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Another Nail in BlackBerry's Coffin

The decision by T-Mobile (NASDAQ: TMUS  ) to stop carrying BlackBerry's (NASDAQ: BBRY  ) handsets in its stores and only offer them online becomes just another shovel digging the once-high flying smartphone maker's grave. 

It also makes Prem Watsa's bid for the company through his Fairfax Financial (NASDAQOTH: FRFHF  ) insurance company look even more like a bit of vanity investing, an unwillingness to take the hard knocks that come with having bet on the wrong horse. When a company essentially admits consumers don't want its phones, and then lays off a third of its employees, why bite at the bait?

No doubt it's because, as my Foolish colleague Tim Brugger noted on Wednesday, Watsa's offer is actually one without consequence for him. He's got six weeks to decide if he really, really wants to buy the dying brand; if he decides not to, there's no penalty for backing out. But should someone else lose their mind and step up to bid more than the $9 per share Watsa did, he gets paid off. It's a no-lose proposition -- unless he actually decides to go through with the deal.

Even with the shift in customer focus at the top, not being able to buy BlackBerrys in-store is a death knell for this company. While T-Mobile is only the fourth largest wireless carrier, should Verizon or AT&T follow its lead, the smartphone maker may just as well pull the plug on itself. 

T-Mobile says the phones were taking up precious inventory and there was little demand for them other than from business customers, underscoring the change BlackBerry made. That was evident this summer as Ma Bell and Best Buy were slashing prices on units to just $49 in order to move them. Still, BlackBerry sold only 3.7 million phones last quarter, less than half the iPhones Apple sold in one weekend when it introduced the iPhone 5.

But how long will businesses continue to buy what is otherwise a system that's dead on arrival (or soon will be)? Apple has already made significant inroads in the enterprise market, with Halliburton and Home Depot switching to the iOS earlier this year along with government agencies like Immigration and Customs Enforcement, the NTSB, ATF, and NOAA. Don't think the fingerprint reader on the iPhone 5 was simply a fortuitous outcome of Apple's purchase of AuthenTec last year. This was a planned takeover of BlackBerry's market.

The market researchers at IDC were already tolling the bell for BlackBerry's demise last year when they noted that for the first time ever Apple and Samsung had shipped more phones to enterprise customers than BlackBerry did.

With the handset maker saying it's abandoning the consumer for the enterprise market, and T-Mobile not carrying the phones in its stores anymore, all BlackBerry will have left is a service business that admittedly does offer enterprise customers a fairly robust and secure environment, but among a dwindling population of clients and rising competition. If this empty shell is the way forward Prem Watsa sees for BlackBerry, then perhaps he can see further than most.

I think, however, once he peers more closely into the casket over the next few weeks, he'll see the decaying corpse for what it is and quietly close the lid. At that point we can just solemnly lower BlackBerry's remains into the ground.

Ashes to ashes
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Read/Post Comments (5) | 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 September 27, 2013, at 11:11 PM, rockthebest123 wrote:

    Same old headlines. The company has been sold. Get a life and find a real job now.

  • Report this Comment On September 27, 2013, at 11:15 PM, HelpIsHere wrote:

    This one was so stupid I couldn't even finish reading it. I had to stop at Home Depot buying iPhone 4 units that aren't even supported any more. Wow, that was a dumb reference so you know the balance of the article is nonsense.

  • Report this Comment On September 27, 2013, at 11:16 PM, ronbeasley wrote:

    Prem Watsa is a self-made billionaire and one of the best investors of our generation. How fortunate we are, then, to have the uber-brilliant Motley Fool bloggers who are even smarter than Watsa!

    Just think how much better he might have done if he had had the Motley Fool subscription salespeople guiding his decisions!

  • Report this Comment On September 29, 2013, at 1:09 AM, HelpIsHere wrote:

    This crap is still here? This is Obama's fail, idiots like this clown can't find work and are forced to write junk mail.

  • Report this Comment On November 04, 2013, at 11:17 AM, TMFCop wrote:

    So BlackBerry is *not* being sold, as I foretold, and has called off the dog and pony show. As I've noted before, BBRY is a rotting corpse. It's time we buried it to avoid its stench.

    This company, despite the cash infusion it will receive, and the injection of new management is still in a downward spiral.

    Apparently Mr. Watsa is reading the pages of The Motley Fool.


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