Can you not only survive, but thrive, if your market share is dwindling to near-irrelevance?
Despite alarming figures that show sales of BlackBerry smartphones continue to slide as the once-dominant company realigns itself around the enterprise customers who fuelled its early growth, CEO John Chen says there’s no reason to worry. Investors, at least for today, seemed to agree, and drove shares up more than 6.5 per cent to $7.77 in trade on Thursday.
A slow fade to black
IDC touched off speculation earlier this week when it released updated mobile sales tracker figures that projected BlackBerry would ship 9.7 million handhelds in 2014, down 49.6 per cent compared to last year. This would leave BlackBerry with a 0.8 per cent share of the global handheld market, compared to Android’s 80.2 per cent and Apple’s 14.8 per cent.
BlackBerry’s sales figures will only worsen over time, according to IDC, amid spiking global demand for smartphones. The research company predicts demand will soar 23.2 per cent this year, to 1.2 billion units, but says BlackBerry will ship only 4.6 million handhelds in 2018. BlackBerry’s compound annual growth rate of -25 per cent would leave it with 0.3 per cent market share by then, a showing IDC says puts the company’s future in doubt.
“The question of whether BlackBerry can survive continues to surface,” IDC said in a statement. “The only way the company will be viable is likely through a niche approach based on its security assets.”
Not so fast
"Yeah, we have problems, but it's not dead," Chen said. "I'm confident we will be able to save the patient."
Assuming Chen lives up to his word, the patient promises to be very different from the one he inherited from Thorsten Heins when he took over as CEO last November. He’s moved quickly to reorient the company on a number of fronts.
He has partnered with contract hardware manufacturer Foxconn to accelerate hardware design-and-build. The company is aggressively leveraging its QNX unit in automotive, healthcare and other key verticals, and is pushing into cloud services and Machine to Machine (M2M) markets, as well. It has opened up its back-end platforms to streamline management of the multiple devices and environments currently found in most bring-your-own-device (BYOD)-influenced businesses. BlackBerry Messenger was freed from its BlackBerry-only roots last autumn with its release for iOS and Android, and the company pushed into enterprise social media territory with the launch of BlackBerry Channels.
Looking beyond the handheld
As Chen continues efforts to monetize BlackBerry’s expanded enterprise software and services universe, the company’s reliance on handheld revenue will no longer weigh as heavily on the bottom line. In fact, despite Chen’s assurances in April that BlackBerry remains committed to its devices business, investor response to the latest market share figures suggests they no longer correlate hardware sales to long-term success.
Indeed, when Re/Code’s Walt Mossberg yesterday asked Chen if BlackBerry could survive without its handset business, Chen said he could still “create a lot of value for [the] shareholder even without the handset business.”
In betting more closely on corporate-heavy products and services offerings that no longer depend exclusively on selling the smartphone as the basis for building and maintaining revenue, Chen is rendering the smartphone market share question virtually moot. This sets the stage for a time when BlackBerry devices themselves may finally slip into history.
There’s no reason to doubt IDC’s numbers or the methodology behind them. But as BlackBerry evolves its business model further away from its once-sacrosanct handheld-led roots, the metrics for measuring its success aren’t as black-and-white as they once were.
Carmi Levy is a London, Ont.-based independent technology analyst and journalist. The opinions expressed are his own. email@example.com