Will Google Beat BlackBerry At Its Own Game?

Google unveils two new assaults on Blackberry’s target markets. So how worried should shareholders be?

| More on:
The Motley Fool

Here’s a riddle: How do you beat Kobe Bryant in a game of 1-on-1? It’s simple: Don’t play him. It’s a philosophy that applies very well in the business world, one that says you should only compete where you have a leg up on the competition.

And that is exactly what CEO John Chen is trying to do as he turns around struggling smartphone maker BlackBerry (TSX:BB)(Nasdaq:BBRY). In addition to focusing on enterprise services, Mr. Chen is focusing on providing low-cost handsets to emerging markets like Indonesia, and is also focusing on leveraging BlackBerry’s QNX operating system for in-vehicle technology.

Here comes Google

This is where the analogy starts to look a little shaky. Because while Kobe Bryant is happy to focus on one sport, Google (Nasdaq:GOOG) is determined to win in numerous markets, and that includes the ones where BlackBerry specializes. This became all the more clear recently when Google unveiled Android One, an operating system meant to work with low-cost handsets. The search giant also announced a new Android Auto offering for in-vehicle technology.

So what effect will this have?

There is no denying the fact that this is bad news for BlackBerry — not because this is Google’s specialty, but rather because the company has such deep pockets. With a market capitalization of nearly $400 billion (USD) and net income last year of nearly $13 billion, Google can afford to spend what is necessary to win in this market. And winning is something that Google is very accustomed to.

There are other reasons to fear Google. One is that the company’s real money-maker is search and advertising. This is why the company is willing to give away Android practically for free – it helps boost Google’s real source of revenue. Competitors can then only watch as the industry becomes less profitable. If Google has the same attitude towards in-vehicle technology, then that could spell further trouble.

Another reason to fear Google is its brand power. The company has a very good impression with consumers, which will certainly help Android One, and will also help with its in-vehicle technology.

So what does this mean for BlackBerry?

While this should be worrying for BlackBerry shareholders, it should not be surprising. Google and Apple were never going to stand idly by as Mr. Chen cornered BlackBerry’s strongest markets. In the future, expect to see some headlines about Google and Apple making big improvements in security, and some headlines about them pursuing the enterprise services market, too.

And if you’re not prepared for that scenario, you shouldn’t be a BlackBerry shareholder.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Benjamin Sinclair holds no positions in any of the stocks mentioned in this article. David Gardner owns shares of Apple and Google (C shares). Tom Gardner owns shares of Google (C shares). The Motley Fool owns shares of Apple and Google (C shares).

More on Investing

Silver coins fall into a piggy bank.
Tech Stocks

How to Turn a $500 TFSA or RRSP Into $50,000

Are you looking to convert a $500 TFSA into $50,000? A little discipline and patience can help you achieve it.…

Read more »

Pot stocks are a riskier investment
Cannabis Stocks

5 Things to Know About Cannabis Stocks Before 2023

Cannabis stocks like Canopy Growth (TSX:WEED) are struggling, but there are positives to draw on as well.

Read more »

STACKED COINS DEPICTING MONEY GROWTH
Stocks for Beginners

3 Best-in-Class Stocks to Build Long-Term Wealth

Looking for stocks that might create generational wealth over the long term? Here's a top growth, value, and income stock…

Read more »

TFSA and coins
Dividend Stocks

TFSA Couples: How to Invest for $777 of Passive Income Each Month

The TFSA or Tax-Free Savings Account can be used to buy and hold a portfolio of blue chip dividend stocks…

Read more »

A close up image of Canadian $20 Dollar bills
Dividend Stocks

Investing in the Stock Market Could Turn Your $1,000 Into $100,000: Here’s How

The stock market can convert a $1,000 regular investment into $100,000 without making too risky bets. Here’s a simple strategy…

Read more »

Bank Stocks

3 Top Stocks to Buy Now in a Once-in-a-Decade Opportunity

Given their discounted stock prices, these three quality stocks offer a once-in-a-decade buying opportunity.

Read more »

Various Canadian dollars in gray pants pocket
Stocks for Beginners

Here’s an Absolutely Brilliant Way to Earn Passive Income

Here’s a simple and unique way to earn passive income that does not involve working more, buying a property, or…

Read more »

Make a choice, path to success, sign
Stocks for Beginners

Canadian Investors: 2 Once-in-a-Generation Buying Opportunities

You can grab these two once-in-a-generation buying opportunities in Canada right now to get super rich in the long term.

Read more »