BlackBerry Ltd.: 3 Reasons We’ll Never See Another BB10 Device

BlackBerry Ltd. (TSX:BB)(NASDAQ:BBRY) will either switch to Android or abandon handsets altogether.

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As BlackBerry Ltd. (TSX:BB)(NASDAQ:BBRY) prepares to launch its first Android-based handset, one thing has become increasingly clear: we will never see another BB10 device again.

This doesn’t mean BlackBerry is abandoning its operating system altogether. We’ll still see software updates for current BB10 users. But if you bought a Passport, a Leap, or a Classic, you can be sure you’ll always have the latest BB10 model.

We take a look at three reasons why below.

1. The devices simply have not been selling

As we all know by now, BlackBerry’s handset sales have been in steady decline. The following chart paints a clearer picture:

Quarter Phones Sold (000s)
Q2/2015 2,100
Q3/2015 2,000
Q4/2015 1,300
Q1/2016 1,100
Q2/2016 800

The 800,000 phones sold in Q2/2016 was a particularly disappointing number and confirmed that the most recent BB10 models simply were not moving off the shelf. This is without doubt what compelled BlackBerry to release an Android phone.

2. A lack of applications

There are a few reasons why so many people have shunned BlackBerry phones in recent years. But perhaps the biggest reason is the lack of available applications.

In fact, this is a vicious cycle that BlackBerry has not been able to break. Developers are abandoning BlackBerry because not enough people are buying the phones. And consumers are abandoning BlackBerry because there aren’t enough apps.

Now that BlackBerry has switched over to Android, the BB10 developers will leave even faster, thus accelerating the cycle. After all, if BlackBerry itself is abandoning BB10, why would a developer stay on the sinking ship?

3. Corporate users are slow to upgrade

BB10’s most loyal users are employees of large organizations—particularly governments—that value the operating system’s security. And these customers are very important to BlackBerry, so they will certainly not be neglected.

But these corporate customers, unlike consumers, are not looking for the latest specs. They don’t need the best camera, or the best-looking screen, or even the fastest processor. Instead, they’re looking to control costs, keep their information secure, and preserve some sort of continuity. It’s no surprise they are very slow to upgrade phones for their employees.

Thus BlackBerry can continue to serve these customers with phones like the Classic and Passport for a very long time. Eventually, the customers may be persuaded to adopt the Priv, but for now there is no need to look that far ahead.

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 has no position in any stocks mentioned.

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