The low-end cheap smartphone and messaging element part of the Blackberry business has been highlighted as the division likely to disappear according to Enders Analysis consultant Benedict Evans, as the company eyes a potential sale having temporarily halted trading.
Speaking to The Drum, Evans explained that the business was separated into two parts, with one-third being the smartphone business mainly targeted at corporate customers across the UK and US, and the second being the low-end smartphone and cheap messaging offer across emerging markets, which made up the bulk of Blackberry’s business.
“The business was being killed by the iPhone, Android and What’sApp,” explained Evans. It took them far too long to work out that these other products were credible competition. It took them a year longer than it took Nokia to work out that this was really a serious problem. The solution, which was to try and create a new ecosystem was too much, too little, too late and indeed not viable at all.”
The mobile phone developer has now set up a committee to explore ‘strategic alternatives’ for the business, which includes a possible sale.
However, “There’s no white knight out there that will solve all of their problems,” warned Evans.
“The low-end business will disappear, there’s not much question about that, and that’s two-thirds of their revenue. It is a niche-corporate messaging phone, that’s not an enormous business, and a big chunk of that will be on iPhone and Android. Clearly there is a valuation for it somewhere. The enterprise email platform has value, the patents have value but it’s not true that you can just buy this and fix it.”
Evans also said that he foresaw a break-up of the business as being most likely, with Microsoft, Hewlett Packard or IBM likely to have an interest in Blackberry’s enterprise email clients, while the parents are also likely to be worth over $1bn.
“The real issue is that this is a war of echo systems and they have no echsystem and they have an adequate but not very exciting smartphone,” concluded Evans.