The Demise of BlackBerry
As many of you may have heard, and according to the New York Times, BlackBerry announced on Monday that it has begun the process of a buyout to go private. Fairfax Financial Holdings, a Canadian insurance and investment company who was already a 10% owner of BlackBerry, intends to purchase the company for $4.7 billion. The buying price is an excellent representation of the phone maker’s decline, as BlackBerry used to be valued on the stock market at over $83 billion (June 2008), a 94% reduction. Of course, the deal is far from done as Fairfax is currently seeking financing, plus the offer could flush out additional buyers, though with stock prices sitting at a mere $8.82 (as of Monday), additional prospects are likely rare.
A buyout at such a low valuation should come as no surprise, especially after BlackBerry announced last Friday that it was preparing for a quarterly loss of nearly $1 billion. This loss is primarily due to the huge failure of the BlackBerry 10 line of phones. As a result, BlackBerry announced that they would be laying off approximately 4,500 employees, roughly 40% of the company. It is unlikely that Fairfax will purchase BlackBerry in an attempt to resurrect its phone business. Market analysts like Brian Colello, of Morningstar, believe that “there is no value for the BlackBerry 10 ecosystem”. Many experts suggest that the true value in purchasing BlackBerry would be for its patents that are currently valued at about $2 billion. Even if Fairfax plans on reviving BlackBerry’s phone business and not simply gutting it for its patents, that does not mean that BlackBerry will be saved, as Fairfax has had many recent comparable failures. Fairfax bought CanWest Global Communications, a Canadian media company, and AbitibiBowater, a paper company, both of which completely collapsed after their acquisitions despite efforts to revive them.
In the meantime, BlackBerry has set plans in place to expand their software business. To that respect, they have developed applications for both iOS and Android for their BlackBerry Messenger (BBM) service. Unfortunately, BlackBerry has had to postpone the release of their apps last weekend after a “rouge version was released onto Google Play”, according to The Guardian. Andrew Bocking, head of BBM at BlackBerry said in a blogpost that they accidentally pushed an “older, unreleased version”. Even if BlackBerry can get their ducks in a row with their BBM app, prospects are not good with heavy competition in the messaging space from Facebook, Apple, Whatsapp, and Skype, to name a few.
For a juxtaposition, on Monday Apple announced that it sold a record 9 million units of its latest iPhone 5S & 5C, according to The Wall Street Journal. In a market where so much success can be had, why did BlackBerry fail? According to Sam Gustin at Time, there are three clear reasons:
- BlackBerry failed to anticipate that consumers—not business customers—would drive the smartphone revolution
- BlackBerry was blindsided by the “app economy”, which drove adoption of competitors, iPhone & Android
- BlackBerry was unable to see that smartphones would be more than simply communication devices and become all-in-one entertainment hubs
BlackBerry was simply too late in the game. For example, they insisted on making phones with full keyboards, even after it was clear that the market preferred touchscreens. When BlackBerry finally launched their BlackBerry 10 touchscreen device, it was seen as a poor imitation of an iPhone. Because of lack of vision and execution, BlackBerry sealed its fate. From my perspective, it is a waiting game until BlackBerry is a mere memory. It may be a fond memory from the early 2000s, where thumb-wizards first started typing up emails on QWERTY keyboards, but still a memory nonetheless. If you are still using BlackBerrys, start thinking about moving to other devices, like those by Apple and Google that can support your personal and business needs. If you are hesitant to switch, best guesses say you have time to make the move. According to the New Yorker, as of June, BlackBerry had 72 million users, so it could take some time for that to dwindle down to nothing (as long as BlackBerry continues to support their platforms). Even though BlackBerry may fizzle out like a candle instead of going out with a boom, it doesn’t change the result, the age of the BlackBerry has come and gone, it’s time to embrace a smart smartphone.