BlackBerry Suffers Another Disastrous Quarter

What do these BlackBerry 10 devices have in common? None of them are selling very well.

BlackBerry’s quarterly results were a mundane disaster.

A disaster, because the company managed to sell only 1.9 million smartphones in the third quarter—down from 3.7 million smartphones in the previous quarter. Revenue was $1.2 billion, down 24 percent from the previous quarter. Most of the smartphones sold were BlackBerry 7 devices, which means the company’s newer BlackBerry 10 smartphones—once touted by executives as epic game-changers—are mostly gathering dust on store-shelves.

But those dismal figures also seem typical, given the much-publicized crises that have gripped the company over the past few years. In the wake of declining revenues and device sales, delayed products, massive layoffs, and corporate restructuring, the real surprise would have been any signs of improvement in BlackBerry’s fortunes.

Even so, the company isn’t throwing in the proverbial towel quite yet. As part of its turnaround effort, BlackBerry announced a five-year “strategic partnership” with Foxconn to develop and manufacture new BlackBerry devices. The companies will begin work on a new smartphone for developing markets such as Indonesia, with a targeted release date of 2014.

“Partnering with Foxconn allows BlackBerry to focus on what we do best—iconic design, world-class security, software development and enterprise mobility management,” new CEO John Chen wrote in a statement, “while simultaneously addressing fast-growing markets leveraging Foxconn’s scale and efficiency that will allow us to compete more effectively.”

BlackBerry will retain all its intellectual-property rights, and use the resources freed up by the Foxconn deal to focus more intensely on its enterprise and government segments. The company also intends to keep pushing its BlackBerry Messenger app, which is now supported on multiple platforms.

Once a dominant force in the mobile-communications market, BlackBerry saw its market-share collapse thanks to the combined efforts of Apple iOS and Google Android, both of which seized the consumer market before making inroads among businesses. Three years ago, BlackBerry’s share of the smartphone market stood at 55.3 percent; today, it’s down to 2.7 percent, according to research firm Gartner.

The company bet everything on BlackBerry 10, a next-generation operating system it felt could compete against iOS and Android. That proved the wrong calculation, however, as branded devices loaded with BlackBerry 10 failed to sell, forcing the company to take a $960 million write-down on unsold inventory. Now its strategy seems clear: focus on enterprise and government customers while maintaining a presence in developing markets—the last bastions of BlackBerry’s market.

 

Image: BlackBerry

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