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BlackBerry reported layoffs darken already-murky future

BlackBerry reported layoffs darken already-murky future

Though we knew it was coming, the numbers are staggering even after years of consistently worsening news that’s seen smartphone pioneer BlackBerry plunge from market leader to near-also-ran.

A Wall Street Journal report that quotes unnamed sources warning of upcoming layoffs that could claim another 5,000 jobs – or approximately 40 per cent of the 12,700 employees the company said it had last March – at the Waterloo, Ont.-based vendor touched off another round of speculation over the state of a strategic review process announced last month.

The report says the layoffs will target all departments across the company, and will play out in waves by year’s end. While the depth of the cuts may raise eyebrows, the fact that they’re cutting at all isn’t coming as a surprise to some analysts.

“If they do cut jobs it would be sad but not altogether surprising either given they are still trying to transform the company and find their new stride in whatever form that may take,” said Krista Napier, senior analyst, Mobility, IDC Canada.

The company isn’t sharing details of what that form could ultimately look like. In a statement, BlackBerry said, "We will not comment on rumors and speculation. As previously stated, we are in the second phase of our transformation plan. Organizational moves will continue to occur to ensure we have the right people in the right roles to drive new opportunities in mobile computing.”

Continuing a trend

Ronald Gruia, Frost & Sullivan director of emerging telecoms, says the signs have been in place for a while. Relatively small rounds of layoffs this summer that followed a major downsizing in 2012 established a consistent trend, one that Gruia says fits with the company’s need to rightsize itself in advance of a potential sale, partnership and/or restructuring.

“Is it surprising? I wouldn’t say it is,” he said. “The fact is the BlackBerry 10 update has not been what the company expected. But at the same time, it throws a little bit of cold water over whatever optimism there was.”

The report overshadowed the company’s announcement of a new high-end phone, the 5-inch Z30, and the launch this weekend of BlackBerry Messenger on Android and iOS devices. The BBM announcement, in particular, signals a significant shift in strategy for BlackBerry, as it decouples the messaging software – still used by 70 million subscribers globally – from its namesake hardware and sets the stage for additional post-reorg moves to extend its software and security services across competing platforms.

BlackBerry’s global smartphone market share has slid from about 15 per cent in 2010 to 2.9 per cent in the most recent quarter, according to figures released by IDC. The one-time smartphone leader slipped into fourth place behind Microsoft’s Windows Phone. Its U.S. market share crashed from over 40 per cent to 3 per cent in the same period. Globally, Android tops the smartphone pile with nearly 80 per cent share, with Apple shipping 13.2 per cent of smartphones sold in the quarter.

Gruia said declines this steep and prolonged are usually one-way.

“Once you get into that downward spiral, it’s very hard to get out,” he said, adding there’s plenty of blame to go around. He cited the company’s dismissal of the iPhone as a “toy” when it was first released in 2007, significant delays in bringing its next-generation BlackBerry 10 operating system to market, its overreliance on legacy products – including the recently announced BB7-based BlackBerry 9720 for emerging markets – and senior leadership distraction as former co-CEO Jim Balsillie tried to bring an NHL hockey team to Canada.

“This is a failure at multiple levels,” he said. “It isn’t just at the CEO level, or in the board or upper management. They should have seen this happening beforehand.”

Carmi Levy is a London, Ont.-based independent technology analyst and journalist. The opinions expressed are his own.