For years, we've been talking about how Apple and Google have been destroying BlackBerry (BB 3.21%). As it turns out, Microsoft (MSFT 1.65%) is the real enemy.
The battle of Britain
BlackBerry handsets will drop from third to fourth place in smartphone market share in the U.K. in 2014, research firm eMarketer reports. The losses are expected amid soaring demand for Windows Phones.
Windows Phone is on track to outgrow its UK peers. Credit: eMarketer.
"BlackBerry users will decline by a whopping 35.2% this year, hitting a new low of 2.4 million -- and the drop will be even steeper in 2015, leaving just 1.4 million BlackBerrys in the hands of UK consumers," the research firm said in an article announcing the findings.
Talk about poor timing. Next month, the company plans to introduce the new BlackBerry Passport at an event in London. A warm reception for the offbeat handset could help to stem the tide of market share losses, and regain momentum in a key territory such as the U.K.
Wait... isn't BlackBerry diversified?
Bullish investors will tell you that BlackBerry isn't the device-dependent company it used to be. That's true, but handset sales still comprise more than a third of the business. Niche market buyers of BlackBerry products are likely to include at least some handsets for accessing data or tailored services.
Take the NantHealth deal. BlackBerry is promising the 250 or so hospitals using the network handsets capable of rendering 3D images and CT scans for better diagnoses. Even if smartphones are no longer the thing, BlackBerry is going to keep making interesting handsets, such as the Passport.
Businesses at the front lines
Microsoft is taking a similar approach. Here's CEO Satya Nadella outlining a portion of his strategy in a lengthy memo to employees last month:
We will build first-party hardware to stimulate more demand for the entire Windows ecosystem. That means at times we'll develop new categories like we did with Surface. It also means we will responsibly make the market for Windows Phone, which is our goal with the Nokia devices and services acquisition.
In talking up the "Windows ecosystem," Nadella is referring to not only devices, but also apps used in the enterprise to help make workers more productive. Think of it as a comprehensive strategy to occupy what's left of the mobile business market. A reasonable plan, judging by eMarketer's estimates.
Yet, all that could change if the BlackBerry Passport succeeds. An early review of the device by the experts at Mobilenet.cz includes praise for the wider-than-average keyboard, which doubles as a touchpad. Here's an even closer look, courtesy of PhoneArena:
BlackBerry Passport is a key weapon for keeping Windows Phone at bay. Credit: BlackBerry.
Mix in a slew of productivity-enhancing apps available in the Amazon.com app store, and you have the makings of a reasonable challenger to Mr. Softy's newest round of Nokia-branded Windows Phones.
Foolish takeaway
As much good as CEO John Chen has done by diversifying BlackBerry's business beyond handsets, it's still 39% of a multibillion-dollar business serving more than 50 million customers. Enticing that installed base with a top-flight phone is key to stabilizing and, ultimately, growing the business. Windows Phone and Nadella's emphasis on the enterprise could get in the way.
As far as head-to-head bouts in the smartphone space go -- iOS vs. Android in the U.S., Samsung vs. Xiaomi in China -- this one isn't that exciting. But that doesn't make it any less important. So grab a ringside seat, Fool. This one's going to be a doozy.
