BlackBerry’s struggling smartphone business
In the previous part of this series, we discussed how BlackBerry (BBRY) remains in the hardware business despite declining fortunes. In the last few weeks, developments have happened that indicate that demand for BlackBerry’s smartphones has fallen rapidly. First, BlackBerry’s telecom partner AT&T (T) criticized the company’s flagship smartphone, Priv, of “struggling” with its sales, according to a report from CNET.
Then, in early July, the U.S. Senate announced that it will no longer procure new smartphones from BlackBerry. This was a big blow for BlackBerry, as the company has largely depended on government bodies for its smartphones sales since governments value the security aspect of BlackBerry devices. However, with Apple’s (AAPL) iPhones and Samsung (SSNLF) improving their security features, BlackBerry has lost that competitive edge as well.
BlackBerry’s smartphones sales continue to decline
To top it all off, BlackBerry announced that it will discontinue sales of its Classic smartphone. The decision to axe the Classic smartphone was surprising. BlackBerry had partnered with all major US telecom providers—AT&T, Verizon (VZ), and T-Mobile (TMUS)—to sell the Classic. Although the Classic used a dual core 1.5 GHz Qualcomm (QCOM) Snapdragon processor along with 2 GB of RAM, its smaller screen size at 3.5 inches and QWERTY keyboard proved unpopular.
The lower demand for BlackBerry’s smartphones is also visible in its continued declining sales. As the chart above shows, BlackBerry managed to sell only 500,000 smartphones in fiscal 1Q17, a decline from the 1.1 million smartphones it managed to sell in fiscal 1Q16. This change is a steep decline. Consider that the overall smartphone market grew slightly in the March-ending quarter, according to IDC.