BlackBerry Limited (BB), known as Research In Motion (RIM) until January 2013, has a long history of extreme success and failure. It's credited by many as creating the first smartphone. And at its peak in September 2011, there were 85 million BlackBerry subscribers worldwide. But the rise of Google's Android platform and Apple's iOS caused it to decline in popularity by nearly three-quarters. BlackBerry's stock price effectively tanked from highs of $147 to around $3.69 as of March 2023. How did a high-flying revolutionary tech company get eclipsed so badly? A new movie, set to release in Canada in May, is set to tell the tale.
Key Takeaways
- Blackberry pioneered handheld devices but has lost market share to larger rivals like Apple.
- The company, which was formerly known as Research In Motion, grew by leaps and bounds from 1999 to 2007, as the company's innovative product lines were well received.
- The launch of the touchscreen iPhone in 2007 triggered a dramatic shift away from Blackberry handheld devices.
- Hopes for a turnaround have been dashed as the company grapples with intense competition from larger technology companies.
- Blackberry has lost more than half of its market value in two years.
- Blackberry, a movie about the company's founders, premieres in Canada on May 12, 2023.
History of BlackBerry
The pioneer in bringing email services to handheld mobiles, with its trademark QWERTY keyboard, BlackBerry became an instant darling of world leaders, corporate honchos, and the rich and famous alike. Indeed, owning a BlackBerry device was once a status symbol, andBlackBerry addiction was a prevalent condition.
The always-on, always-connected wireless world that allowed secure and reliable access to emails turned out to be very useful for businesses. The first prominent release from BlackBerry,the Inter@ctivePager 950,was in 1998.It had a small-sized screen, keyboard buttons, and the iconic trackball that allowed seamless syncing and continuous access to corporate emails. It became an instant hit, and then there was no looking back.
In 1999, the company introduced the 850 pager, which supported “push email” from Microsoft Corporation’s (MSFT) exchange server, and in 2000, BlackBerry launched the first smartphone called the BlackBerry 957.
Attributed to increased use by enterprises and governments, RIM’s revenues grew by leaps and bounds between 1999 and 2001. The company continued to expand functionality in the BlackBerry Enterprise Server (BES) and BlackBerry OS. The golden period of 2001 to 2007 saw BlackBerry’s global expansion and the addition of new products to its portfolio.After successfully gaining a foothold in the enterprise market, Blackberry expanded into the consumer market. The BlackBerry Pearl series was very successful, and subsequent releases of Curve and Bold product lines were well received.
Blackberry, the movie, tells the story of the founders who created the world's first smartphone. The satiric history is loosely based on Losing the Signal: The Untold Story Behind the Extraordinary Rise and Spectacular Fall of BlackBerry, by Sean Silcoff and Jacquie McNish. It's set to premiere in Canada on May 12, 2023.
The Game Changer
BlackBerry's stock price peaked at an all-time high of $147 in mid-2008. A year earlier, Apple, Inc. (AAPL) introduced its iPhone—the first prominent touchscreen phone. BlackBerry ignored it initially, perceiving it to be an enhanced mobile phone with playful features targeted at younger consumers. However, iPhone was a huge hit, and this was the start of BlackBerry’s demise.
Not just aimed at individuals, the iPhone managed to attract business leaders, penetrating BlackBerry’s core market, which was soon flooded with many similar email-enabled smartphones from other manufacturers.Yet, BlackBerry managed to maintain its status as a “business email device.” People used to carry two phones—a BlackBerry for business and another personal phone.
BlackBerry introduced Storm in 2008, its first touchscreen phone to compete with the iPhone. But after high initial sales, complaints started pouring in about the device’s performance. This was the first time investors, analysts, and the media started to worry about the business prospects of BlackBerry.
The Swings
In 2009, RIM secured first place in Fortune’s 100 fastest growing companies. In Sept. 2010, Comscorereported RIM having the largest market share (37.3%) in the U.S. smartphone market. Its global user basestood at 41 million subscribers. Unfortunately, that was the peak of market penetration for RIM in the U.S. After that, the company continued to lose ground to Apple iOS and Google’s (GOOG) Android, and was never able to make it back.
By Nov. 2012, BlackBerry’s market share in the United States had dropped to just 7.3%, with Google and Apple claiming 53.7% and 35% market share, respectively. Despite declining U.S. sales, BlackBerry continued to have success globally. Itreported 77 million users globally during the last quarter of 2012, demonstrating its success in global expansion.
Owing to these local losses versus global success, the stock displayed high volatility.The worst year was 2011, as BlackBerry's stock price tanked around 80% amid declining market share. Continued earnings losses resulted in further declines—most prominently the first quarter loss in 2014 of $84 million, which lead to a roughly 30% decline in the share price on the day after the announcement.
Corporate Comeback
The high volatility in the stock is attributed to several comeback attempts, corporate developments, associated recommendations by analysts, and competitor developments. In April 2010, RIM acquired the real-time operating system QNX, which formed the basis of the BlackBerry Tablet OS. The BlackBerry Playbook tablet was introduced on the QNXplatform. Unfortunately, it turned out to be a total failure due to its high price, limited features, and poor performance.
The next generation of BlackBerry phones were announced in 2011, but the eventual product, the BlackBerry 10, failed to catch on. Nonetheless, based on interim forecasts that the BlackBerry 10 would surpass sales predictions, the company’s stock saw an upswing of 14% in Nov. 2012. By Jan. 2013, the stock had risen around 50%, and the volatility continued.
Wide positive swings to the tune of +35% were observed a couple of times during the first half of 2014. Those were based on announcements of BlackBerry transforming from mobile devices to a mobile solutions company. Those plans yielded less than meaningful results.
Another swing came in Jan. 2015, when it was reported that Samsung was interested in buying BlackBerry. This led to a 30% spike in the latter’s share price. However, the jump proved to be a short-term blip, as the stock resumed a downtrend through 2015 and 2016.
44%
Enterprise software sales represent almost half of Blackberry's revenue in 2020.
Hopes for a dramatic turnaround at Blackberry have been dashed repeatedly. The stock rallied to a closing high of $12.66 in early 2018—almost doubling value after two years of gains. Since then, however, the stock has lost more than half of its market value, as the company's mobile business has been decimated by the competition and it has been forced to shift its focus its efforts towards other segments like enterprise software.
Will Blackberry Survive?
In its current iteration BlackBerry Limited is a provider of Cybersecurity and Internet of Things (IoT) services, having effectively given up on smartphones as a business. On March 6, 2023, the company issued preliminary FY2023 total revenue of $656 million, with IoT revenue of $206 million, and Cybersecurity revenue of $418 million. Q4 and full-year fiscal 2023 revenue for the company's IoT business is expected to show 16% year-over-year revenue growth, according to BlackBerry.
It is possible, often even necessary, for a technology company to change its stripes. Google and Facebook have blazed trails in that arena recently. Blackberry, however, will not only have to morph, but it will also have to overcome its reputation as a failed smartphone maker. Time, as they say, will tell whether BlackBerry is up to these tasks. Stay tuned.
What Business is BlackBerry in Now That it Has Stopped Making Smartphones?
Currently BlackBerry Limited is primarily a provider of Cybersecurity and Internet of Things (IoT) services. The company recently reported (preliminary) FY2023 total revenue of $656 million, with IoT revenue of $206 million and Cybersecurity revenue of $418 million.
Why Did BlackBerry Smartphones Fail?
Competition, in a nutshell. The introduction of the Apple iPhone, which BlackBerry didn't take seriously, caused a loss of market share BlackBerry couldn't recover from. More competitors entered the smartphone space, eventually crowding BlackBerry out.
When Will the BlackBerry Movie Be Out?
Set to premiere across Canada on May 12, 2023, Blackberry tells the story of the three men who took an idea and turned it into the world's first smartphone. The movie, described as more satire than history, is loosely based on the 2015 book, Losing the Signal: The Untold Story Behind the Extraordinary Rise and Spectacular Fall of BlackBerry.
The Bottom Line
BlackBerry is an example of the big risks associated with the highly dynamic technology sector. None of the industry rankings, predictions, or recommendations seem to fit the BlackBerry stock play. Long-term investors have been burned, while only a few traders may have made money on the wide swings. Unless confirmed news of solid acquisition or partnership comes in, this stock will likely remain a pure trader’s play.
