Is There Any Light At The End Of The Tunnel For BlackBerry Ltd (BBRY) Stock?

BlackBerry Ltd (BBRY) tries to revive the brand but is it too little too late for BBRY stock?

  • Blackberry have suffered a huge drop in market share with no signs of getting it back.
  • Microsoft continues to encroach on the enterprise part of the business.
  • Can self-driving car tech save the company?

BlackBerry (NSDQ:BBRY) had a smartphones market share of 20% in 2009, which has dropped off a cliff to 0.1% in present day. Blackberry has tried to revive the brand many times. However, they had a similar problem like Microsoft (NSDQ:MSFT) had with the Windows Phone project. Their refusal to adopt Android resulted in their smartphones becoming less-and-less desirable.

In a move much like Microsoft's, Blackberry has sold most of the global rights of its smartphones to TCL. This enables the Chinese company, TCL to release smartphones with the Blackberry brand. This might seem like Blackberry ‘throwing in the towel’. However, it would enable them to focus on other parts of their business.

Interestingly, this deal is likely to increase Blackberry’s revenue in 2016. This is because Blackberry’s phone business led to significant losses. And with software and services up by 50%, it makes sense for them to change their focus. Despite this, Blackberry made a loss of $117 million in its fiscal third quarter earnings report. As a result, some would describe Blackberry as a sinking ship; however, their CEO remains optimistic.

Opportunities

Blackberry still holds a good position in the Enterprise market, and also holds many patents. Their traction in the enterprise market is primarily due to the strong security of their devices. However, one wonders where the growth is in the enterprise market. Notably, Microsoft continues to dominate the enterprise market despite growing competition.

Blackberry’s current situation is the classic case of a giant resting on their laurels. As a result, they have resorted to placing their few eggs into one basket, or ‘rolling the dice’. A big part of Blackberry’s business involves building in-car tech. Recently, Blackberry announced that they were investing heavily in developing self-driving car technology. (See Also: Ignore All The Hype Around BlackBerry Ltd (BBRY) Stock )

However, like most things with Blackberry, they are late to the party. Tesla (NSDQ:TSLA)Alphabet (NSDQ:GOOGL) , Alibaba (NYSE:BABA) and Baidu (NSDQ:BIDU) are deep into the development process of their self-driving car tech. Therefore, by the time Blackberry brings something compelling to the market, one or more of the aforementioned companies is likely to have already signed many of the lucrative deals.

Brand leverage

Blackberry’s decision to jump out the phone business was an intelligent decision- and one wonders why they didn’t do it sooner. If it goes right, and their partners produce compelling devices, the Blackberry name regains market share, they can jump back. However, wth 0.1% market share, at the moment, there really isn’t a downside to the deal. The only way is up.

Error after Error

Despite decreasing market share, Blackberry decided to release the Blackberry Priv in Q4 of 2015 and set the price at $699. This was a time when Apple and Samsung both had compelling smartphones on the market at that price range. Market trends and consumer sentiment shows that there is little desire for Blackberry smartphones in the market. Therefore, the Priv was their opportunity to undercut the competition on price in order to entice consumers and gain some trust.

Also Read: BlackBerry Ltd (BBRY) Stock: Don't Gamble, Look At The Data Points

Notably, Blackberry was hoping that the Priv would be well-received by the corporate market. However, they were asking for a lot. The design and price combined with other options meant that sales tanked. In October of 2014, Blackberry launched BBM for Android and iPhone. And in doing so, they relinquished the competitive advantage BBM gave. Some enterprise users held on to their Blackberry devices because of the security BBM provided. However, once they knew that they could have it on either Android or iOS, they left.

Conclusion

In conclusion, Blackberry is a company which is stuck behind the times. Unfortunately, they rested on their laurels half a decade ago. As a result, it is highly unlikely that you would see significant growth from the company. Their grip on the enterprise market is loosening, as that of Microsoft's gets stronger. There are better tech stocks such as Amazon and Microsoft to add to your portfolio.

Looking for great technology stocks? Check out our tech stock picks, which have beaten the NASDAQ by over 111%.

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