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Good News, Bad News for BlackBerry

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With so much riding on its new operating systems and phone line, BlackBerry (NASDAQ: BBRY  ) won't get much wiggle room from investors, nor should it expect any. We all knew when BlackBerry CEO Thorsten Heins announced the arrival of its BB10 OS in late January, along with a couple of highly anticipated new phones, that the rollout needed to go smoothly. Monday's news that a major customer is swapping its employees' BlackBerry smartphones for iPhones wasn't what Heins had in mind.

The bad news
In the past year alone, BlackBerry's market share has declined at an alarming rate -- and it's not alone. Even Apple's (NASDAQ: AAPL  ) iOS experienced a drop in market share in Q4, slipping from 23.6%, to 20.9%, compared to 2011's fourth quarter. The primary beneficiary of BlackBerry's and Apple's decline in the OS market? Google (NASDAQ: GOOGL  ) and its Android OS.

Nearly twice the number of android OS smartphones were sold in 2012's Q4 compared to the prior year, raising Google's piece of the global OS pie to nearly 70%. Microsoft (NASDAQ: MSFT  ) and its new Windows 8 OS is also benefiting from BlackBerry's and Apple's decline in market share. Microsoft's OS now runs 3% of the world's smartphones as of the last quarter, up from a paltry 1.8% in 2011.

As recently as Q4 of 2011 , BlackBerry owned nearly 9% of the global smartphone market, as measured by operating systems. By the fourth quarter of 2012, BlackBerry's piece of the pie shrunk to just 3.5%, and Heins and team are relying on its new BB10 to turn things around. Getting BlackBerry back into the smartphone mix is a big challenge in and of itself, so you can bet investors will react negatively to any bad news, as they did on Monday.

The reason for BlackBerry's 5% drop in stock price earlier this week was the announcement that one of its customers, Home Depot, has opted to furnish 10,000 of its executives and corporate folk with Apple's iPhone, in lieu of BlackBerry devices.

Losing a deal for 10,000 phones won't end BlackBerry's comeback bid; it sold nearly 7 million smartphones last quarter, and expectations are running high for its Z10 and (eventually) Q10 units this year. As for Apple, it sold about 47.8 million iPhones in its most recent quarter, so another 10,000 isn't exactly corporate celebration material. But remember, Heins is walking a fine line here, and perception will continue to become reality for BlackBerry investors, at least for the foreseeable future.

Home Depot's shift to iPhones also reinforces the fear that more companies are blurring the lines between business and personal mobile computing. BlackBerry has long been the choice of commercial and government customers, but Home Depot's decision makes it pretty clear that the business world once owned by BlackBerry is becoming wide open.

Early release of Z10? Sort of...
As discussed in an article a week ago, Heins grudgingly admitted that the release of BlackBerry's Q10 smartphone model -- the one with the keyboard -- would be delayed until late May or early June for U.S. customers, to give mobile carriers time to test the devices. BlackBerry's Z10 smartphone, which has started off well in Canada and the U.K. according to Heins, should be released domestically in mid-March. Like most, I expected the Z10 to go on sale in the U.S. shortly after BlackBerry's Jan. 30 BB10 party, but it wasn't to be. Why the delays?

In the U.S., wireless companies pick up the majority of the cost, by way of subsidies, so you can bet they want to make certain the devices are going to work. But what if a carrier offered the new BlackBerry Z10 smartphone domestically, without a subsidy?

Turns out, if you're willing and able to shell out $999, you can get your Z10 in a couple of business days, beginning now. A relatively new carrier in the wireless game, Solavei , will sell you a BlackBerry Z10 without a long-term contract through GSM Nation.

After announcing delays of its Q10, and watching Home Depot opt for iPhones, BlackBerry shareholders could use a little good news. A recent upgrade from Wells Fargo will help, as will making BlackBerry's Z10 available early in the U.S., even without a subsidy. A non-subsidized Z10 won't sell millions of units, but BlackBerry can use all the good news it can muster.

We haven't seen the last of big stock price movements with BlackBerry, not by a long shot. Every bit of news -- good, bad, or indifferent -- will elicit wild swings in valuation. That's what happens when you put it all on the line, as BlackBerry's done with BB10. In the long run, I still like BlackBerry's chances; but if the recent news has taught us anything, it's that you better get ready for a wild ride.

There's a debate raging as to whether Apple remains a buy. The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on both reasons to buy and reasons to sell Apple, and what opportunities are left for the company (and your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.

Read/Post Comments (15) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 14, 2013, at 9:32 PM, TimmyBee123 wrote:

    Home Depot got a deal on 2 year old smartphones. Not sure how that is indicating the future direction of the ecosystem wars.

    Not sure how trends matter when one company. It is obvious that BB is now getting positive reviews and customers are realizing that they are back in the game. Big change from last quarter and therefore last quarter's numbers are meaningless.

  • Report this Comment On February 14, 2013, at 10:29 PM, jwyoungy wrote:

    You should mention that Home Depot is not buying new iphone 5 phones but the older iphone 4s model. This was not a lost sale for blackberry, just lost service fees.

  • Report this Comment On February 15, 2013, at 7:26 AM, Arthur1111 wrote:

    Old news since last Friday. Everyone knows Home Depot bought 2 year old phones on a 2 year old contract. So, in 2 years, their phones will be 4 years old. I guess Home Depot does not care to keep up with the technology.

  • Report this Comment On February 15, 2013, at 8:06 AM, magnaman1969 wrote:

    I know its hard for impaired people posing as writers/analysts to focus on reporting the actual news...but speaking of "Bad news" is some on your precious Apple:

  • Report this Comment On February 15, 2013, at 8:23 AM, greenember wrote:

    BBRY has 79M customers. 10k is approkimately 1/100 of 1%. That's like trading in a coupon for cash value. Obviously the decision was a cost-based one since they aren't getting the newest Apple phones. At the speed corporations make decisions, this was likely put in place many months ago. Plus I doubt you would wait until your contract is up on 10,000 lines to decide what you're doing for your next device.

    Also of note is that the Q10 is not "delayed". They have maintained all along that it would launch AFTER the Z10. It's not news

  • Report this Comment On February 15, 2013, at 8:27 AM, BR14 wrote:

    Home Depot didn't have many BlackBerrys. Not a great loss for BlackBerry.

    This nonsense article is just part a strategy to drive down BBRY and try and generate price volatility.

    Hedge funds make money whichever way the stock moves - they only lose if the price is stable.

  • Report this Comment On February 15, 2013, at 8:29 AM, hfatt wrote:

    Home Depot always made mistake, they paid their EX-CEO 1 billion us dollar, how money the company left. This time Home Depot is going to paid extra money for old Apple phone. Home Depot never learn. It is good news for BB

  • Report this Comment On February 15, 2013, at 8:38 AM, randomroyalty wrote:

    Do people realize that Google does not make a cent on Android?

    Google is the world's biggest advertising agency, don't ever forget that. Don't be distracted by the technology.

  • Report this Comment On February 15, 2013, at 8:38 AM, digitally404 wrote:

    I think the greatest thing is that when BlackBerry's next newest device launches, no one will be able to say "too little too late" anymore. I'm very glad those comments have stopped since Z10 launched. Very frustrating.

    But yes, I'm pretty excited for the launch of Z10 in the states. I just hope there's more of a carrier push to sell them.

    What I'm wondering about is what may be happening behind the scenes. Do AT&T and Verizon have big piles of iPhone 5s' that they've subsidized and aren't able to loosen up inventory, especially with the impending launch of the 5s or 6? And if so, do they want time to sell those? (I'm not sure the argument makes too much sense, but it's something to think about).

    It's always worth a look behind the scenes, because, as some of the other users noted, Home Depot's choice came down to the BB7 blackberry platform or the iPhone 4S (for 2 YEARS). 2 years in the smartphone world is a lifetime.

    Personally, I'm a huge proponent of blackberry, and I do own the Z10 because I love the screen real-estate. I think though at this stage in the game if I had to choose between a BB7 phone or an iPhone 4S for the next 2 years, I would choose the 4S (notwithstanding the security risks involved). I concede the iPhone 4S is, in *general*, a more desirable phone compared to a BB7 phone. That said, the Z10 is far superior to even the iPhone 5, and that's just a matter of opinion.

    With that in mind, I think the choice made some sense for Home Depot, and I'm not worried. In a couple of years, they'll be choosing between the iPhone 5 and the Z10. That will be a more meaningful decision.

  • Report this Comment On February 15, 2013, at 8:39 AM, mforgetfool wrote:

    And that's it Motley, I am now blocking you from my yahoo news stream. Sick of your BS articles that are pure speculation and favors Apple no matter what. Maybe someday you all will pull your heads out of your rears and wake up.

    Adios Fools

  • Report this Comment On February 15, 2013, at 8:54 AM, tonyrenier wrote:

    When you use the term "market share" you, as well as everyone else in the Financial Sector forgets that the Smartphone market has exploded. Blackberry is shipping nearly as many phones as they did in '08 and '09, it's just that more people are buying smartphones.

    Home Depot (10K units)has been repeated over and over, yet when Immigration and Custums (nearly 18K units) initially anounced that they were moving to Apple and then decided to stick with BlackBerry only the first headline was printed. Sometimes it really appears that the financial press is aiding and abetting stock manipulation-a crime.

  • Report this Comment On February 15, 2013, at 9:32 AM, applesucks wrote:

    I am fed up of all the appletart articles always trying to kill BB. Z10 is here to stay and take back market share from Apple and Android. Just accept it. I read the same article of Balsille selling his shares in 30 different versions. He has not been involved with BB since the board put Heins in charge. When he resigned he stated clearly that he was not happy with the direction BB was taking. Is it so unusual that he dumped his shares?

    Why don't the fools talk about Mike Lazardis (co-founder) he is still with BB and still has his shares.

    BB is back and here to stay.

  • Report this Comment On February 15, 2013, at 9:50 AM, cbglobal wrote:

    Home Depot managers I have seen had old Motorola phones. So they are not switching out of Blackberry.

  • Report this Comment On February 15, 2013, at 10:58 AM, AnCOL wrote:

    Believe the main problem with BB10 is it can ONLY be managed by the new RIM MDM which doesn't even manage their older Blackberrys. Why would anyone want a product that you need a separate MDM to manage devices with and then have to have another one to manage all your other mobile devices including legacy Balckberrys! These Clowns are commiting suicide is what's happening !

  • Report this Comment On February 15, 2013, at 11:19 AM, voytekp wrote:

    @ AnCOL - you are wrong! Before you talk nonsense do some research...

    BES 10 suports Bb10 and BES 5 supports old BB OS phones but the web interface that comes with BES 10 allows for management of all BB phones simultaneously.

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