Smartphone sales: BlackBerry move from consumer unlikely to stem red ink
Smartphone sales for BlackBerry will shift from the consumer to business and government sectors after the company announced layoffs late last week. Blackberry hopes this shift in smartphone sales will provide a boost.
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For example, Credit Suisse is not supporting the Blackberry 10 and is helping employees globally to switch to iPhone and Android-run devices.Skip to next paragraph
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"We don't support BlackBerry 10 because of the added cost to our servers," said Credit Suisse U.S.-based spokeswoman Marcy Frank. The bank still supported older BlackBerry devices because there were plenty of staff who continued to use them, she said, but added: "We're driving people toward bring your own device (BYOD) ... we encourage people to give up their BlackBerry."
The head of technology procurement at a major North American bank, who declined to be named because he is not authorized to speak to media, said that while email and security are features in BlackBerry's favor, employees were increasingly turning to Apple and Android.
"We will purchase a limited number of BB10 but our inventory of BlackBerry devices will definitely and drastically reduce as we implement a broader BYOD implementation over the next 18 months," he said.
BlackBerry was losing support at companies even before Friday's warning, said Phillip Redman, vice president of mobile solutions and strategy for Citrix Systems Inc, which provides software that helps companies manage mobile devices.
Redman said he had met with technology staff at 60 companies in various industries and none had a strategy of adding more BlackBerrys to their mobile device fleets. Redman's own company has limited capacity to handle Blackberry devices.
"The writing is on the wall," he said.
BlackBerry's shift away from consumers will also change the dynamic with network operators, who have already been burned by the poor showing of the Z10 and a string of previously delayed product launches.
The company on Friday wrote off almost $1 billion, mostly on a ballooning stockpile of Z10s it must discount sharply, even as it launched a fresh flagship device - the larger-screen Z30.
Poor sales of the Z10 made it difficult to get carriers to commit to the Z30, according to a source at BlackBerry, who declined to be named because of the sensitivity of the situation.
"Many carriers will now pull much if not all of the BlackBerrys from the shelves because shelf space is valuable and coveted and there are many other handset vendors who would eagerly invest a lot to displace BlackBerry," said a former senior BlackBerry executive who used to negotiate directly with carriers.
A spokesman for US operator Sprint Corp said questions about any change in how BlackBerry devices are sold should be directed towards the company. A Verizon Wireless spokeswoman also declined to comment specifically on BlackBerry but said it would support its customers.
Highlighting the problems that have come to define BlackBerry in recent years, the company suspended the launch of its popular BlackBerry Messenger instant chat application for iPhones and Android devices scheduled for this weekend.
THE NEXT NORTEL?
Many industry analysts are now drawing parallels between BlackBerry and Nortel Networks Corp, the now-defunct Canadian telecom equipment giant.
Both companies, at their peaks, were the largest publicly listed names on the Toronto Stock Exchange. But as Nortel's revenue collapsed, it dumped employees in repeated restructurings and was eventually broken up and sold in parts.
BlackBerry has already hired advisers to look at finding a buyer for all or some of the company.
Given the dismal picture, Morningstar analyst Brian Colello said BlackBerry is likely to quickly attempt to go private or sell off some, or all, of its business units.
But he said he was no longer confident that a private equity buyer, who would shield management from the scrutiny of being a listed company, could turn the company around.
"We see no hope for BlackBerry at this point," Colello stressed in a note to clients following the warning on Friday. He said, in his view, BlackBerry was in "a death spiral."