Blackberry Maps Out its Road to Ruin

by Matt Klassen on October 3, 2013

Blackberry has admitted it simply couldn’t compete with the likes of Android and iOS, even in emerging foreign markets where the Waterloo company has long been dominant. In a delayed regulatory filing, one that normally would have accompanied the company’s disastrous second-quarter earnings report last week, Blackberry came clean on the reasons behind its downfall, and while none of it really comes as a surprise, its always interesting to see a company’s take on its own demise.

“The intense competition impacting the company’s financial and operational results that previously affected demand in the United States market is now being experienced globally,” the troubled company said, “including in international markets where the company has historically experienced rapid growth.”

Simply put, cheap Android phones have hurt Blackberry abroad, undercutting the Canadian company’s dominance in these key markets, while at home the company’s once sought after smartphones failed to compete in one key area: apps… either reason enough to sink any mobile company on its own.

Reading almost like an obituary, the brief, delayed, the company explained, because of a “highly conditional, nonbinding bid from its largest shareholder, Fairfax Financial Holdings of Toronto,” confirmed what we’ve always known, that the company’s demise was due in large part to an insufficient app ecosystem that finally led to a global dismissal of the entire brand and an unexpected downturn in emerging markets.

As mentioned previously, much of the company’s billion dollar quarterly loss comes as the company was forced to write-down its new Z10 and Q10 inventory, the great flagship/saviour phones that really didn’t do anything.

The New York Times summarizes the details of the filing as follows: “The regulatory filing details the fall of BlackBerry’s hardware business. During the quarter, sales of phones declined by $942 million, or 55 percent, compared with the same period a year earlier.”

Further, the brief noted that despite the fact the majority of Blackberry’s smartphone sales during the quarter were from the company’s older Blackberry 7 operating system, it still had plans to scuttle the older models and focus on four phones (two budget, two high end) that run the new Blackberry 10.

The company’s unique global data network has long meant it was able to run what has long been a highly profitable service business as well, but that division was unable to escape the overall downturn, falling 27 percent to $724 million.

Finally, while the company has often boasted about the popularity of its new server software among the enterprise sector, the brief also admitted that the company expects relatively few businesses to actually purchase the software after testing it.

In the end, the filing offered a glimpse at Blackberry’s disastrous mobile roadmap of the last fiver years, one that at the time seemed like a sure way to build strong smartphone empire but now, in hindsight, we realize that it could only lead to the company’s inevitable ruin.

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Written by: Matt Klassen. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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