Almost since that day, BlackBerry have been on the decline. The iPhone has fallen into the typical aggressive Apple update cycle, with the latest incarnation, the iPhone 5S and/or the iPhone 6 set to launch this september. During this time Samsung have grown exponentially too, to the point that they are now the dominant market leaders, with a 75% market share in the mobile space. All of this had left BlackBerry on the scrap-heap – that was until the BlackBerry 10 OS launch and their new range of smart phones powered by it launched this year. BB10 was heralded as the saviour of the company, so what happened?
Read: Is this the iPhone 6?
This poor performance has clearly left the investors unimpressed. Early trading on Friday saw an immediate 25% wiped off the company’s value. With more bad news forecast, alongside the upcoming launches from Apple and Samsung during Q3, things are beginning to look seriously bleak at BlackBerry.
A CEO in denial
Perhaps of most concern is the apparent state of denial that the companies Chief executive Thorstein Heins has found himself in. In a recent statement, Heins said the company was continuing to focus on the global roll-out of BB10 and was confident it would be a hit with customers.
“We are still in the early stages of this launch, but already, the Blackberry 10 platform and Blackberry Enterprise Service 10 are proving themselves to customers to be very secure, flexible and dynamic mobile computing solutions,” Heins, BB CEO
The BlackBerry Z10 flops
A significant part of the company’s turnaround strategy lay at the feet of the BlackBerry Z10, which launched last quarter as their new flagship smartphone. Ditching the iconic BlackBerry keyboard – which remains one of the enduring popular BlackBerry features – the Z10 closer resembled other popular smartphones.
City Analysts were especially keen to measure the performance of the Z10 in the market, as it has just completed its first quarter of sales in the USA. Whilst granular stats have not yet been made available, Blackberry have released one damming statistic:
Blackberry said that it had shipped 6.8 million phones overall in its first quarter, which compares to 7.8 million in the same three-month period last year. That means that despite the launch of the Z10, as well as the Q10 which did feature the popular QWERTY keyboard, BlackBerry still leaked one million sales over 2013 v 2012.
“It doesn’t bode well for the initial Blackberry 10 launch, particularly the Z10. But even the outlook for a second-quarter loss doesn’t bode well for the Q10 either,” Brian Colello, Morningstar analyst .
Colello is right, quite simply because smart phones are not like vintage wines – their sales do not increase over time. The rapid fire nature of the technology sector in general and the smart phone sector specifically means that new phones have a very limited time frame in order to win the market.
Blackberry face an ever more competitive landscape, and this is only set to get worse this year.
BlackBerry: A company with no identity and declining sales – are they now finished?
When BlackBerry first hit the market, they resonated strongly with the business community. bizarrely, they spent many of the intervening years chasing the younger market, especially with their popular BBM (BlackBerry Messenger) service. During this time they lost their identity, and that perhaps more than anything, has really hurt them. This was eloquently noted by Daniel Ernst, from Hudson Square research:
“They’re not the high-end provider any more, they’re not Apple. They’re not the low-end provider, they’re not Nokia. So they are in the middle and they do relatively low volumes. It’s difficult to make great margins on that kind of volume, so I would say the outlook is quite negative.”
It is now difficult to see where the company can go. There’s little doubt that they put a lot into the big push of 2013. They invested heavily, perhaps wagering a significant chunk of their remaining cash reserves. Despite the denials, BB10 has failed. It is not going to pick up steam during a quarter that will see the arrival of the new iPhone and new releases from Samsung. So the negative outlook may actually be a terminal outlook. Whilst we asked if BlackBerry are now finished, it does appear that they may be reaching their swan song. They may not quite be beyond saving, but it would take a person with incredible vision and direction to pull it off – where is Steve Jobs when you need him?