Will Your Smartphone of Choice End Up the Next BlackBerry?
This doesn't mean that it was a good quarter. It wasn't. A smaller adjusted quarterly deficit than analysts were forecasting is still a loss. Revenue plunged 68 percent over the prior year, and there was pronounced weakness in all of BlackBerry's four geographic regions.
BlackBerry recognized hardware revenue on just 1.6 million BlackBerry smartphones during the quarter. To put things into perspective, Apple (AAPL) sold 43.7 million iPhones in its latest quarter, and it's not even the global leader in smartphone sales -- Samsung (SSNLF) is.
BlackBerry closed out its latest quarter with $3.1 billion in cash and investments on its balance sheet, and it's been slashing operating expenses. However, it's losing market share as devices with Google's (GOOG) Android, iPhones running Apple's iOS and a resurgent Microsoft (MSFT) with Windows Phone gain ground.
BlackBerry was all the rage nearly a decade ago when the platform's security and ability to quickly serve up email made it a fixture in the corporate world. White-collar busybodies were addicted to their "CrackBerries."
Everything changed when Apple rolled out the iPhone in 2007 and the iTunes App Store the following summer. Smartphone usage shifted from calls and emails to apps. Physical keyboards gave way to touchscreen displays. BlackBerry tried to catch up, but between Apple dominating on the high end and Google owning the low by making everyone else's smartphones cheaper with its open Android platform, the former champion was outflanked at every turn.
The Smartphone Revolution Isn't for Everybody
Industry tracker IDC reports that 287.8 million smartphones were sold worldwide during the first three months of 2014, up 31.5 percent from a year earlier. BlackBerry's fiscal quarters don't line up to calendar quarters, but it's easy to see how irrelevant it has become. Based on global shipments, BlackBerry's share of the market has gone from 13.6 percent three years ago to 0.5 percent today.
Android has made the most of the disruption, going from 36.1 percent during the first quarter of 2011 to a whopping 81.1 percent just three years later. It doesn't seem as if Android is susceptible as the next mobile operating system to buckle, but an argument can be raised that either Apple or Windows could be the next platform to follow BlackBerry lower.
%VIRTUAL-article-sponsoredlinks%Microsoft has just 2.7 percent share -- down from 3.2 percent a year earlier. Yet we can't dismiss Microsoft because it has a ton of dough and it's willing to spend plenty of it to get a foothold in the markets of the future. Then again, one of the few companies with more cash on hand is Apple.
Apple has been losing market share for two years. Sales of iPhones are still growing because the overall smartphone market is growing, but Apple's closed system and the high price of its smartphones overseas where carriers don't subsidize the handsets are taking a toll. However, analysts see Apple picking up steam later this year when the larger iPhone 6 hits the market. Until then, it's worth remembering that Android is the only platform that has gained market share over the past year.
BlackBerry's fading, and history isn't kind to smartphone platforms once they start to fade. (Remember Palm?) However, neither a tardy Microsoft and a proud Apple can be dismissed, and the market changes too quickly to believe that any platform will stay relevant forever.
Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Apple and Google (C shares). The Motley Fool owns shares of Apple, Google (C shares) and Microsoft. Try any Motley Fool newsletter service free for 30 days.