Concerns that struggling smartphone company BlackBerry will not survive in its present form appear to be hurting sales of its new phones, both to businesses and retail customers.
Investment bank Morgan Stanley is delaying a multimillion pound contract to upgrade to BlackBerry’s latest smartphones amid concerns the company will not survive, according to the Bloomberg wire service, which quoted internal sources.
Meanwhile, industry sources in the UK say the new phones – the touchscreen Z10, introduced in January, and keyboard-based Q10, which went on sale in April – “haven’t exactly flown off the shelves”. In the US, the Wall Street Journal reported that carrier executives and US retailers called sales of the Q10 “dismal”, with one multi-store owner seeing virtually no demand.
The revelations come just weeks after the company announced it had put itself up for sale as part of a decision to “explore strategic options”.
Morgan Stanley, with 55,600 staff, is sticking with its existing handsets using the older BB7 software from 2011, Bloomberg said, and has not made any strategic plans to upgrade despite their age.
BlackBerry phones are popular inside financial and government organisations because of the encryption applied to data, including email metadata, and their physical keyboard. Some Canadian banks are testing BB10 phones, including Royal Bank of Canada in the company’s home country. The Pentagon has also cleared the phones for use on its internal network.
But growing concerns that it could hit a cash crunch or that carriers will decline to sell its phones – along with growing downward pressure on the price it can charge for its services – has led some businesses to hold off from sizable purchases.
“Tech is a confidence game,” said Douglas Pollitt, who runs the independent brokerage firm Pollitt & Co, which holds BlackBerry stock. “If there is no confidence in the company, the company won’t sell gear.”
BlackBerry is just completing its fiscal quarter, which ends on 31 August, and will report on 27 September. Chief executive Thorsten Heins forecast in June that the company would make an operating loss in the quarter, following on from a net loss of $80m last time on sales of $3.1bn.
He also revealed that it had shipped just 2.7m BB10 phones in that period, out of 6.8m total, as handset shipments slumped from a high in late 2011 of 14.9m.
The Q10 made a strong start in the UK when it was sold exclusively through Selfridges, with thousands being snapped up within hours by business customers, in some cases for immediate export to the Middle East.
But some customers have since suffered software problems with the handset, leading to returns in some cases.
The company is trying to remake itself as a software and services company and is preparing to broaden its BlackBerry Messaging (BBM) service, previously exclusive to its own phones, to Apple’s iPhone and handsets running Google’s Android software.
A Morgan Stanley spokesperson declined to comment on the report.
A BlackBerry spokesperson said: “We don’t break out specific device numbers, just a total overall figure we disclose in our quarterly earnings. In terms of the below Bloomberg report, we don’t comment on rumour or speculation.”