It's Way Too Late for Apps to Save BlackBerry Phones

BlackBerry users will soon have access to apps from's app store, but it's too late to save the BB10 smartphone platform.

Jun 23, 2014 at 2:05PM

One of the many issues with BlackBerry's (NASDAQ:BBRY) new line of BB10 phones has been a dreadful selection of apps. With the BlackBerry platform already shrinking rapidly at the time that BB10 was introduced, many major companies decided it wasn't worth spending any money to develop BB10 apps. This made the failure of BB10 a self-fulfilling prophecy.

Last week, BlackBerry announced an agreement with (NASDAQ:AMZN) that will put the Amazon Appstore on BB10 phones. If this deal had happened prior to the launch of the BB10 platform in early 2013, it might have raised BlackBerry's chances of success. Today, it is too late to revitalize BlackBerry's smartphone sales.

Adding key apps
BlackBerry's deal with will allow it to add numerous key apps to its ecosystem. The Amazon Appstore has more than 240,000 apps: almost twice as many as BlackBerry's own app store. The deal gives BlackBerry users access to popular apps like Groupon, Netflix, and Candy Crush Saga, according to BlackBerry's press release.


BlackBerry users are getting access to the Amazon Appstore.

However, even with the addition of the Amazon Appstore, BlackBerry users have a significantly smaller selection of apps than iOS and Android device users. Both of those platforms have more than 1 million apps available!

Moving at a snail's pace
After entering 2013 with high hopes for the new BB10 platform, sales of BlackBerry's revamped phones never took off. In the first few quarters after the BB10 release, BlackBerry booked sales of millions of smartphones, but most of these phones ended up sitting on retailers' shelves and did not sell through to end users.

For the last few quarters, BlackBerry has been reporting "sell-through" (the number of phones purchased by customers) as well as "sell-in" (the number of phones shipped). Here is the estimated sell-through of BlackBerry phones for the last three quarters:



Quarter ending November 30, 2013

4.3 million

Quarter ending March 1, 2014

3.4 million

Quarter ending May 31, 2015

2.3 million

Source: BlackBerry quarterly earnings reports (available here).

These numbers look paltry enough. By comparison, Apple (NASDAQ: AAPL) has averaged selling about 40 million phones per quarter in the past year -- at a much higher price point than most BlackBerry phones.

Moreover, BlackBerry still sells phones running its outdated BlackBerry OS 7 despite the launch of the BB10 platform. Those older phones -- which barely have full smartphone functionality -- have actually sold better than the BB10 phones, a serious slap in the face for BlackBerry's new OS. If we look just at BB10 phone sales, the numbers are far worse:


BB10 Sell-Through

Quarter ending Nov. 30, 2013

~1.1 million

Quarter ending March 1, 2014

~1.1 million

Quarter ending May 31, 2015

~1 million-1.5 million 

Source: BlackBerry quarterly earnings reports.

Too little, too late
Getting access to the Amazon Appstore is an incremental positive for BlackBerry. However, its problems run much deeper than app selection at this point. For the past several quarters, it has been selling just 1 million BB10 phones per quarter. That isn't nearly enough to fulfill the normal replacement demand for BlackBerry phones.


BlackBerry's flagship Z10 phone sold terribly. Source: BlackBerry.

Indeed, while a few BlackBerry devotees have remained loyal, most have jumped ship by this point. BlackBerry's global share of smartphone sales is expected to fall below 1% this year, causing its installed base to shrink further.

BlackBerry's biggest problem today is this erosion of its installed base. It's harder to convince a customer to switch platforms (or switch back) than it is to win a new customer or convince an existing user to upgrade.

The recently released $179 Z3 phone offers some hope for gaining new first-time smartphone users in developing markets. However, these are destined to be low-margin customers simply due to their lack of purchasing power. Meanwhile, the upcoming "Classic" QWERTY phone may convince the remaining high-end BlackBerry users to upgrade, but that is a fast-shrinking market.

For BB10 to become a successful smartphone platform, it would need to win tens of millions of users away from iOS and Android, and that's extremely unlikely to happen. Amazon, which just released its own smartphone -- the Fire Phone -- faces a similar problem. The vast majority of smartphone users simply are not looking to switch platforms.

BlackBerry needs to keep moving beyond smartphones
The BlackBerry smartphone is all but dead. BlackBerry may be able to continue to sell a few million each quarter, and if it can do so profitably, that's fine. However, BlackBerry's long-term survival depends on the success of some of the company's other growth initiatives.

BlackBerry has three main businesses outside of smartphones. BBM is a messaging app and suite of related services. BES is a platform that allows enterprises to secure and manage mobile devices. Lastly, QNX is an operating system that can be used for machine-to-machine communications. All of these businesses have long-term growth potential -- far more than BlackBerry's device business, with or without apps from

Leaked: Apple's next smart device (warning: it may shock you)
Apple recently recruited a secret-development Dream Team to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out... and some early viewers are even claiming its everyday impact could trump the iPod, iPhone, AND the iPad. In fact, ABI Research predicts 485 million of these type of devices will be sold per year. But one small company makes this gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

Adam Levine-Weinberg owns shares of BlackBerry and is long January 2016 $560 calls on Apple. The Motley Fool recommends and owns shares of and Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.

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.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

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.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information