A sorry BlackBerry Limited, at a possible $75 billion discount

Sep 26 2013, 17:42 IST
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SummaryHow the hardware innovator lost the plot as a software developer as well

Finally, BlackBerry Limited has signed an agreement to sell to a consortium led by Prem Watsa’s Fairfax Holdings. The timing of the announcement is ironic because over the weekend the world’s incredulous eyes were on BotchBerry as the former leader, which has floundered for years as a hardware innovator, lost the plot as a software supplier as well. The launch of the BBM messenger to competing mobile platforms had to be rolled back when an unauthorised app on Google Play brought unexpected traffic to BlackBerry Limited's servers. What, BlackBerry didn’t know that Android has an open ecosystem?

Briefly, the company tried to snatch dignity from the jaws of ignominy with the ‘thank you for crashing our servers’ manoeuvre, which used to be popular with start-ups in the 1990s. If you couldn’t scale up and your service flaked out, you claimed an overwhelming response to your product. But, in 2013, when server farms, multiple redundancies and the cloud are behind every product, such petty deceptions are underwhelming.

But thanks to the BBM release drama, BlackBerry Limited did not have to face some curious questions which were in the air. The company had released its second quarter results on Friday, a time-honoured strategy to dilute coverage, since business readers are less attentive over the weekend and publications show their softer side.

There was much to hide here. Revenue stood at $1.6 billion, half of what analysts expected. Costs are to be halved by 2015, trammelling growth, and the Wall Street Journal has reported 40% job cuts. About 5.9 million smartphones were sold. In contrast, Apple shipped 9 million units of two new iPhone models within the first weekend of release and reported 200 million devices upgraded to the new iOS 7.

Research in Motion had been a hardware leader with a firm grip on the enterprise segment. What does it say about BlackBerry Limited's conviction of its competence in hardware when it is willing to release its software products to users of other hardware platforms? Of course, the BBM would be snapped up, especially by people who have never used BlackBerry and want to know what the mystique was all about. But can a messaging service be monetised to any great extent? After the Whatsapp and Facebook Messengers, well after every operating system, for mobile and PC, has unified messaging, do you really need BBM? Besides, with its USP heavily eroded, not by technological progress

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