Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Arun Kumar, a senior product manager for BlackBerry, shows off the new BlackBerry 10 during the global launch of the new smartphone. (NATHAN DENETTE/THE CANADIAN PRESS)
Arun Kumar, a senior product manager for BlackBerry, shows off the new BlackBerry 10 during the global launch of the new smartphone. (NATHAN DENETTE/THE CANADIAN PRESS)

BlackBerry’s cloudy future hurts BB10 smartphone sales effort Add to ...

Over the past few years, mobile executive Ojas Rege noticed a gradual decline in the number of companies deploying BlackBerry Ltd.’s smartphones and services.

In recent months, the slow exodus of customers has become a rapid one. There is mounting evidence, he said, that the company’s cloudy future is starting to turn away those who have always been the most loyal BlackBerry buyers – professionals who make the technology decisions for larger companies.

More Related to this Story

“The uncertainty around BlackBerry has definitely affected the IT buyers in this situation,” said Mr. Rege, vice-president of strategy at MobileIron, a California-based seller of mobile equipment with thousands of corporate customers. Some companies that had been slowly migrating from the once-popular smartphone have begun making a faster shift to rival devices, or even making contingency plans for life after BlackBerry.

It will be a few weeks before the company discloses its fiscal second-quarter results, but some are starting to bet that they will be awful. This week, National Bank Financial’s Kris Thompson said he expects only three million of the new BlackBerry 10 devices were shipped in the quarter. Canaccord Genuity also cut its estimate, saying BB10 sales are “very weak.”

Since announcing last month that it had formed a committee to explore all strategic options, including putting itself up for sale, BlackBerry’s future has become the subject of speculation among investors, analysts and consumers. But that uncertainty may be damaging its ability to hold on to its traditional base – the corporate user.

For years, almost all of MobileIron’s 5,000 or so business customers have used some version of BlackBerry smartphones and enterprise server technology. But recently, Mr. Rege said, a number of customers in heavily regulated and security-conscious sectors – including banks and U.S. federal agencies – have begun bracing for the possibility that Waterloo, Ont.-based BlackBerry might be acquired by a foreign player.

“They’re starting to get spooked by the thought that BlackBerry might be bought by a non-Canadian or non-American company,” Mr. Rege said. “There’s a possibility that every e-mail you send as a regulated entity might end up on a server in a country that you might, frankly, have security concerns about.”

Since last month’s announcement, news reports about who might be interested in buying BlackBerry have tended to include at least a couple of Chinese firms, including Lenovo and Huawei. Neither has confirmed any desire to acquire the Canadian company, and it is unclear whether the federal government would allow such a sale on national security grounds.

This week, The Wall Street Journal reported that BlackBerry has had talks with potential bidders and planned a quick auction process to sell part or all of the company. A BlackBerry spokeswoman refused to comment on what she described as “rumour and speculation.” She also refused to comment on whether any uncertainty related to the strategic review is having an impact on BlackBerry’s enterprise customers.

BlackBerry has remained largely silent on the issue of a possible sale beyond the initial announcement, focusing instead on its three major smartphone launches this year: the touchscreen Z10; the keyboard-equipped Q10; and its more affordable sibling, the Q5. All three run on the BlackBerry 10 operating system, which the company’s leaders hoped would allow BlackBerry to catch up with its rivals in the smartphone race.

However, sales of the new devices have been somewhat disappointing. Canaccord Genuity analyst Michael Walkley said that not only are global sales of all three phones weak, but shipments of older BlackBerrys are also declining. For fiscal 2014, he expects the company to sell 24.1 million, down from a previous estimate of 26.7 million.

“We believe the special committee formed by BlackBerry’s board to explore strategic alternatives such as joint ventures, strategic partnerships, or a sale of BlackBerry is consistent with our belief BlackBerry will ultimately end up selling the company due to the difficult competitive smartphone market and low probability BlackBerry 10 can return BlackBerry to sustained profitability, ” Mr. Walkley said.

In the know

Most popular videos »

Highlights

More from The Globe and Mail

Most popular