Android squeezing BlackBerry's global sales

The Canadian smartphone maker tells regulators that growth in international markets is being affected by competition from low-cost Android smartphones.
Written by Nick Heath, Contributor

Demand for BlackBerry handsets outside of Europe and the US is on the wane, threatening some of the few remaining growth markets for the handset maker.

Sales of handsets in international markets are being squeezed by competition from low-cost Android smartphones and buyers being put off by the lack of apps for BlackBerry phones, the Canadian firm wrote in a filing to the US Securities and Exchange Commission (SEC) published yesterday.

"The intense competition impacting the company's financial and operational results that previously affected demand in the United States market is now being experienced globally, including in international markets where the company has historically experienced rapid growth," the filing said.

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The filing follows BlackBerry's financial results being released last Friday where it announced losses of $965m during the second quarter of this year. Much of these losses came from a write-down of inventory phones using the new BlackBerry 10 operating system, which were designed to compete with Android and iPhones.

Most of the 3.7 million BlackBerry smartphones shipped during the quarter were the previous generation BlackBerry 7 handsets, although BB10's poor showing was in part because revenue on some BlackBerry 10 devices shipped during the quarter were not included in these figures.

Hardware revenues for the quarter declined $942m, or 55 percent, over the same period the previous year.

"The company believes that the significant decrease in hardware revenue and device sales over the prior fiscal year was primarily attributable to decreased demand and lower sell-through for the Company's new products, due to the maturing smartphone market and very intense competition, as well as lower average selling prices compared to the second quarter of fiscal 2013," the filing said.

"Additionally, delays in the launch of certain functionality of the BES 10 platform and alternative competitor products in the market have resulted in a slower than anticipated rate of adoption of the BES 10 platform by enterprise customers, many of which look to deploy BlackBerry 10 hardware and software simultaneously to optimize security through the integrated BlackBerry end-to-end solution."

The BlackBerry Z10, which introduced the new line in January, will be sold as the company’s low-priced entry level touch-screen phone, it said.

BlackBerry's services business also saw revenues decline, falling 27 percent to $724m.

Europe, the Middle East and Africa (EMEA) accounted for the largest share of BlackBerry's $1.573bn revenue for the three months to the end of August this year. While EMEA accounted for about 44 percent of revenues, the proportion of BlackBerry's takings from North America stood at $414m or about 26 percent.

The company repeated its earlier pledge that it intends to lay off about 4,500 people, about 40 percent of the workforce. These layoffs are expected to cost the company about $400m in charges, according to the filing, up from a previous estimate of $100m.

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