BlackBerry: “This is the Beginning of the End”

“This is the beginning of the end,” said analyst and finance journalist Felix Salmon about BlackBerry in an interview with CBC’s business news show, Lang and O’Leary Exchange. This was in response to their results for the second quarter of their fiscal 2014, where they announced:

  • An expected GAAP — that’s suit-ese for “Generally Accepted Accounting Principles — net operating loss of “approximately $950 million to $995 million”. $930 million to $960 million of this lost was the result of “the increasingly competitive business environment impacting BlackBerry smartphone volumes”, a phrase over which the people in BlackBerry’s PR must have expended much sweat and worry,
  • The laying-off of 4,500 employees, roughly a third of its workforce, and
  • A shift in focus to “enterprise and prosumer-centric” devices.

“I would say than losing $1 billion would count in most people’s books as serious decline, not to mention 4,500 [layoffs]. You can’t cut your way to growth, you can’t cut your way to adoption,” Salmon said. “Who would want to throw good money after bad? There’s a breakup value to the company, but as a going concern, I believe this is the beginning of the end of people walking around with BlackBerrys in their pocket.”

The Washington Post published this chart yesterday, in an article titled The decline of BlackBerry in one chart:

blackberry demise in single chart

Chart by Comscore; found in the Washington Post. Click to see the source.

BlackBerry’s renewed focus on enterprise is, in my opinion, a mistake. In the business of mobile devices, which are seen as “personal” in a way that desktop and laptop computers aren’t, and in the era of users either bringing their your own devices or choosing them from a selection offered by their employer, where Gartner is predicting that half of businesses will expect employees to use their own mobile devices for work, their decision to go back to their roots is the application of a 1999 solution to a 2013 problem. In CITEWorld, Nancy Gohring calls the move one of “desperation”, and I believe she’s right.

city of waterloo

With a lot of the 4,500 people who were laid off living in or near BlackBerry’s home base of Waterloo — a university town about an hour and a half drive southwest of Toronto — the mood in the city is grim. The impact on the community will be significant, and many people hope that the presence of several high-tech firms in the area, including Google and Intel, will help absorb these thousands of suddenly-unemployed techies.