Consumer Electronics

T-Mobile Deal Blindsides BlackBerry

T-Mobile US Inc. (NYSE: TMUS) made a trade-in offer to users of phones from BlackBerry Ltd. (NASDAQ: BBRY) that expires Wednesday, and it might have worked better than BlackBerry had hoped. An internal T-Mobile sales update shows that 94% of all BlackBerry phone trade-ins have come from users switching to a non-BlackBerry device. Ouch.

The story was reported at the TmoNews blog, which claimed that it received an image of the memo from one of its sources. Here is the relevant text:

On Wednesday, March 5 the BlackBerry $200 Trade-in Offer will end. The program has been extremely popular, driving at least a 15x increase in BlackBerry trade-ins, with approximately 94% of those customers moving to a non-BlackBerry device at upgrade. The promotion was created to provide additional value for our loyal BlackBerry customers while providing customer choice — an important part of being the Un-carrier.

It appears the BlackBerry loyalty is running a bit thin these days. Of course T-Mobile does not really care whether its subscribers use a BlackBerry phone, as long as they are “loyal” to T-Mobile, which has provided them with “customer choice” so they no longer have use those clunky old BlackBerry phones.

This cannot be good news for BlackBerry, even though the company is not really counting on consumer purchases to drive its turnaround. CEO John Chen told the Financial Times that BlackBerry’s turnaround is focused on “our heritage and roots — delivering enterprise-grade, end-to-end mobile solutions.” In the same interview Chen admits that there is a “50:50 chance” that his turnaround strategy will fail.

If the T-Mobile promotion is any guide, failure is clearly an option. BlackBerry shares were down about 2.3% to $10.09 in the noon hour on Wednesday. The stock’s 52-week range is $5.44 to $16.82.

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