Why Did BlackBerry Dump T-Mobile?
T-Mobile US Inc. (NASDAQ: TMUS) customers will not be able to buy BlackBerry Ltd. (NASDAQ: BBRY) handsets through the wireless company anymore. The smartphone company said it would end its licensing agreement with the carrier on April 25 when the current partnership expires. No reason was given, but there are several likely causes. Whatever the reason may be, BlackBerry made the move at a time when it needs to ship as many units as possible.
The Canadian company said about the end of the partnership:
“BlackBerry has had a positive relationship with T-Mobile for many years. Regretfully, at this time, our strategies are not complementary and we must act in the best interest of our BlackBerry customers. We hope to work with T-Mobile again in the future when our business strategies are aligned,” said BlackBerry CEO and Executive Chair, John Chen. “We are deeply grateful to our loyal BlackBerry customers and will do everything in our power to provide continued support with your existing carrier or ensure a smooth transition to our other carrier partners.”
The decision was unexpected, at least by the customers of both companies.
Since T-Mobile is the number four carrier after AT&T Inc. (NYSE: T), Verizon Communications Inc. (NYSE: VZ) and Sprint Corp. (NYSE: S), BlackBerry may have decided it did not want to support service for all four companies. It also may have decided that T-Mobile’s market coverage is too geographically small to offer first-rate service.
Another trigger may have been that T-Mobile wanted a financial deal with BlackBerry for handset sales that was more favorable than the ones that the other three carriers have.
However, the most logical reason for the change may be based on an observation by PC Magazine:
The announcement by the Canadian company comes after a dispute in February with the fourth-largest carrier in the U.S. for promoting Apple’s iPhone 5s at a discount to its BlackBerry customers.
As BlackBerry sales drop ever further, its management clearly does not believe it can compete with the iPhone on terms that favor Apple Inc.’s (NASDAQ: AAPL) products.
Analysts concerned about BlackBerry’s future should be anxious. Even if T-Mobile is small or its service does not match that of its rivals, BlackBerry’s sales are likely to be further depressed, however modestly, by the T-Mobile move. BlackBerry cannot afford to lose even one sale if it hopes to remain a viable company.