BlackBerry's Split With T-Mobile Doesn't Change Much

So apparently BlackBerry (NASDAQ: BBRY  ) and T-Mobile (NYSE: TMUS  ) never quite smoothed things over from February's falling-out. BlackBerry announced today that it would no longer sell its devices through T-Mobile as of April 25.

While it's never good news for a device maker to stop selling its products through one of the major wireless carriers, BlackBerry investors have much more to be concerned about than the two companies parting ways.

Why split up?
Dropping T-Mobile from its list of carriers is likely the result of the magenta company's promotion back in February that offered $200 to any BlackBerry user to switch to an iPhone on T-Mobile's network. The offer spurred a backlash by BlackBerry loyalists online.

T-Mobile tried to smooth things over by offering a Blackberry promotion, but it was too late. About 94% of users who participated in the offer ditched their BlackBerry for another device.

Why neither company will suffer
BlackBerry's device sales in fiscal Q4 2014 were already pretty bad, and dropping T-Mobile isn't likely to make them any worse. The company only sold 3.4 million devices to end consumers and only 1.1 million of those were running the BB10 operating system.

BlackBerry's newer OS hasn't turned around the company as investors had hoped and now it's looking to tap into some nostalgia for future sales. The company's brining back its formerly popular BlackBerry Bold device, and is releasing its Q20 device with a physical keyboard -- harkening back to the company's heyday.

With device sales already so low, and BB10 failing to change the tide, BlackBerry doesn't have much to lose by cutting ties with T-Mobile. Consequently, with such low demand for BlackBerry devices, T-Mobile won't likely see much of a loss, either. The company will continue to support current BlackBerry devices, so any current customers can continue to pay for their plans if they choose.

Foolish final thoughts
The one thing that could potentially be hurt in all this is how BlackBerry loyalists perceive the company. Sure, BlackBerry has already lost its clout with most mobile consumers, but purposefully dropping a carrier should be a little unsettling for a group of users who are staunch supporters of the devices.

I can't help but view the T-Mobile and BlackBerry split as yet another small step into insignificance for the device maker. While the move doesn't change much for either company, it's still a telling sign that BlackBerry is slipping further away from mobile consumers. And, unfortunately, that's nothing new.

A better opportunity 
So far, BlackBerry's failed to turn its ship around, leaving investors who hoped for big gains pretty disappointed. Luckily, there's a new wave of tech that's coming into its own, and it's not even close to being too late for investors to get in on it. An ABI Research report predicts 485 million of them could be sold over the next decade, and you can invest in it right now... for just a fraction of the price of AAPL stock. Click here to get the full story in this new report.


Read/Post Comments (2) | Recommend This Article (0)

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 April 02, 2014, at 3:08 PM, cbglobal wrote:

    Motley Fool still batting 1000 (100% wrong).

    This is all because T Mobile signed an agreement to buy a gazillion iPhones whether they can sell them or not. So they will lose less on the loyal Blackberry customers who do not want an iPhone and switch carriers; then paying for iPhones they do not sell by a certain date. If an iPhone 6 comes out soon, they will be paying for old phones they cannot sell.

  • Report this Comment On April 03, 2014, at 10:13 AM, Jjkiam wrote:

    Whatever the motives for Tmobile's decisions to try t get BBRY device users to switch to an Iphone, the reality is more BBRY sub decreases! Now that they have parted ways, it only accelerates these decreases! How is it relevant to BBRY what potential excess IPhone inventory Tmobile May or may not have?

    The glaring reality investors have to look at about BBRY is decreasing handset sales, decreasing subs, decreasing cash position, decreasing carriers and BBM and QNX still contribute relatively small amounts in revenue in terms of the overall, which again continues to decrease with no foreseeable end in sight! How is this glass 1/2 full? I see it as almost empty

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2900267, ~/Articles/ArticleHandler.aspx, 12/21/2014 5:56:22 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement