Last Friday it issued an alarming alert about how it was projecting nearly a billion dollars in losses in just one quarter. Granted, much of it was in the form of accounting write-offs, but still it was an indicator that inventory was simply not moving. And that, at this rate, analysts predict that they simply could not imagine BlackBerry having enough cash to go on operating for the first quarter of next year. Which was why BlackBerry promptly ordered the slashing of thousands of jobs across the globe.
All this stems from the simple fact that, frankly speaking, the only people who are most likely to buy a new BlackBerry phone are the people who have already bought BlackBerry phones in the past. And that pool of potential buyers is shrinking dramatically as more and more of them decide to fully commit to iPhones or Android devices.
And so it has begun: BlackBerry has probably long ago realized that its hardware unit is a giant money pit, but that the BlackBerry Z10 and its ilk were the last hurrahs — a Hail Mary pass, if you will — for the business. The company probably crossed its collective fingers and prayed that the Z10 (a great device, by the way) would see conversions from iPhone and Android users.
It didn’t. Yes, sales went up a notch as excitement was stirred by the new BlackBerry 10 operating system early this year… but it simply was not enough to pull the company out of its crash position.
So now, a billion dollars later, it looks like we are seeing Plan B finally getting into action. Last week, the company also announced (perhaps in anticipation of the financial fallout) that it would be rolling out BlackBerry Messenger (BBM) apps for both iPhones and Android devices.
Translation: If you can’t beat them, penetrate them.
Perhaps what we are now seeing is the move that BlackBerry should have done long ago, namely cut its losses, get out of the phone business, and focus on its core competence, which is its Messenger service and infrastructure. And then make the service available to other device makers and operating systems. The hope is that BlackBerry could ride on its reputation, as vouched for by its current 70 million fans worldwide. The company hopes that those 70 million users would urge a friend or two to use BBM on their mobile devices so that the number of BBM users grows geometrically. BlackBerry hopes it has a fighting chance to become the world’s preferred instant messaging service. It’s possible… though quite a battle considering that there are already so many instant messaging services being used today. Its business model would also likely focus on corporate services.
So why didn’t BlackBerry do this earlier like, say, early last year? Well, it’s likely that the once-mighty company was in denial about its situation. Plus, they were probably hoping that the incoming BlackBerry 10 operating system and its next generation of phones would be impressive enough to give it a momentous U-turn. Didn’t happen.
And so, say hello to BlackBerry the pure services firm. No more hardware. And the BlackBerry Z30 practically stillborn. Well, it still is premature to say this, but this does seem to be the recourse that really makes sense to save the business.
(Besides, with BBM now to be made available to other platforms, the pool of loyal BlackBerry users is bound to shrink even more — Z30 notwithstanding — as they rationalize that they’ll still be getting their beloved BBM experience even if they buy an iPhone anyway.)
BlackBerry was in the process of rolling out its iOS app over the weekend, and about a million or so have already managed to download it, but the company issued a temporary stop to the market availability as it ironed out kinks. The supposed reason: apparently, the Android BBM app was leaked prematurely, and it was wreaking havoc to the system as it still hasn’t been ironed out.
So now we wait. And hope that BlackBerry really gets back on track this time around.
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