BlackBerry Posts Surprise Loss on BB10 Flop; Only 2.7m BB10 Devices Sold in Q2
June 28, 2013 2:47 PM
comment(s) - last by
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. (
) -- 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
(BB10). And prior to that, last year it had shuffled management, tapping
to be its new chief executive.
But for all that effort, the
[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.
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. (
, 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
of around $39M USD ($0.06 USD/share). The analysts expected $3.4B USD in revenue, RIM delivered only $3.1B USD.
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, t
he 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.
After all the sacrifices, BB10 is coming up short in sales. [Image Source: Unknown]
. 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. (
), Apple, Inc. (
), and Microsoft Corp. (
) -- 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?"
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 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 --
)?), 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.
This article is over a month old, voting and posting comments is disabled
6/30/2013 5:37:31 PM
Here is what I think.
I do think that understanding markets is important. I do think that platform performance and platform health (using common sense metrics) is important. I don't think that market share is a good proxy for the platform performance of the various mobile operating systems. I do think that by using any of the many sensible metrics that can be used to measure platform performance it is clear that iOS is a very robust and healthy platform that is out performing Android which is a poorly used platform.
I do think that the lazy lumping together of all the various types of Android devices and OS variants in all the very different global device markets into one homogenous lump called 'Android' conceals considerable, interesting, significant and complex differentiated markets, and also conceals some of the more significant reasons for Androids under performance as a platform.
I don't think Apple is remotely 'in trouble' and that in all the markets within which it is a serious player (PCs, tablets, handsets, software, digital content, tech retailing) it is in a very strong position and is mostly the strongest player in each product sector. I do think that the outlook for Apple is very good based on the depths of it's strengths in all it's various products lines and the unusual degree of integration in both it's product lines and in it's corporate governance.
I do think that over the next decade the mobile device markets will be dominated by a mix of the various strains of Android on the one hand and a more monolithic iOS on the other, neither will 'win' and neither will 'lose', both operating systems will be used by in excess of one billion users each within a few years, probably sooner rather than later. Android will generate a great deal of low value added economic activity but like the legacy Wintel PC business it will be hard for most Android OEMs to make much more than thin profit margins although a few will do quite well commercially.
Google, for whom Android users are not customers, will invest heavily in supporting both platforms with it's service offerings and apps so iOS users will lose nothing in relation to Google offerings. On the other hand Apple will continue to invest heavily in it's service and content value stack, which because of it's depth of integration will be best of class, and it's offerings will not be offered to Android users. Apple will continue to dominate the high value added end of the PC, tablet and handset markets, as well as dominating device sales to the enterprise, education and government sectors and will remain very profitable and very successful.
Neither Android users nor iOS/Mac users should have anything to worry about in the future as all will find great products and services available for the foreseeable future.
Blackberry and Nokia will continue to be very weak and will probably eventually disappear or be bought. Windows phone will fail. Windows on the desktop will continue a long steady decline into a relative niche position, profitable, quite large but a tech backwater. Google and Samsung will have a fraught relationship and either side could provoke a rupture but like a bad marriage the relationship could stagger on for a long time before a divorce happens.
"You can bet that Sony built a long-term business plan about being successful in Japan and that business plan is crumbling." -- Peter Moore, 24 hours before his Microsoft resignation
Microsoft: Windows Phone is in Third Place and We're Proud
June 27, 2013, 11:07 AM
IDC: Windows Phone Passes BlackBerry for Third Place in Q1 Shipments
May 16, 2013, 10:50 AM
BlackBerry Q10 Review Roundup; Coming to the U.S. in May for $249
April 24, 2013, 3:40 PM
RIM Posts Another Questionable Video to YouTube
March 19, 2013, 4:37 PM
BlackBerry Offers "Secure Work Space" for iOS, Android
March 14, 2013, 10:51 AM
Moto 360 to go "Champagne Gold" for $299, According to Amazon Listing
October 30, 2014, 3:24 PM
Call-capable Samsung Gear S Smartwatch Launches Nov 7 in U.S.
October 30, 2014, 12:45 PM
Lenovo Completes $2.91B Acquisition of Motorola
October 30, 2014, 11:57 AM
Samsung Electronics Q3 Profit Falls by 60%, Mobile Division Sees 74% Profit Decline
October 30, 2014, 10:10 AM
Microsoft's $199 Fitness Band Packs in 10 Sensors, Works with Windows Phone, iOS, and Android
October 30, 2014, 8:58 AM
Google’s Project Ara Modular "LEGO" Smartphone Shown Booting Up on Video
October 29, 2014, 5:28 PM
Most Popular Articles
Amid Theater Boycott Netflix Defiantly Plans New Movies, Plus 3 TV Shows for 2015
October 24, 2014, 7:30 PM
AT&T Defeats Purpose of New Apple SIM, Locks iPad Air 2 SIMs to Its Network
October 24, 2014, 2:17 PM
CVS, Rite Aid Kill Unofficial Apple Pay Support, Burn Google Wallet Users in the Process
October 25, 2014, 5:26 PM
1 Million Credit Card Activated on Apple Pay Within 72 Hours, Walmart CEO Hopes Visa "Suffers"
October 28, 2014, 8:17 AM
Microsoft's Figures Show Desktop Users Flocking to Windows 10 Preview
October 27, 2014, 11:04 AM
Latest Blog Posts
Costco Gives Employees Thanksgiving Off; Wal-Mart Leads "Black Thursday" Charge
Oct 29, 2014, 9:57 PM
"Bear Selfies" Fad Could Turn Deadly, Warn Nevada Wildlife Officials
Oct 28, 2014, 12:00 PM
The Surface Mini That Was Never Released Gets "Hands On" Treatment
Sep 26, 2014, 8:22 AM
ISIS Imposes Ban on Teaching Evolution in Iraq
Sep 17, 2014, 5:22 PM
Space Terrorism is a Looming Threat For the United States
Apr 23, 2014, 7:47 PM
More Blog Posts
Copyright 2014 DailyTech LLC. -
Terms, Conditions & Privacy Information