BlackBerry growth plans hit operator brick wall

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EE, O2 and Three snub new Passport handset as market share plummets to just five per cent

BlackBerry’s attempts at a UK comeback have received a major setback – after operators EE, O2 and Three all rejected its new “make or break” Passport device.

The snub – which accounts for approximately 60 million customers – is the latest blow to the Canadian firm, which has seen its share in the UK enterprise market plummet from 18 to just five per cent* in the past year.

Only Vodafone and Carphone Warehouse are currently stocking the new device, which went on sale on September 24 at £530 SIM free. This is in stark contrast to the Z10, BlackBerry’s first BB10 handset 18 months ago, which was snapped up by all major networks and retailers.

No demand
Kantar Woldpanel ComTech director Dominic Sunnebo reacted to the news: “Operators will only take smartphones that their customers are asking for. It’s simply that consumers are not asking for BlackBerry.

Gartner research director for smartphones Roberta Cozza added: “Mobile operators aren’t convinced by the Passport, or BlackBerry as a whole.

“Shelf space is in short supply and operators have to be careful with the products they stock, but they no longer believe in BlackBerry or think they can make a return on investment with their products.”

Bleak outlook
Globally, the outlook for BlackBerry remains as bleak with IDC forecasting that the manufacturer’s share will drop to as little as 0.3 per cent in the next four years.

BlackBerry chief operating officer Marty Beard, who last month hosted the London leg of the Passport launch – insisted BlackBerry is not considering exiting the hardware space, despite reports in the press.

Chief executive John Chen, who was speaking at the Toronto launch, told reporters BlackBerry must sell 10 million devices a year to be profitable.

The firm sold 20.5 million handsets for the year ending March 1, 2014 – down from 28.1 million a year earlier – and 49 million the year before that.

Hardware accounted for 46 per cent of the firm’s total £561 million turnover in its Q2, down from £962 million year-on-year.

Beard said the “success” of the Passport, which is focused almost exclusively  at business customers, as well as the upcoming Classic, will “carry” the firm forward.

“We know this space better than any other in the world, and we know this market is underserved today,” said Beard. “The strategy of our turnaround is based on what we know and what mobile professionals demand the most.”

Right move
BlackBerry’s renewed focus on the B2B market – and all but ending its interest in consumer – has however prompted a largely positive response from the market, with many believing it to be the right move.

Its “brave” decision to break away from the traditional  smartphone “slate” design, with a  never-before-seen 4.5-inch screen device, has been largely commended although they admit this is unlikely to transmit in to high sales.

CCS Insight chief of research Ben Wood said: “BlackBerry should be applauded for doing something different. One of the biggest challenges in the smartphone space is differentiating your offer.

But if you are a BlackBerry devotee, and like the productivity that a BlackBerry gives you, it will add utility for someone used to using their phones.

“When you have invested time in it and used it for a while, it is an interesting product. In fact, out of all the new devices I have used recently, this is one of the most interesting this year.

He continued: “John Chen reckons if he can sell 10 million phones a year, he can support a devices business. Apple sold 10 million iPhone 6 and iPhone 6 Plus on its launch weekend and BlackBerry has had more than 200,000 pre-orders in one weekend. That’s not a bad start towards Chen’s goal.”

IDC’s Francisco Jeronimo added: “It’s a good first step forward but I can’t see it being a top seller compared to the other devices in the enterprise space.

“BlackBerry will be a niche player and there is no problem with that, so long as they have enough profits to survive. They don’t need to be number one.

Gartner’s Cozza however feels it’s too little too late. “The BlackBerry Passport won’t be a resounding success. The battle for the consumer market is done for BlackBerry – the Passport won’t be pushed at them.

“BlackBerry needs to win the hearts and minds of enterprise users but it won’t even be able to do that with the Passport. It won’t be a main volume driver.”

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