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Underdog of the Year: Blackberry


News by admin on Friday January 02, 2015.

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Take a look through articles on tech websites regarding Blackberry through 2014 and you may see why we think the company deserves the Underdog of the Year award. Outlets routinely round on the company and the general consensus is the Blackberry is not worth scrap and is doomed. This comes from agenda driven peers of ours who should know better and get some research done, because Blackberry is a rebounding company that has actually had a good 2014.

How can a company that has lost a lot of money this year, sold few devices, and seen its market share crumble be celebrating a good year? For many commentators they are looking from the perspective of here and now and are not addressing where Blackberry has come from. Taking one quarter in isolation, then yes Blackberry's situation looks dire, but considering the company was on the very brink of extinction in 2013, 2014 provided substantial growth.

I didn't quite get it myself until I sat down and had a chat with a Blackberry executive last summer. Since then I have simply followed what the company has been saying all the time... Hardware is no longer the driving revenue source, enterprise is, and it will be a long road with ups and down. Those downs are still happening, make no mistake, but Blackberry is now moving in the right direction.

A Blackberry fanboy, moi? That is the general attack when you say something nice about this company. Here's the truth, I would not buy any of the company's smartphones, not even the Passport that I admire... I would not buy it in a million years. It is simply not for me, but it is for someone, and those are the people Blackberry works for now, if you don't believe me, just watch the company continue its growth into 2015.

Here's the good, the bad, and the ugly from Blackberry this year:

Devices are a no go for the company too. Sure, Blackberry can use comments on tech websites to big up its latest Passport square smartphone, but the truth is at best the handset has been met with a shrug of the shoulders, and at worst a chuckle and derision. There simply is no magical smartphone on the horizon that would right the wrongs of the company and make it a hardware player once again.

Even Blackberry's few remaining strongholds in Asia will come under fire soon. The company's more affordable smartphones are still popular in countries such as Malaysia and Indonesia, but Chinese companies like Xiaomi and ZTE are now targeting those regions for big expansion. Although the writing is not on the wall for Blackberry in those markets, it is hard to see how the Canadian company can compete with the Chinese juggernauts.

Another problem for the company is that its services are losing traction in key (read money making) markets such as Europe and the US. When BBM (Blackberry Messenger) was released to Android and iOS last year it caused some serious buzz and was seen as a possible open door for the company to find success again. After millions of initial downloads and plenty of heat for months after launch, BBM is failing and is way down the charts for most downloaded apps on both rival platforms (lower than 700 in the US for iOS).

It could be argued that BBM was never going to compete against messaging giants like WhatsApp and Facebook, but the fact the service is even lagging behind second tier offerings like Viber and Kik tells its own story. Again, BBM is enjoying some popularity in African and Asian markets, but all that can do is prop Blackberry up and do little more.

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I had a chat to a rather successful Blackberry employee from the advertising team recently via email and she was extremely positive about the company's future. I was honest in saying that I did not see the optimism, but her later replies shed some light on the general plan of the company moving forward and I can say now, there is a reason why investors are coming back to the Canadian company. I have also got to use the newest version of BB10 fairly extensively over the last few weeks and have changed my overly negative position on the software.

However, and here's the thing to remember, Blackberry is not currently for you and the company is not even thinking about you, that's if you happen to just be a normal smartphone consumer. During my conversation with the employee she was explicit in saying that Blackberry's sole focus is building enterprise relationships, strengthening the ones it already has, and finding new ways to get its hardware in the hands of governments and businesses.

The consumer walking into Wal-Mart to buy a Blackberry is not a priority for the company, at least not yet. If someone not from enterprise and just considered a normal consumer wants a Blackberry for its functionality, services, and other reasons, the company is happy. If a million want a Blackberry, great. However, the company has pinpointed enterprise as the area to drag the brand out of trouble and is at the moment targeting everything towards that goal, success in the consumer space would be a bonus.

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The Passport is, then, Blackberry getting back to its roots, putting productivity and enterprise first and trend following firmly second, that's if this device considers trends at all. That means, for the first time since Blackberry strode atop the smartphone world several years ago, this is a handset from the Canadian company worth getting excited about. Luckily, that is not a shallow appreciation either, because the Passport is actually very good.

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The company formally known as RIM has today announced losses of $207 million for its second quarter. That of course is a disastrous figure, but it shows massive progress in the right direction for Blackberry. To put the number into perspective, predictions posted losses for this quarter at much higher (over a hundred million dollars more in most cases).

So, the company is performing better than expected and compared to this time last year things are positively rosy. During Q2 of 2013 the company was probably at its lowest ebb and recorded a devastating loss of $965M, a figure that put the very future of Blackberry on the brink. So, the company is making rapid progress and in fact predicts that it will be back in profit by the end of the 2015 fiscal year.

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However, HIbben predicts that the company's market share will fall by over 50% in most countries when Blackberry announces its fiscal third quarter results later in the week. Despite the sales of those new handsets, overall hardware shipments will fall from 1.9 million units during this period last year to just 960,000 units this year. Hibben claims revenue from hardware will be 51% lower and revenue across the company will slip 20% lower. That would not be good news as this time last year Blackberry was in a torrid position with its very future the subject of debate. (Note: these predictions turned out to be largely accurate).

 
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