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Does It Matter That BlackBerry’s OS Market Share Is Almost Gone?

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Android takes 81.7% share of the market

It might seem like the end of an era for BlackBerry (BBRY) with the latest data from research firm Gartner. Gartner reported that the company’s share of the mobile OS market was ~0.05% in the December quarter, down from 0.1% in the prior quarter.

BlackBerry shipped just 207,900 devices running its native operating system during the quarter. Yet, more than 432 million handsets were shipped in the quarter, with devices running Alphabet’s (GOOGL) Android accounting for 81.7% of the sales and Apple’s (AAPL) iOS accounting for 17.9%. The chart below shows device unit sales by top vendors in 4Q16.

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Software and Security business

The direction taken by BlackBerry’s CEO, John Chen, doesn’t seem to be much cause for alarm. BlackBerry has essentially abandoned its Hardware business to focus its resources on growing its Software and Security segment.

Instead of struggling to gain share in a market where it is losing money, BlackBerry decided to focus the company on the key strengths of its Software and Device Management business. BlackBerry noted that its software sales grew 16% in fiscal 3Q17 and that they would grow 30% in fiscal 2017. Further growth is expected in going forward.

Tapping into third-party platforms

Despite BlackBerry’s diminishing OS market share, the company is steadily penetrating third-party operating systems with its software and services such as BBM. In a recent move, the company opened BBM Enterprise’s SDK (software development kit) to third-party developers, which would allow them to integrate BBM Enterprise features into their iOS and Android apps. BlackBerry would collect revenues from such integration.

The rise of Apple, Samsung (SSNLF), Sony (SNE), and Microsoft (MSFT) has choked the smartphone life out of BlackBerry. However, BlackBerry is compensating for the loss with its aggressive Software and Services segment push.

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