work together?

The mobile tech space is a fast paced and unforgiving sector where only the strong survive and the weak die. There are numerous differences between these two companies but there are also a couple major similarities that could help to revitalize these two. Both companies are currently struggling with the changing mobile space and are being forced out by bigger and better known companies like Apple and Samsung.

HTC phones run on Google’s Android operating system which is the largest and fastest growing OS of any currently available. Google’s Android OS is open scourced which allows any company that wants to license it from Google to use it in there own phones and add little touch ups to make it there own. The OS has garnered a lot of success with companies like Samsung, HTC, Google, Motorola, Asus, and more all using it for there devices. Having all these different options also allows for developers to have a better audience and many companies support the operating system for that reason. The problem that companies like HTC are now realizing is that Samsung is starting to muscle them out of there market share. HTC has been pushed out of a couple markets by different companies and the budget sheet is starting to show the effects of the loss. Its also widely thought that Android is synonymic with Samsung and that many people are using the brand because of the name. HTC has had trouble differentiating itself from the rest of the pack and is starting a downward slope.

Blackberry is also a struggling brand and is in major need of good news. Research in Motion who owns the Blackberry brand lost 500 million last quarter and shipped the lowest number of phones since 2007. The brand is currently in transition to its new operating system Blackberry 10 from the BB OS brand which has served them for 15 years. While the operating system has yet to be proven there has been a lot of support and excitement for what has been seen to date. When released in January, 2013 the BB10 OS will only be available on a Blackberry phone. The time between today and the release will be important for the company as a whole to keep afloat and to have enough cash to push the product. One of the ways that Research in Motion has talked about staying afloat is possibly licensing the BB10 operating system to another company or opening up portions for a fee. Companies such as Facebook, Microsoft, Samsung and Amazon have all been rumored to have interest but nothing has officially materialized.

Two companies that I could see working together at HTC and Blackberry. HTC is a company that is getting lost in the mess of Android, even as they produce good phone. Blackberry is in the middle of pumping out a new OS which could help to find its way in the changing marketplace. Blackberry’s weak point in the past has been a full touchscreen phone and that is likely were HTC could help out the most. HTC has only built touchscreen phones and has been successful in making extremely good phones. In turn for the help HTC could license BB10 and allow them to become a company with a different perks then the other android phones. These two business could come together to build a stronger platform and create a viable third option to iOS and android. Together these companies could form a strong relationship like Nokia and Microsoft to try and reclaim the 3rd spot. Each has there own strengths and weaknesses but together they could push out a great phone and a great OS to reclaim a portion of the mobile space.