It was the best of times, it was the worst of times in a tale of two phone companies on Friday. Apple enjoyed booming sales of its new iPhone 5S, while the once mighty BlackBerry announced plans to lay off 40 percent of its workforce, in what could foreshadow a sale of the company - and perhaps even the end of its smartphone.
According to preliminary quarterly results from Canada-based BlackBerry on Friday, which were aggregated by the Wall Street Journal, the company said it will lay off 4,500 workers, or 40 percent of its company, "in response to the increasing competition in the smartphone market." BlackBerry will also trim its future smartphone portfolio from six devices to four.
"We are implementing the difficult, but necessary operational changes announced today to address our position in a maturing and more competitive industry, and to drive the company toward profitability," BlackBerry President and CEO Thorsten Heins said in a press release. "Going forward, we plan to refocus our offering on our end-to-end solution of hardware, software and services for enterprises and the productive, professional end user."
The news of layoffs came on the heels of BlackBerry's announcement on Wednesday of its new Z30 smartphone, which will go on sale in the U.K. and the Middle East next week before becoming available in all other regions. The phone received positive reviews from CNET and from the New York Times , but it could be too late for the company to gain back prestige in North America, says Bill Menezes, a principal research analyst who covers mobile communication at technology research firm Gartner.
BlackBerry could not be reached for comment.
BlackBerry was once the favorite smartphone that businesses and governments provided as a work device for their employees because it was simple to use and easy to secure, but Menezes says the company has faced a "long, slow decline," among consumers since the launch of the original iPhone in 2007. BlackBerry's smartphone market share has plummeted from approximately 50 percent in 2009 to 3 percent in 2013, according to figures released in August by analyst firm International Data Corporation. Though the overall market is much larger.
"Corporations tend to equip their employees with the devices they are asking for, and those devices are now Apple and Google smartphones," Menezes says.
BlackBerry has reportedly been shopping for a chance to sell the company, and some bidders want to break up the assets, according to Reuters. Some bidders might stop manufacturing the BlackBerry phone and focus on the more valuable parts of the company, including its software patents and its device management solutions, Menezes says.
"It doesn't necessarily mean that the phone is going to disappear overnight, but likely that whoever buys the company is not going to buy it for the phone," Menezes says.
Bert Nordberg, a board member at BlackBerry and former CEO of Sony Mobile, told the Wall Street Journal in August that there are "subsets within the company that it can get rid of" and that "BlackBerry is able to survive as a niche company."
"Historically, BlackBerry has had larger ambitions. But battling giants like Apple, Google and Samsung is tough," Nordberg told the Wall Street Journal.
BlackBerry has likely lost consumers to Apple and Google in the U.S., but it still has opportunity to compete in developing markets where BlackBerry phones could be a budget-friendly alternative to an iPhone or Android, Menezes says.
"It's a different world from when BlackBerry was the 800-pound gorilla," Menezes says.