Does struggling smartphone company BlackBerry Ltd. (NASDAQ: BBRY) make a single product consumers or business people want? No. And that, more than financial losses and restructuring, is what ultimately matters if the company is to survive or be sold. Its flagship Z10, Z30 and Q30 products have no appeal, based on sales numbers.
The information for the quarter remained remarkably grim:
Revenue for the third quarter of fiscal 2014 was approximately$1.2 billion, down $380 million or 24% from approximately $1.6 billion in the previous quarter and down 56% from $2.7 billion in the same quarter of fiscal 2013. The revenue breakdown for the quarter was approximately 40% for hardware, 53% for services and 7% for software and other revenue. During the third quarter, the Company recognized hardware revenue on approximately 1.9 million BlackBerry smartphones compared to approximately 3.7 million BlackBerry smartphones in the previous quarter.
How can a smartphone company sell only 1.9 million units and make it another year? It would need to have a product on the drawing board that, for some reason, would be unusually attractive in a sea of competition that includes the already wildly attractive Apple Inc. (NASDAQ: AAPL) iPhone and Samsung Galaxy product.
The one reason the market cheered the results is that BlackBerry will exit the hardware business in which it has been so abysmally ineffective:
The Company announced today that it has entered into a five-year strategic partnership with Foxconn, the world’s largest manufacturer of electronic products and components. Under this new relationship, Foxconn will jointly develop and manufacture certain new BlackBerry devices and manage the inventory associated with those devices. The initial focus of the partnership will be a smartphone for Indonesia and other fast-growing markets targeting early 2014.
The fact of the matter is that, in the smartphone world, 2014 is a long way off, even it seems to be right around the next corner.
Among BlackBerry’s greatest enemies are the huge U.S. carriers, AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ). One of the primary ways these companies sell BlackBerry devices is to recycle used ones and offer them to customers for $0.99 or even zero. BlackBerry’s Q10, priced at $199, has to compete with those particularly low offers. AT&T probably reasons that so few people will buy the more expensive BlackBerry that it may as well give away devices to customers who are willing to consider the brand at all.
There can be no BlackBerry revival based on selling devices no one wants.