Z10: The phone that sank a company
BlackBerry (NASDAQ: BBRY) bet that the slick new all-touch Z10 would become the firm's new flagship smartphone, giving it the edge to regain its position in the consumer smartphone market lost to Apple (NASDAQ: AAPL) and Samsung.
Instead, the company announced on Friday that it is now writing off between $930 million and $960 million for unsold Z10 inventory, and cutting 40 percent of its workforce. The firm has seen its share of the consumer smartphone market shrink to below 3 percent, according to stats from IDC.
Analysts had expected revenue of around $3 billion for BlackBerry's second quarter, but the firm is projecting only half that amount.
"That's disaster quality in terms of sales versus estimates. We'd anticipated it was going to be a bad quarter and maybe even below estimates, but not to this magnitude," analyst Troy Crandall of MacDougall, MacDougall & MacTier told CBC News.
For BlackBerry, the issue is no longer whether it can compete with Apple and Samsung, but whether it can survive as a company. Suitors have begun circling, looking to bite off the most appealing chunks of the company.
The Canadian firm is betting that its strong position among corporate and government customers can provide a lifeline to continue as a company. BlackBerry will focus on selling mobile enterprise services to security conscious firms and agencies, rather than consumer smartphones, the Wall Street Journal is reporting.
Those customers "helped build BlackBerry into the leading brand today for enterprise security, manageability and reliability," the Journal quoted CEO Thorsten Heins as saying.
Perhaps bowing to the inevitable, BlackBerry announced earlier this year that its BlackBerry Enterprise Service 10 would manage and secure iOS and Android devices, as well as BlackBerrys through its Secure Work Space platform.
BlackBerry has an enterprise market share of 38 percent among firms with more than 10,000 employees, and a 33 percent market share among government and financial institutions, according to Steve Brasen, managing research director at Enterprise Management Associates.
Yet, BlackBerry faces an uphill battle even in the enterprise. The BYOD trend is pushing enterprises to accept employee-owned devices, which are overwhelming Android and iOS smartphones.