Even while BlackBerry is down, industry watchers can’t seem to stop kicking it. Analysts have been having a field day since BlackBerry announced on Monday that it will happily talk to buyers as it considers various ways to stem its struggles. And you know things are bad when even a former Palm executive joins in on the action. Now, Sector & Sovereign Research analyst Paul Sagawa has chimed in as well, with one of the most depressing thoughts yet. According to Sagawa, buying BlackBerry would be like Sprint’s acquisition of Nextel.
“No matter who buys Blackberry, public or private, it will be VERY difficult to regain traction in the smartphone market,” Sagawa wrote in a recent note. “Google’s Android army and Apple are far, far ahead in market share, and, perhaps, even further ahead in consumer mindshare. Even industry whipping boy Microsoft has more market share momentum than Blackberry, which has seen its slice of the global smartphone market drop from 4.9% to 2.9% over the past 12 months, unthinkably dropping below 1% share in the US.”
The analyst goes on to explain that BlackBerry’s market position is falling apart across the globe. He also agrees with BGR contributor Tero Kuittinen, who has said numerous times that the mid-range Q5 is far too pricey to compete with the dirt-cheap Android phones and Asha handsets that are sweeping markets that used to be BlackBerry strongholds.
“It is very hard to make a moribund brand cool again, even if you hire Alicia Keys as your brand Ambassador,” Sagawa continued. “The platform is an afterthought to developers, and the lack of scale puts anyone who owns it at a distinct competitive disadvantage. For investors hoping for a greater fool to jump on Blackberry as a way to jumpstart a smartphone program, the ugly history of HP and Palm is still fresh in the memories of the struggling PC industry players often trotted out as potential acquirers. Moreover, the last bastion of Blackberry’s North American business are enterprises, including many government agencies, that still rely on the company’s secure, closed messaging infrastructure. It’s hard to imagine a transfer of this network and its 10s of millions of high value users transferred to a Chinese company like Lenovo without the vehement opposition of the US and Canadian governments.”
Sagawa finishes by likening BlackBerry to Nextel, which Sprint acquired in 2005 before announcing just five years later that the network would be shuttered.
“To me, the idea of an established device player buying Blackberry to gain access to its customers or technology reminds me of Sprint’s ill-fated purchase of Nextel,” he wrote. “At the time of the deal, Nextel was still profitable and was gaining subscribers, largely on the strength of its superior ‘push to talk’ capability. However, equipment vendors for the GSM and CDMA networks operated by Nextel’s rivals were making rapid progress on bringing their own ‘push to talk’ capabilities to a satisfactory level of performance. Sprint, a CDMA operator itself, had to know this, but pushed ahead with the Nextel deal anyway, thinking that it could transition all of the users to its own network over time. Instead, the network rivals had a field day harvesting the former Nextel ‘push to talk’ subscribers from Sprint.”
“Replace ‘push to talk’ with email/messaging, the network rivals with Android smartphone makers, and Sprint with whatever poor sap decides to buy Blackberry,” the Sagawa concluded.
