Where did it all go so wrong for BlackBerry?

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With sales at their lowest for almost 10 years, is it time to finally wave goodbye?

“The device business must be profitable because we don’t want to run a business that drags onto the bottom line. We’ve got to get there this year.”

This was the damning verdict from BlackBerry CEO John Chen last month, following another disastrous quarterly performance that saw losses of £517 million.

It is the second threat by Chen in under a year and the one time giant may abort the hardware business, having stated in October it would need to sell a minimum of five million units a year to continue.

Sour performance

Such a small target shows just how far BlackBerry have fallen in recent years. Sales figures in 2011 show the one time Candian giant shipped 52.3 million devices, holding around 11 per cent of the global  smartphone market – only bettered by Nokia (15pc), and joint leaders Apple and Samsung on around 19 per cent. Last year, sale numbers fell to just seven million, while forecasters predict just 3.2 million for 2016 – three million below Chen’s goal.

In the same period, BlackBerry’s market share has plummeted from 11 per cent to just 0.2, according to Gartner. Perhaps the most telling detail in the firm’s Q1 results (ending March 31) was BlackBerry’s decision to not include quarterly sales numbers. Instead, the firm focused on financial performance, clouding the waters further by bundling both its hardware and software/licensing arms together.

The division saw revenues fall from £128 million to £113 million year on year, while revenues for the business as a whole fell from £450 million to £260 million year-on-year.

Bold decisions failing
The continued decline presents clear evidence its so-called “make or break” measures, put in place by the manufacturer and most notably Chen, have so far failed. Numerous efforts have been made. These include an overhaul of its operating system BB10 in January 2013, rebranding from Research in Motion (RIM) to just BlackBerry, a failed $4.7 billion sale attempt to fellow countryman Fairfax all in the same year. It also broke ranks by launching its first Android device, the Priv, in December last year and has shed more than 4,500 jobs since 2013, with total numbers reduced from 17,500 to just 7,000 since 2011. This included outsourcing the manufacturing of its handsets to Foxconn in 2014. Even US president Barack Obama has now ditched his device in favour of a Samsung.

With consumer sales now all but a thing of the past – and with UK operators and retailers largely removing its devices from its shelves – its chances of survival depend almost exclusively in its heartland, business.

With that in mind, Mobile News spoke with a number of B2B resellers and leading industry analysts to get their views on where they feel things have gone so wrong for the company and whether they see any hope for a turnaround.

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Can you see BlackBerry return to profitability for hardware?
Voice Mobile CEO Ian Watson: “Based on sales we’ve seen, probably not. We’ve marketed the Priv handset to our customers and we haven’t had many sales. BlackBerry was banking its hopes on it, but I don’t see it helping them achieve what it wants. We’re not seeing positive feedback for it.

“BlackBerry has never really developed a touchscreen handset appealing to customers, or an operating system designed for more than just sending or receiving emails. The handsets are very limited when it comes to options for applications and people don’t see them as desirable anymore.”

Rainbow Communications head of mobile sales Paul Lawther: “BlackBerry’s sales keep falling and its hardware portfolio doesn’t have anything that’s innovative enough. We ran a survey with them to find out why they weren’t choosing to go down the BlackBerry route and the consistent feedback is that the devices don’t have the same capability, user friendliness or choice of applications as an Apple or Samsung device.

“Ninety to 95 per cent of our sales are from iOS or Android. There’s just no demand for BlackBerry handsets anymore. We used to sell thousands.”

Sales flat-line
O2 partner Welcomm Communications purchasing manager Darren Tiday: “BlackBerry was a big player when I came into the business eight years ago. We’d sell hundreds of them a year. It’s now an extremely small part of what we do. It thought it could release a game changer like the Priv, but our sales do not reflect that one bit. We don’t even get double digits in terms of handset shipments.”

Vodafone partner Next Communications MD Mark Finlayson: “I can’t see BlackBerry recovering. It doesn’t have a big enough market anymore. I don’t think they have a clear strategy on how to solve the problem. They’re well behind Android and Apple in terms of market share and nobody has an affinity for the brand anymore. The Priv is far too expensive and it isn’t selling. People have gotten used to touch screens, which have gotten bigger, so there’s less need for a physical keyboard.”

IDC senior analyst Susana Santos: “I doubt it. When a company offers its employees a choice of a Samsung, Apple or BlackBerry device, it’s very unlikely they’ll choose the BlackBerry. You can easily get a handset that’s just as good for half the price and they do everything a BlackBerry does in a much easier way.  There are more apps to choose from and the user interface is much easier to navigate.

“It’s just not an interesting brand anymore. There are too many rival devices out on the market that will prevent them achieving that profitability. It’s too optimistic. People think of BlackBerry as something from the past. It’s had its time.”

Behind the curve
Ovum lead analyst Ronan De Renessee: “The handset division hasn’t been doing well for quite some time now. I don’t see from our view that the hardware division will come back into profitability. It’s very difficult to gain share in this market.”

uSwitch senior commercial manager Ernest Doku: “No, it’ll be difficult for a brand that’s lost all of its core resonance. It’s in the wild. You’ve got Samsung and Apple dominating and BlackBerry are irrelevant in the consumer space. The Curve was a fantastic device because you could use BlackBerry Messenger to message other BlackBerry users for free.

“Now you have messaging services like WhatsApp, which are more useful because they can work across different platforms. Opening BlackBerry Messenger to every platform was too little too late. It’s a two-horse race with everyone else scrambling to make ends meet. It’s a tough sector and BlackBerry won’t be able to come back with its devices. The market isn’t there for them anymore.

“Equally the Priv is just too expensive when you have devices at half the price delivering equal if not better experiences. A few people have tried to stick with them, but the support wasn’t there. They need developer support for applications, which just doesn’t exist on the same scale as Apple or Samsung.”

Where did it really start to go wrong?

Watson: “It was when they released the Z10 (released 2013, pictured left). Consumers  just left in droves because they couldn’t find many apps on a BlackBerry handset compared to an Apple or Android device. iOS was so simple for people to use, whereas BlackBerry required more needless actions to do tasks.”

Lawther: “For me, it was the BlackBerry Storm (released 2008). That was the turning point in terms of decline in their hardware. It just wasn’t intuitive enough when you compared it to the iPhone. It wasn’t as user friendly and the touch screen was much harder to use. At that stage a lot of loyal BlackBerry customers had been put off. That device pushed them to explore their options with the likes of Apple, and they discovered iPhones were more user friendly.

“The device just didn’t look as good, it wasn’t as easy to use and consumers just felt at that stage there were more options than BlackBerry.”

Lacking of Appeal

Finlayson: “Apple and Android is what went wrong for BlackBerry. It didn’t respond to the threat from Apple and Android until it was too late. It was too self-centred and wasn’t forward thinking enough. People were ditching their products for better ones that had superior user interfaces.

“BlackBerry devices didn’t offer anything like web browsing or applications, and nobody wanted to develop for it because there were no customers there.”

Out of touch
De Renessee: “When the iPhone launched, they didn’t transform the business quickly enough. A similar thing happened to Nokia. They didn’t catch onto the popularity of touchscreen technology and they stuck with the keyboard. It made BlackBerry products look outdated. It was a dying factor when so many people found touch screens more practical.”

“It gained some inertia in the market with customers who used BlackBerry Messenger. However,  BlackBerry’s products were no longer unique and you had similar applications on other devices.”

Allen: “It didn’t have the same number of apps available on Android and iPhone devices, which put customers off. People started realising Android and Apple handsets could do so much more and BlackBerry lost its customer base. It didn’t react quickly enough.

Can you see it being sold off and brought back like Nokia?

Lawther: “No. It’s highly unlikely anyone would purchase the hardware arm of BlackBerry. I just don’t see any hardware manufacturer that would look at BlackBerry’s current business and believe they could actually turn it around. There’s a brand problem. It’s been in that much of a decline that it’s hurt their brand as a hardware manufacturer.”

Tiday: “BlackBerry isn’t as strong as it used to be. The whole USP was the use of a secure device. The perception of that is that has disappeared. Other manufacturers are now offering similar products that can do more. We don’t get the indication these are necessary devices now. More people are likely choose popular devices like Apple or Samsung.”

Finlayson: “I don’t think they can successfully sell it. There’s no brand, continuity or customer loyalty. They haven’t got massive sales volumes and they don’t have an attractive proposition in terms of market share. It’s very bleak for them.”

Santos: “It’s different with Nokia because it is still the number one in the feature phone market. BlackBerry isn’t even a leader in any market, let alone smartphones.

“I don’t see any reason for any company to buy BlackBerry’s handset division. Their shares and revenue are declining and they continue to do so every quarter. We’ll just have to wait and see, but the numbers are already telling the story.”

Doku: “There aren’t many people who are going to be interested in purchasing a brand so late in its life cycle. It’ll be tough for anyone to buy it back and bring it back to profitability.”

Software security
Former OneCom and EE sales director Steve Allen: “It’s probably the horse has bolted and left them well behind. People follow trends. They don’t want to be the odd one out, so it’s going to be very difficult to buy a business when everyone else is using an iPhone or an Android device.”

What do you see as its greatest asset today?

Watson: “They’re still one of the best for software security. When most businesses need to protect data and emails, they’ll probably choose BlackBerry software first because they feel confident about the security.”

Lawther: “BlackBerry as a business should focus entirely on its enterprise solutions. Their software business continues to achieve scale and traction.

Tiday: “It’s the security software. There are still certain services using BlackBerry because of its reputation for secure content, but that’s at danger from other manufacturers such as Samsung and Knox, which are just as secure. BlackBerry isn’t the only manufacturer out there with secure options now.

Finlayson:  “I’m not sure they’ll survive with software on its own, but they’ve got a greater chance there. Software isn’t a very big market but customers are still security conscious, especially in the enterprise space. BlackBerry still has a major brand there. However, they’ve got some serious competitors and the risk to them is that other vendors are also getting good in that area.”

So, all that said, is this the end for BlackBerry now in handsets?

Watson: “I don’t think they have a future in handsets. They’ve not delivered what the consumer wants. It’s a difficult path for them. Phones do so much more now. They’re not just email devices. People want to be able to do everything on their phone fast, easily and securely. They want to run software for their business. BlackBerry was too late to catch onto that trend, which Apple and Samsung did. There’s just too much demand for Apple and Samsung now. BlackBerry hasn’t managed to take advantage as well as the manufacturers have and have been crowded out.”

No future

Lawther: “Absolutely. If you look at BlackBerry’s financials over the last five years, it’s a consistent decline and I don’t see that discontinuing. It has tried to become more innovative, but that hasn’t worked.”

Finlayson: “BlackBerry hasn’t got enough customers to justify its existence as a handset manufacturer. I just can’t see a future in handsets for them. This industry is an expensive one and you have to sell millions of products to survive. They seem to have failed on their hardware side.

“We see zero sales for BlackBerry handsets, we’ve not sold one this year. We used to sell thousands. I don’t think it’ll last the year. Nobody takes BlackBerry seriously on the handset side anymore.”

Santos: “If they don’t do anything to change, they will likely die. BlackBerry devices aren’t that cheap and it doesn’t have the same marketing investment as the likes of Huawei, Samsung or Apple.

“You need more than just a good device in the high end. You need the proper investment in marketing for operators and retailers to tell customers about your devices. This gives consumers more confidence to go for a device they know is good. They will have more trust in a product if they know the operator is advertising your products as good ones. Many consumers go for devices that are recommended to them. Samsung, Apple and Huawei have been very good at getting the networks and retailers to do that. Customers hear a lot about those brands, but not BlackBerry.

A tough road back

Doku: “It will certainly be the end for BlackBerry in its current form. They face difficulty from competitors who are releasing devices that are more capable. You can get the BlackBerry experience elsewhere now, so they’ve got no unique selling point. BlackBerry fans want peerless email support and security, but not at a price point that breaks the bank. They don’t have the marketing spend to get the same network support as the other manufacturers. It’s going to be a tough road back for them.”

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