Is BlackBerry Loyalty Waning?

The latest T-Mobile promotion may prove BlackBerry customers aren't as loyal as once thought.

Mar 6, 2014 at 10:00AM


Source: BlackBerry.

BlackBerry (NASDAQ:BBRY) users are typically considered a particularly loyal bunch. But T-Mobile's (NASDAQ:TMUS) latest promotion proved that even the most dedicated of tech fans can have wandering eyes.

A very uncarrier move
Last month, T-Mobile launched a limited promotion offering its BlackBerry customers a special deal to switch to an iPhone 5S. That resulted in a lot of BlackBerry loyalists speaking out against T-Mobile on social media sites, and sparked a public argument between BlackBerry CEO John Chen and T-Mobile chief John Legere.

Chen called the promotion "inappropriate and ill-conceived," while Legere poked fun at Chen by saying he wanted to respond to him on Twitter, but since Chen wasn't on the social network he'd look him up on MySpace. T-Mobile tried to smooth things over by offering free shipping to people who ordered BlackBerry devices, and then launched a promotion in which users would get a $200 credit if they switched to an iPhone or Android phone, or $250 if they bought a new BlackBerry.

So what was the result of the promotion?

According to an internal T-Mobile memo acquired by the blog TmoNews, 94% of BlackBerry owners who signed up for the promotion switched to a non-BlackBerry device. T-Mobile's chief marketing officer said the promotion that ended Wednesday resulted in 15 times the normal BlackBerry trade-ins.

To be fair, this is just one short-lived campaign by a single carrier, and we don't even know how many actual customers switched from BlackBerry to another brand. But we do know that despite the backlash from BlackBerry loyalists when T-Mobile first launched the promotion, it appears not every BlackBerry user is as devoted.

No room for error
BlackBerry thinks its loyal fans can help turn the company around, and it just introduced the Q20 device a few weeks ago to help make that happen. The Q20 has physical buttons, a trackpad and QWERTY keyboard -- reminiscent of BlackBerrys of old. Chen said in a statement that the phone was designed "to give you the distinct experience that every BlackBerry QWERTY loyalist and high-productivity business customer absolutely loves."

But catering to the loyalists won't be enough. Whether BlackBerry has a strong following may not matter much, in light of how the company has failed to gain new converts. This past quarter BlackBerry sold just 1.1 million BB10 devices. Loyalists or no, the company won't turn itself around with sales like that. Investors should look to how well the company can sell the Q20 and the new Z3, but based on current sales the situation doesn't look promising. 

I'm doubtful either of the devices will garner the sales the company needs. Even the launch of the new BB10 operating system last year didn't get consumers to open their wallets to change BlackBerry's fate. If there's any time BlackBerry loyalists need to show their support, it's now.

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4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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