BlackBerry Ltd , (TSE:BB) will exit the smartphone market if turnaround efforts don’t bear fruit within 12 to 18 months, said chief executive officer John Chen.
Some of the firm’s recent moves include the purchase of WatchDox, a file-sharing solution, for $150m; the introduction of Leap, a touchscreen phone without a physical keyboard; and the back-to-basics phone models Classic and Passport.
So far, BlackBerry’s strategy to focus on software seems to be working. The firm raked in $137m worth of software revenue in the last quarter. However, smartphone revenue fell to $263m within the same period.
Unsurprisingly, the experts don’t have much confidence in BlackBerry’s future. Morningstar analyst Brian Colello said, the firm will continue to be a risky investment in the long term. Despite its attempts to monetize on its software, it’s highly likely that it’ll only break even, especially in the face of competition from the likes of Apple and Google. Even the most optimistic stock recommendations peg BlackBerry at hold/market perform.
The Rise and Fall of BlackBerry
To have some insight into what’s on the horizon for BlackBerry , it’s essential to look back into its past.
Formerly known as Research in Motion (RIM), BlackBerry was a technological pioneer. In 1996, it revolutionized the mobile market forever with its two-way pagers; gadgets that allowed one to text and receive messages. To this day, this remains a basic function of mobile phones.
Since then, the firm continued to aggressively innovate its hardware. BlackBerry added a number of features that appealed to customers, like color displays, Bluetooth radios and Wi-Fi. Although its competitors – such as the equally ill-fated Nokia – also offered similar products, the market was pretty much evenly divided among them, and business was good.
That was, until Apple stole the show in 2007. Realizing that consumers wanted more than a rectangular screen and a keypad, Steve Jobs’ iconic company introduced features that no smartphone at the time had, such as the touchscreen and the Safari Web browser.
At first, RIM didn’t see Apple as a threat. In an interview with Reuters, then co-CEO Jim Balsillie dismissed Steve Jobs’ company as “… the entry of yet another competitor into the smartphone market.”
Then, things began to go awry for RIM. An in-depth report published in The Globe and Mail stated, the firm’s inability to innovate can be blamed on three major factors: the failure of RIM’s attempt to create an iPhone killer; the resignation of Balsillie to protest the killing of his idea of an instant messaging software, which had the potential to put the firm back in the game; and the disastrous launch of the touchscreen Z10, despite co-CEO Mike Lazaridis’ reservations.
Eventually, in 2012, the firm’s sales began to tumble, to the point that it was almost forced to sell itself for $4.7 billion in 2013. To this day, revenues are still below dangerous levels.
At this point, BlackBerry’s main competitors are already well-entrenched into their respective markets. If it wants to do more than barely keep its head above water, it should introduce a product that is revolutionary, caters to what its customers want and isn’t merely a rehash of what came before. Otherwise, it will meet the same fate as its peer Nokia, which was once a giant in its own right before becoming a mere write-off on Microsoft’s balance sheet.