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October 02, 2013

BlackBerry Products See a Global Slide

This has been one rough year for BlackBerry. Last week it announced its second quarter results, and they were not good at all. In fact, they did not have their customary webcast to announce the information. BlackBerry cited that Fairfax Financial has a bid in for the company as the reason.

Things continue to be on the downward slide. In a delayed regulatory filing that was issued on Oct. 1, 2013, BlackBerry disclosed that its one time bright spot, the developing world, is losing customers. It seems that in this region that BlackBerry had high hopes for, people are not buying its smartphones.

We have seen over this past year that a lot of companies are creating inexpensive, sort of watered down versions of smartphones specifically geared for the emerging markets. Most of these are Android based devices. BlackBerry sees this as one of the factors for the slowdown in this market.


Image via Shutterstock

A reason that it cites for lack of sales in the U.S. is the fact that the new BlackBerry 10 devices do not have enough desirable apps. I have a Z10 and I find that even after several OS upgrades, it does not have all the functionality of the older OS 7 models. While it does have some nice new features, I would have preferred both, the new features with all of the old features that I really liked.

In a company statement, BlackBerry said: “The intense competition impacting the company’s financial and operational results that previously affected demand in the United States market is now being experienced globally, including in international markets where the company has historically experienced rapid growth.”

This week’s regulatory filing gave some details on the downward slide of BlackBerry’s hardware business. The second quarter showed a decline in smartphone sales of about 55 percent. This amounts to a decline of about $942 million. Most of the devices that were sold were not the new BlackBerry 10, but the older 7 models.

With this in mind, BlackBerry did affirm its plans to discontinue the older models so that it can focus on the four new versions. Six months ago when I started using my brand new Z10 it was the top of the line. This phone will now be downgraded to become BlackBerry’s low priced touchscreen phone.

Another area that saw a decline this year is BlackBerry’s services business. Since it is still supporting all models regardless of OS, this has normally been a strong area for BlackBerry. Unfortunately, this area has seen a decline of about 27 percent, dropping it to $724 million.

During BlackBerry’s first quarter earnings announcement, earlier this year, it was stated that information concerning Venezuela would be reported later. They are now seeing about $25 million in delayed payments coming in from the Venezuelan wireless carriers.

Still another area that is showing some disappointing results is the software side. BlackBerry has been boasting about how many corporations have downloaded the new BlackBerry 10 corporate server software. The problem is that, while a lot of companies downloaded the software, after testing it they decided not to purchase it.

Overall, BlackBerry brought in about $414 million for its North American sales. This amounts to about 26 percent of its revenue. The European, Middle Eastern and African markets did slightly better bringing in $686 million or about 42 percent.

With a loss reported of almost $1 billion for Q2 2014, it seems that the proposed layoffs will probably go through. BlackBerry is expected to lay off about 40 percent of its remaining staff, which would be about 4,500 people.




Edited by Alisen Downey


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