So much for America's "CrackBerry" addiction. BlackBerry, once the dominant force in the U.S. smartphone market, announced Monday it was considering a variety of options including a sale of the company.
In a press release, the board of directors announced it was creating a special committee, which would consider options including a sale of BlackBerry as well as joint ventures or partnerships.
"Given the importance and strength of our technology, and the evolving industry and competitive landscape, we believe that now is the right time to explore strategic alternatives," said Timothy Dattels, the chairman of the new committee, in a statement. BlackBerry declined to comment further for this article.
There are plenty of reasons why Blackberry is a shadow of its former self, not the least of which is a market that was quickly taken over by the iPhone and the Android operating system. According to figures released last week by research firm IDC, BlackBerry had only 2.9 percent smartphone market share as of last quarter, down from 4.9 percent one year prior. That's a tiny sliver, especially when you consider that BlackBerry as recently as 2009 owned 55 percent of the smartphone market, according to figures from tech research firm Gartner.
Recovering from that kind of slippage would be tough for any company. But in the mobile phone market, there are unique challenges to rebuilding a brand. One is the problem of carriers. Even if a company comes out with a promising new phone, as Blackberry had hoped with its recent Z10 and Q10 models, carriers can act as gatekeepers between the phone and customers.
"It has to be a good phone, and then you need a big fat channel – lots of carriers are hot for it and are willing to subsidize it and push it," says Ed Snyder, managing director of Charter Equity Research, a firm specializing in the wireless and telecommunications industries.
Cell phones need networks to operate on, after all, so hardware companies need to strike agreements with companies like AT&T and Verizon to market and sell their phones. In addition, there is the human element of phone purchases, says one analyst.
"You've got to get the salespeople on your side," says Ramon Llamas. When Llamas recently inquired about buying himself a new smartphone for work, "the default was iPhone or the popular Android smartphone du jour. Very infrequently would someone say, 'If you're taking this for business, go for BlackBerry.'"
"Did it happen? Yes. Did it happen frequently enough? In my opinion, no," adds Llamas.
Synder says the other problem is copycats. He estimates that a company with a new phone has around nine months to shop it around, get as many carriers on board as possible, and sell as many units as possible before other companies try to come up with their own version. Shortly after the Motorola Razr debuted in 2004, for example, other phone manufacturers rushed to make their own slender cell phones.
There are plenty of options for the company – it could ride out its difficulties and try to push its newer phones, it could go private, it could find another company to partner with, it could sell entirely or it could sell some of its assets. Boosting BlackBerry to its former place atop the smartphone market could be difficult, to say the least, and nearly unprecedented, Snyder points out. Motorola is one of the very few mobile phone companies to boost itself out of the doldrums, he says, and even then, the company shortly split, with Google eventually buying Motorola Mobility.
Then again, Llamas says it would be a mistake to rule out any option, including future growth. BlackBerry does have a few factors on its side: $3.1 billion in cash, for starters, as of the end of its last quarter. And it also has one massive, stable customer base: government employees. BlackBerry is known in part for its security capabilities, and the company announced last week that it would be the first company with smartphones authorized to operate on Department of Defense networks.
The company's brand name and solid government customer base give the company a unique leg up, says Llamas.
"There's so many layers to this, but one of the things that always comes back to me is just that BlackBerry is just way too big to fail," he says.