I wasn’t a bit surprised by the BlackBerry first quarter results for the three months ended June 1, 2013, announced on Friday. Ever since the under-new-management and renamed smartphone pioneer unveiled its purported saviour product—the BlackBerry Z10—in New York last January, I’ve been looking for signs of excitement around the former Research In Motion’s new touchscreen phone with a new BlackBerry operating system driving it. There hasn’t been any to speak of, other than perhaps among BlackBerry traditionalists happy that a second new phone product—the BlackBerry Q10 with an analog keyboard—would be coming as well by summer. The Q10 has now arrived, but it’s too soon to analyze what it’s effect will be on the company’s balance sheet as sales ramp up.
In the meantime, BlackBerry had to announce an $84.2 million quarterly loss (read what you will into the choice of timing for the announcement, being the Friday preceding the Great White North’s Canada Day long weekend). Waterloo, Ontario based BlackBerry also announced Friday that its embarrassingly slow selling PlayBook 7-inch tablet—which preceded Apple’s iPad mini into the hottest size range sector of the tablet computer market by over a year—will not be supported by the BlackBerry 10 OS as had previously been promised, and will now be discontinued, orphaning the platform loyalists who had ponied-up for the slow selling slab.
“During the first quarter, we continued to focus our efforts on the global roll out of the BlackBerry 10 platform,” said Thorsten Heins, President and CEO of BlackBerry in a release. “We are still in the early stages of this launch, but already, the BlackBerry 10 platform and BlackBerry Enterprise Service 10 are proving themselves to customers to be very secure, flexible and dynamic mobile computing solutions. Over the next three quarters, we will be increasing our investments to support the rollout of new products and services, and to demonstrate that BlackBerry has established itself as a leading and vibrant player in next generation mobile computing solutions for both consumer and enterprise customers.”
Putting on a brave face, but reportedly, financial analysts had been expecting announcement of approximately $3.6 million in Z10 sales, and the actual metric fell almost a million short of that. Again, not a shock to this observer. Most of the buzz around smartphones continues to be generated by the iOS and Android—Apple’s iPhone and Samsung’s Galaxy models especially, with a supporting cast of other Android powered handsets and some interest in the as yet niche Windows Phone sector.
After an initial tranche of media interest in the Z10 after its introduction, the new Blackberry has been rarely written about in the past several months, compared with a literally daily allotment of iPhone and Galaxy press coverage. BlackBerry’s Z10 advertising has been less than uninspiring as well, and while a miracle could happen, it’s hard to imagine at this point how the Z10 could make much of a dent in the iOS/Android market hegemony. It’s simply too late to the party with a catch-up product.
The Q10 (it’s looking like the decision to roll out the Z10 first was another error of judgment) may yet find a steady market among analog keyboard die-hards, but I doubt that many will be betting on that now.
It’s still too early, however, to be writing BlackBerry’s obituary. The platform still has 79 million subscribers worldwide who’ve hung on so far. Last week, BlackBerry also launched a business service aimed at the corporate and government workers who cherish the BlackBerry platform’s vaunted superior security, but have switched to iPhone or Android smartphone hardware. That product, called “Secure Work Space,” allows iPhone and Android users to separate their data and work apps, such as email and calendars, from their personal apps, thus providing a greater level of security, and could prove a lucrative addition if it can be marketed successfully.
In its June 28 press release, BlackBerry notes understatedly that “… the smartphone market remains highly competitive, making it difficult to estimate units, revenue and levels of profitability. Throughout the remainder of fiscal 2014, the Company will invest in BlackBerry 10 smartphone launches, and the roll out of BlackBerry Enterprise Service 10, to continue to establish the new BlackBerry 10 platform in the marketplace. The Company will also invest resources to evolve BlackBerry Messenger into a leading cross platform mobile social messaging application, and launch other revenue initiatives associated with new services and emerging mobile computing opportunities.”
However, it’s getting hard not to see BlackBerry as a potential takeover target for the likes of Apple, Samsung, or even Microsoft. The company’s remaining strengths are more and more evidently in its established infrastructure and not in its hardware, which would make it a logical acquisition for one of the remaining big three. Especially after BlackBerry’s Friday 26+ percent stock price swoon, cash-rich Apple could finance picking the company up out of pocket money.