Announcements by BlackBerry and HTC show the two companies are feeling the pressure and are likely to be increasingly marginalised into the future as consolidation in the mobile sector continues apace.
BlackBerry and HTC have both released announcements highlighting how the mobile sector is being carved up by the likes of Apple, Google, Microsoft and Samsung, while smaller players like BlackBerry and HTC are rapidly being squeezed out.
The first announcement was put out by BlackBerry with ads in papers in seven separate countries as well as an online announcement, entitled, “You can continue to count on BlackBerry”. It’s a fairly weak attempt by BlackBerry to highlight its strengths and tries very hard, perhaps just a little too hard, to inspire confidence in the brand.
While this release did address the dearth of information regarding the current situation at BlackBerry, its hopeful tone is in stark contrast to the overwhelmingly dire news out in the markets.
This may be too little too late, after BlackBerry waited far too long to come out with a new solution, Blackberry OS10 and associated devices, which are truly competitive with solutions like the ones created by Apple and Google. Despite this, and almost directly due to these delays, BlackBerry has lost a lot of ground.
The second statement, from HTC, announces that HTC has closed its South African office and has gone back to a distributor model, appointing Ingram Micro Mobility South Africa (IMM-SA) to distribute its products in South Africa.
IMM-SA has chosen, in the interim, not to bring HTC’s new phablet into South Africa, which was announced by HTC global this week, and instead will only be releasing the HTC One Mini in November, long after its international debut. This shows that the newly appointed distributor is being cautious and won’t risk releasing the HTC One Max into a hugely competitive market. Unfortunately with only two phones launched in the country this year, the HTC brand presence continues to suffer in South Africa.
Given that HTC announced the first quarterly loss in the company’s history earlier this month, it is clearly battling to stay relevant in an increasingly competitive market.
Both BlackBerry and HTC are in effect in a similar position, for different reasons. It appears that consolidation is in the air, what with the purchase of Motorola by Google, and Nokia handsets by Microsoft, along with the relentless rise of Apple and Samsung globally. All of these players have far more marketing muscle and are able to leverage off their diversified businesses to gain market share.
This new reality in the mobile landscape will leave little room for these two previously successful manufacturers to manoeuvre. It appears more and more likely that BlackBerry will delist in the near future and attempt to restructure and return with fresh ideas and market positioning, it remains to be seen if a White night in the shape of old investors or brand new ones will ease the way.
We do expect BlackBerry to focus on its older stronghold of government and industry and to aim only at the high-end of professional business users. If BlackBerry maximises its security and manageability assets, it may well come back with a compelling, if somewhat niche offering. It is highly unlikely that they will disappear from the mobile landscape and leave their current users stranded.
HTC has a very different problem as it doesn’t own technology and patents in the same way as BlackBerry does. As a result HTC really has only two options: return to being an OEM manufacturing provider to operators, which is how it grew and built its successful business in the first place, or look for a company like Lenovo to buy it out.
Lenovo would, in many ways, be a logical fit, as it has a strong presence in the mobile market in China but is weak outside of its borders on the mobile front. HTC has enjoyed good success in China as well as America and Europe, two territories Lenovo would love to penetrate. Lenovo has massive financial resources and supply chain scale as a result of being the world’s number one PC company. With significant marketing clout and supply chain scale a HTC/Lenovo offering could compete on a much more balanced footing with the current giants of the industry.
The sad truth is that the top four mobile phone players — Apple, Samsung, Microsoft, and Google are able to leverage off their diversified businesses to make life extremely difficult for BlackBerry and HTC. Sony LG, and Huawei also have more diversified business models and are showing good growth on the mobile front, be it off fairly small base, compared to the dominant four. Expect Lenovo and Huawei to become increasingly competitive outside of China in the next two years, which will make it even harder for small, innovative players like BlackBerry and HTC to make any significant dent in the mobile sector.