BlackBerry Ltd. shares have been hit hard by Apple Inc.’s announcement of a partnership with International Business Machines Corp.
On Wednesday, BlackBerry shares fell nearly 12 per cent after IBM and Apple announced a strategic alliance that would allow the two companies to sell mobile devices and software to business and government clients – the exact same market niche BlackBerry has long targeted.
BlackBerry shares have risen steadily since May as new CEO John Chen buoyed shareholders with his attempts to turn around the company by outsourcing some manufacturing and refocusing on so-called “enterprise” clients, which have long formed BlackBerry’s core user base. But analysts suggested this new agreement – announced after markets closed on Tuesday – would increase competition for the Waterloo, Ont.-based smartphone maker.
“We believe this development has vastly negative implications for Blackberry’s new business plan to grow into an enterprise software vendor,” said Citigroup Global Markets analyst Ehud Gelblum in a note to clients, reiterating a sell position on the stock.
The agreement will see Apple and IBM team up to better target businesses with the iPhone and iPad. The companies will collaborate by creating more than 100 mobile apps that are designed for the health-care, banking, telecommunications, travel, transportation and retail industries – some of which will be developed in part out of IBM’s mobile lab in Toronto. IBM will also bring to iPhones and iPads its big data and cloud computing solutions. Although the technology landscape is littered with now-defunct partnerships and alliances, said IDC analyst Kevin Restivo, the Apple-IBM tie-up does represent a real threat to BlackBerry.
“BlackBerry has a new, combined, formidable foe that is going to make defending its beach head much more difficult,” said Mr. Restivo, “and that beach head, of course, is the enterprise, where it’s core customers remain.”
IBM, which sold its personal computer and server businesses to Beijing’s Lenovo Group Ltd., will now have its global sales force and IT consultants recommend and sell Apple’s enormously popular devices directly to IBM’s business customers, with specially tailored software and security.
“Am I surprised that others are impacted? No,” said IBM’s Saul Berman, who heads the firm’s consulting group in the Americas. “Our objective is to do what competitors haven’t been able to do in the past.”
BlackBerry, which declined to make executives available on Wednesday as its shares sank, said in a statement late on Tuesday that the Apple-IBM partnership underscored the need for its type of business-focused mobile devices and services – but that Apple was still a consumer-focused company.
“BlackBerry is the clear leader in this market,” spokesperson Kiyomi Rutledge said. “Enterprises should think twice about relying on any solution built on the foundation of a consumer technology that lacks the proven security benefits that BlackBerry has always delivered.”
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