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  (Source: Nickelodeon)
Analysts expected a modest profit, but underestimated BlackBerry's ability to disappoint

There was a time not so long ago -- 5 or 6 years, perhaps -- when the BlackBerry was viewed as a slick status symbol, a business road-warrior's go to device.  But its maker -- the Canadian company formerly known as RIM, now rebranded BlackBerry Ltd. (TSE:BB) -- can only look helplessly back on those days when its brand image held such cachet.

I. BB10 Looks Like a Flop, Early On

Today BlackBerries are the bunts of jokes ("When are you going to get a real phone?") and worse yet they're just not selling.  BlackBerry seemed to give things an honest effort, in January launching its much-delayed modern operating system makeover -- BlackBerry 10 (BB10).  And prior to that, last year it had shuffled management, tapping Thorsten Heins to be its new chief executive.

But for all that effort, the fiscal report [PDF] for Q2 2013 (fiscal Q1 2014) suggest the phonemaker has little to show for it.  Two quarters in and BB10 is starting to look like one big flop.

Analysts hoped for over 3.5 million BlackBerry 10 devices sold; instead only 2.7 million managed to be sold -- in line with previous estimates by market research firm Interactive Data Corp. (IDC).  Embarassingly, even the struggling Windows Phone platform passed BlackBerry by.

Overall BB sold 6.8 million smartphones, 

Worse, BlackBerry bled $84M USD ($0.13 USD/share) -- a surprise loss.  Analysts polled by Thomson Reuters were hoping for a profit of around $39M USD ($0.06 USD/share).  The analysts expected $3.4B USD in revenue, RIM delivered only $3.1B USD.

BB10 phones
The BB10 Q10 (left) and Z10 (right)

But probably the most grim sign for BlackBerry was that only two out of five of its device buyers bought BlackBerry 10 devices.  There were some mitigating factors -- namely, the keyboard equipped Q10 variant (a favorite among some die-hards) wasn't be available till May.

Thus expect BlackBerry to chalk poor BB10 sales up to slow carrier rollouts globally or other excuses.  But at the end of the day, the fact is that these devices were available on many markets (including here in the U.S.); the Q10 has been on sale for a month, and the Z10 was on sale the entire quarter.  

They simply weren't selling; or viewed differently customers didn't appear to feel the Q10 was worth waiting for.

BB10
After all the sacrifices, BB10 is coming up short in sales. [Image Source: Unknown]

Marketing was confused to nonexistent.  Part of that may be due to lack of resources.  After putting so much into its OS push, BlackBerry may simply not have had enough cashflow to buy ad time and hire top grade advertising talent.

In the company's own words it's facing hardship due to the "highly competitive" nature of the smartphone market.  It expects to post a loss in Q2 2013.

II. BB's Best Survival Bet is as a Secured Services Provider

The question is whether it can ever be a viable phonemaker again.  Trying to design you own user interface, app ecosystem, etc. is a massively expensive endeavor that only the biggest companies -- Google Inc. (GOOG), Apple, Inc. (AAPL), and Microsoft Corp. (MSFT) -- for the most part dare to do.

All things considered BlackBerry put up a valiant effort with BB10, considering its limited resources.  Even with all the delays, BB10 has some very nice features and relatively little in the way of glaring deficiencies.  "If it wasn't good enough," CEO Heins and company must be wondering -- "Will anything be?"

RIMdenberg
The RIMdenberg can't seem to catch a break. [Image Source: Jason Mick/DailyTech LLC]

The answer is likely no.

BB10 was almost destined to fall behind Windows Phone -- the sole surprise was that it did so so quickly.  CEO Heins contends, "[BlackBerry customers] an end-to-end solution, including the device."

True, but the worst case scenario is that there may not be that many BlackBerry customers soon.  If only ~1m customers bought BB10 handsets, the global user base may dwindle around 20-30m units (assuming a 2 to 2.5 year upgrade cycle).  Revenues would be at around $1-1.5B USD.  At that level it will be hard to attract developers, and nearly impossible to keep pace with Google, Apple, and Microsoft in OS development.

RIM's stock took a 26 percent hit as shorters and serious investors alike jumped off the ship amidst the grim earnings.

BlackBerry Secure Work Space
BlackBerry is already starting to transistion to platform agnostic services. [Image Source: BB]

Will BlackBerry die entirely?  That's unlikely.  It's losses aren't that bad (particularly, given its $3.1B USD cash pile).  If it isn't acquired (though who would be willing to take on this baggage is a tough question -- Hewlett-Packard Comp. (HPQ)?), it will likely be forced by that "highly competitive" market to become a third party provider of security products -- its service specialty.

It's already quietly started selling secured business service solutions for Google's Android and Apple's iOS.  It wants the focus to be on BB10 -- but that just isn't working out in its favor.  Sooner or later cold hard business realities will be force BlackBerry to become an enterprise service firm and bow out of the hardware market -- no matter how Thorsten Heins and his dwindling brigade of BlackBerry loyalists wish that weren't the case.

Sources: BlackBerry [PDF], Reuters



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RE: Surprise?
By Tony Swash on 6/30/2013 2:55:11 AM , Rating: 1
Meant to add this link to CNN Money article about Samsung's stagnating Android market share and the rise of the (crappy) white box Android handset market.

http://tech.fortune.cnn.com/2013/06/29/apple-andro...

This is also worth a look

http://appleinsider.com/articles/13/06/29/editoria...


RE: Surprise?
By Reclaimer77 on 6/30/2013 10:52:29 AM , Rating: 2
That first article is only relevant for China and China alone. It doesn't have anything to do with the rest of the entire planet. Congratulations on another absurdly-biased link by you submitted as some kind of "evidence" for an absurdly biased point.

Guess what? In China "white box" iPhone knock-off handsets have more marketshare than Apple's iPhone. OOOPS!! So according to your iLogic, Apple's marketshare is stagnating Tony!

quote:
This is also worth a look


Something from Apple Insider? I doubt it...


RE: Surprise?
By Tony Swash on 6/30/2013 12:37:00 PM , Rating: 1
quote:
That first article is only relevant for China and China alone. It doesn't have anything to do with the rest of the entire planet. Congratulations on another absurdly-biased link by you submitted as some kind of "evidence" for an absurdly biased point.


Why is it 'relevant to China and China alone' when such sales are included in Android's global device count and is thus counted as part of it's market share?

If one removes the Chinese white box Android handset sales then Android's global performance and global market share looks a lot weaker.

How anyone can think that the market for tech goods in China "doesn't have anything to to do with the rest of the entire planet" is beyond comprehension.

What is the color of the sky in your world?

quote:
Guess what? In China "white box" iPhone knock-off handsets have more marketshare than Apple's iPhone. OOOPS!! So according to your iLogic, Apple's marketshare is stagnating Tony!


The difference is, oh brainy one, is that the Chinese Android white box sales are included in the Android market share calculations but the Chinese iPhone clones are not included in Apple's sales or installed base figures and they don't run iOS so don't count towards comparative OS usage stats.

This article has some background on how Android activations are calculated and how to interpret them.

https://www.mspy.com/blog/the-math-behind-googles-...


RE: Surprise?
By Reclaimer77 on 6/30/2013 3:36:50 PM , Rating: 2
quote:
If one removes the Chinese white box Android handset sales then Android's global performance and global market share looks a lot weaker.


But I thought, like every good iSheep, that market share didn't matter anyway; only profits?

quote:
How anyone can think that the market for tech goods in China "doesn't have anything to to do with the rest of the entire planet" is beyond comprehension.


Because it's an isolated example. China has always been down with the proliferation of these knock-off brands. So what? Only you would try and make a larger argument based on it. Did you claim the iPod had a weaker market presence because of all the Chinese fake "white box" iPod's sold? Probably not.

quote:
This article has some background on how Android activations are calculated and how to interpret them.


I think you read this stuff so much, you actually SOUND like the bloggers who write it. You just haven't realized it. Let's break down this "article" lol.

quote:
Recent reports from Gartner, Android sold 144,20,300 units in the final quarter of 2012; however, the question is – does it really matter?


LOL great opening statement. Gartner seems to think it "matters".

quote:
The total number of Android units sold is likely not even remotely accurate. It is not really appropriate to lump all Android sales together, all this does is make the platform seem stronger that it actually is. Android does not cover one single entity and so total unit sales do not really mean anything and now


You know reading this crap, I could swear that YOU actually wrote it. Seldom have I seen such a convoluted nonsensical approach to something used to discredit it.

So basically the author is saying that sales of devices running a freely distributed open-source OS don't matter. Because they don't come from any one single entity or vendor, they don't even matter. That's just brilliant LOL!

quote:
It is impossible to count ‘Android’ as one single entity. This has been likened to considering the entire continent of Europe as one single country!


Did anyone else read this and go "WTF"? Great analogy lol.

Tony, honestly, you have GOT to stop reading this garbage. It's rotting your brain. The flaws in this type of amateur analysis are painfully evident to even a high school writing major.

1. Author never backs up his premise. WHY is it "impossible" to view Android as a single entity.

2. Author suggests numbers aren't accurate, but doesn't actually include correct numbers. Assumptions aren't solidified at all.

3. Reader isn't given enough solid data to form an opinion either way. We're just supposed to go with his.

quote:
This type of data should reveal information about a platform’s strength, but all these inconsistent numbers do is conceal Android’s possible weaknesses.


Another unsupported and implied point. Let's say he's right and the numbers aren't exactly accurate (as if they are for ANY platform, but I digress). Then what? What does it mean? If it's a weakness, how is it? On what scale? And WHAT are the weaknesses?

We're left with absolutely NO answers, only implied inadequacies that are suggested as being bad, but we're never given enough data on any point to form our own conclusions.

Tony, this is garbage. Do me a favor and never waste this much of my life again. If you seriously sit at home and read that article and thought this was something you should link this as serious "interpretive" data, while the author actually adds NO interpretations, I pity you seriously.

I recall you and I both share a passion for revealing the truth about the AGW "science". I doubt you would accept something this poorly written as proof of THAT theory...


RE: Surprise?
By Tony Swash on 6/30/13, Rating: 0
RE: Surprise?
By Tony Swash on 6/30/2013 5:56:08 PM , Rating: 1
quote:
I recall you and I both share a passion for revealing the truth about the AGW "science"

Speaking of AGW the absurd headline on this Guardian article made me laugh so hard I actually spate my tea on the table, I thought it might cause you some mirth also. The story relates to the news that a new study has shown that the UK has the world's largest known fracking gas reserves, something which the Green loonies here think is very bad news.

http://www.guardian.co.uk/commentisfree/2013/jun/2...


RE: Surprise?
By retrospooty on 6/30/2013 12:37:08 PM , Rating: 2
LOL... Tony, I am shocked and disappointing in you. Trying to spread disinformation like that... Oh, wait, I forgot, that is the same as every day. #loseragendapost


RE: Surprise?
By Tony Swash on 6/30/2013 1:47:31 PM , Rating: 2
OK I will bite. WTF are you talking about?


RE: Surprise?
By retrospooty on 6/30/2013 6:18:10 PM , Rating: 2
Your agenda... You know, where you post links and comments cleverly crafted to distort the truth and make Apple look better. For whatever reason.

For example, after Q4 2012 #'s came out (the quarter after an iPhone release) you post US #'s where Apple gained marketshare and you claim its meaningful, then in Q1 and Q2 of the next year when Android regains the lost ground and tons more, marketshare is no longer important. Suddenly it's a meaningless stat. If Apple released a bunch of cheaper products and gained a ton of marketshare, but was way less profitable, your narrative would totally change and profits would no longer matter, but marketshare would... It's BS like that is why no-one believes a thing you say.

In reality marketshare is important from a few perpectives. It speaks to the amount of users that are affected by things on that platform. For example, if a great new killer app comes out on WP8 or BB, it doesnt really affect too many people. In that sense marketshare is important, that and it speaks to the popularity of a product. Profit is great... If you are part of the company, but you arent part of the company are you.... Are you? ;)


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