I’ve been staving off writing this for some time now. Even among all the reports of potential buyouts, I kept hoping the company would start to turn itself around, find some momentum. It looks like that wont be happening.
Blackberry is warning investors ahead of their official call on September 27th that revenue will be more than a billion dollars below expectations. Yup. Expectations were hovering around $3 Billion, and BB will be reporting $1.6 Billion. Ouch.
Of course these are analyst predictions, and analysts are notoriously bad at predicting the future, but this will obviously hurt BB’s image (under-producing) more than it’ll hit any market watching “guru”.
Reactions to the news has caused a stock slide of almost 20 percent. Another blow to the company, and now CEO Thorsten Heins is announcing the first measure to be taken will be a round of layoffs to the tune of 4,500 axed jobs. They’ll also be streamlining future handset launches. Instead of the six phones they were planning on introducing over the next year, they’ll be dropping down to four, two high-end and two entry-level.
It’s this combination of expectations and time which is going to put a hurt on upstarts and smaller companies moving forward. Yes, BB once ruled the smartphone landscape, but they didn’t properly focus on the consumer experience. Sure they have great mind-share and brand recognition, but they are also creating a new product line from scratch. New OS. New devices. Customers are wary of “new” right now.
Apple found success in smartphones based on years of consumer trust built on iPods. Android needed about three major revisions before it started gaining traction outside low cost, entry-level gear. HP bailed on Palm before it had a shot when it wasn’t immediately successful out of the gate (they’re currently floundering with half-way attempts at Android, with rumors pointing to a possible Windows Phone in the works). Microsoft is just now starting to be taken seriously in mobile, now that we’re looking at a third generation of Windows Phone hardware about to hit the market.
BB is on that “new” list. The bummer is, BB OS10 is pretty great. It’s a refreshing spin on a mobile UI. Gestures are clean. It looks good. It’s a nice experience. This means almost nothing right now. Customers don’t want “new”, they want an established ecosystem. They want to trust that their devices will get updates and that they’ll see new devices in the future. They want apps, and they want to see cases they’ll never buy at Mall kiosks. Those things only come with time and sales. Those early sales are going to be harder and harder to come by as every player that fails in this market will only reinforce why consumers should only buy something established. Why they shouldn’t take a risk.
Years. Blackberry needs years.
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In a filing with the SEC, HP today confirmed their intentions to divide their company. They’ll retain the traditional HP name for consumer electronics like Laptops and Printers. A new organization named “Hewlett-Packard Enterprise” will retain their corporate solutions.
