BLACKBERRY
(SALES DECLINE)

I. TIME CONTEXT:

BlackBerry's share of the smartphone operating platform market dropped from 21.7% in July 2011 to 9.5% just a year later, according to comScore. Meanwhile, Apple's market share went from 27% to 33.4% in that time, while Google's share went from 41.8% to 52.2%. BlackBerry’s sales of smartphone is now continuously dropping

II. POINT-OF-VIEW:

In today's earnings report, BlackBerry said the $2.7 billion charge was based on the results of an analysis of its long lived assets. Separately, there were "pre-tax restructuring and legal and financial advisory charges of approximately $266 million."

The $4.4 billion loss compared to a profit of $14 million in the same quarter last year. BlackBerry lost $965 million in Q2 2014, primarily because it overestimated how many new phones it would sell.

Excluding all of the one-time charges, BlackBerry's operating loss was $354 million for the quarter, up from an adjusted loss of $248 million in the prior quarter and up from $114 million in Q3 2013.

Despite the bad news, BlackBerry CEO John Chen struck a positive tone. “With the operational and organizational changes we have announced, BlackBerry has established a clear roadmap that will allow it to target a return to improved financial performance in the coming year,” Chen said in the earnings announcement. “While our Enterprise Services, Messaging and QNX Embedded businesses are already well-positioned to compete in their markets, the most immediate challenge for the Company is how to transition the Devices operations to a more profitable business model.”

BlackBerry did increase the amount of its cash, cash equivalents, short-term and long-term investments from $2.6 billion at the end of the second quarter to $3.2 billion at the end of Q3.

"During the third quarter, the Company recognized hardware revenue on approximately 1.9 million BlackBerry smartphones compared to approximately 3.7 million BlackBerry smartphones in the previous quarter," BlackBerry reported. "Most of the units recognized were BlackBerry 7 devices. During the quarter, approximately 4.3 million BlackBerry smartphones were sold through to end customers, which included shipments made and recognized prior to the third quarter and which reduced the Company’s inventory in channel. Of the BlackBerry smartphones sold through to end customers in the third quarter, approximately 3.2 million were BlackBerry 7 devices."

BlackBerry will continue to reduce operating expenses in Q4, the company said. As for its partnership with Foxconn, the five-year agreement means that "Foxconn will jointly develop and manufacture certain new BlackBerry devices and manage the inventory associated with those devices... BlackBerry will own all of its intellectual property and perform product assurance on devices through the Foxconn partnership, as it does currently with all third-party manufacturers." This will reduce BlackBerry's risks related to unsold products.

III. COMPANY BACKGROUND:

Given how common smart phones are now these days it is shocking just how recently they were introduced. The first BlackBerry smart phone was developed in 2003 although the company did produce other devices before that. In a remarkably short time they have managed to completely change the way that people communicate. There has also been a huge increase in the number of features that a smart phone can offer.

The first BlackBerry appeared on the market way back in 1999 although that one was nothing at all like the current models. The original was a two way pager, pagers of course are almost never used anymore which is a pretty good demonstration of just how fast the technology has come. When it first came out a two way pager was a pretty novel product since most of them up until then had only allowed for one way communication. The original BlackBerry had a keypad that allowed the person who was receiving the page to respond to the sender.

In 2003 BlackBerry introduced the first of what we would think of as being the modern smart phone. This was a device that not only functioned as a telephone but also allowed for the sending and receiving of email and text messages as well as web browsing. One of the main focuses of the early BlackBerry's was to allow for mobile email. It was clear that this was a technology that was necessary since email had become so popular. Clearly people who were on the go needed a way to access their email without having to find a computer.

The early BlackBerry had a monochrome screen but all of the ones that have come out since then have had color screens. One of the other features that appeared on the first models which has been retained over the years is the QWERTY keyboard. This is a necessity if people are going to use their BlackBerry to send email or text messages. There have been a couple of models that don't retain the QWERTY keyboard but the vast majority of them do as customers have made it clear that they prefer it this way.

Since the introduction of the BlackBerry a lot of competitors have appeared on the market and this has really hurt sales since they are now competing with some of the biggest companies in the telecommunications industry. This competition combined with improving technology has resulted in a huge increase in the number of functions that you will find on your BlackBerry. The current models are not only a communication device but also a personal digital assistant and a multimedia player. In addition a number of apps have been developed by other parties that add even more features to the phone. The result is a device that is capable of an amazing number of things.
Parent company: Research in Motion (RIM)
Industry: Electronics

IV. STATEMENT OF THE PROBLEM

BlackBerry is one of the world’s leading smart phone and e-mail devices. But, now facing a big problem with its sales declining which starts from the outage in late 2011, the failure of its Playbook tablet and the stiff competition from Apple's (AAPL) iPhone and Google's Android devices, have led to a rapid decline of BlackBerry's brand value.

V. AREA OF CONSIDERATION (SWOT ANALYSIS)

STRENGTHS

* BlackBerry owned 76 million of loyalty users. * Blackberry has the high brand awareness. * Blackberry has QWERTY keyboard ease tying experience. * Provides BBM service and strong business function. * No debt status (Blackberry is debt free). * Highly secure phones. * Strong focus on narrow customer segment.

WEAKNESS

* Lack of native software. * Lack of the unique Blackberry products * The Research in Motion has limited R&D on innovation capabilities. * The blackberry’s cell phone with OS 10 has the high price. * The RIM take too long to introduce OS 10 * Lack of the entity store.

OPPORTUNITIES

* The development of BlackBerry can increase the Apps market. * The smart-device market growing fast about 41.7% per year. * Engaging with ODMs (original design manufacturers) to build new BlackBerry products.

THREATS

* There are many competitors, such as Apple and Samsung. * Most sales depend on the operator and lack of entity store in Canada. * Negative Publicity (Bad Public Reputation).

VI. COURSES OF ACTIONS

To address the problem of sales decline of the BlackBerry, they can do some adjustments and/or do alternative marketing strategies to gain more profit and reduce their loss every year. This may include:

1. Customer Research

BlackBerry must take the time to ask their customers what’s important to them and what other alternatives they are considering to solve their problems. The problem with BlackBerry they are producing and producing of products that their not consulting their markets. They really need to know what would make it to be on top again through their customers. Consumer behavior is changing.

2. Targeting

Target Customer Traditionally, Blackberry phones have been targeted to business professionals only. They were not priced or developed for the everyday cellular user. Unlike Samsung and iPhone they targeted students or the younger generation. BlackBerry must be careful of entering to the new consumer targeting concept.

3. Product Development & Product Modification

Lack of the unique BlackBerry products and its said to be unattractive features are considered its weaknesses, if only they will engage to the ODMs (original design manufacturers) they will have the idea of producing new highly unique and competitive products, for the their CrackBerry (loyal customers of blackberry) and to its potential customers. 4. Price Reduction
RIM should make a bold move: start giving away the outdated models by the reduction of its commercial price. Several of the latest BlackBerry models are priced higher than Android phones. If RIM can somehow give us a sneak peek or early beta look at BlackBerry 10 (as is the Microsoft way), and convince people that this is the OS you can use at some point in the future, and all the phones are free, maybe they can convince a few more customers to stick around.

VII. CONCLUSION/RECOMMENDATION

BlackBerry is one of the world’s leading smart phone and e-mail devices. It currently enjoys a 20% market share of mobile phone sales, but that is under pressure from Apple’s iPhone and similar phones. But also, one of the few leading mobile device makers that is not participating in the new partnership — or at least it is not listed as a member. The parent company has seen its stock decline nearly 90% in the past three years. RIM announced in June that it would cut approximately 5,000 jobs out of about 16,500 employees, or around 30% of its workforce.

Therefore, today’s status of BlackBerry Ltd. seems to face a big problem with losses upon sales worldwide. Some reasons might be its delayed release of its new OS, unattractiveness of its mobile features, and bad publicity that Blackberry are sometimes used for explosive device. These problems should address by the company, because it is really possible for the company to fall into its peak and then gone in the market.

I recommend using all of the alternative courses of action, to help the BlackBerry to eventually gain profit.