Blackberry Announces End of T-Mobile Licensing Deal
Blackberry (NASDAQ:BBRY) is parting ways with T-Mobile later this month when its U.S. licensing contract expires. The Canadian smartphone company announced its decision in a press release posted on the website Tuesday. The statement says that Blackberry will continue to support Blackberry smartphones that use T-Mobile (NYSE:TMUS) services, including currently unsold phones in T-Mobile’s inventory. Its partnership with T-Mobile is ending because the two companies are no longer on the same wavelength.
“BlackBerry has had a positive relationship with T-Mobile for many years. Regretfully, at this time, our strategies are not complementary and we must act in the best interest of our BlackBerry customers. We hope to work with T-Mobile again in the future when our business strategies are aligned,” said BlackBerry CEO and Executive Chair, John Chen.
T-Mobile’s ditch Blackberry campaign in February 2014 probably did not help matters. The company offered free trade-ins to Blackberry users. About 94 percent of users switched to non-Blackberry phones. The campaign encouraged Blackberry users to switch their phones for the iPhone 5. Many Blackberry fans made their displeasure with the campaign known on social media. Chen wrote a post praising their actions.
“I want to thank our loyal customers for your commitment to BlackBerry. By expressing your outrage directly to T-Mobile through tweets, calls, and comments in the media and on blog posts, you sent a powerful message that T-Mobile could not ignore. Your partnership with our brand is appreciated by all of us at BlackBerry, and draws a sharp contrast with the behavior of our longtime business partner … I can assure you that we are outraged too. What puzzles me more is that T-Mobile did not speak with us before or after they launched this clearly inappropriate and ill-conceived marketing promotion.”
T-Mobile still benefited from the flood of trade-ins that followed. Approximately six weeks later, Blackberry announced the decision to not renew its licensing contract with T-Mobile Tuesday. The current deal will expire on April 25.
T-Mobile is in the midst of a campaign to rebrand itself, reports TechCrunch. The mobile company competes with the larger Verizon (NYSE:VZ) and AT&T (NYSE:T) for customers in the American market. It benefited from the anti-Blackberry campaign in the form of the social media and news attention the company got for sparking a feud with its snarky campaign. Meanwhile, Blackberry is continuing its downward spiral in the smartphone wars.
Blackberry’s smartphones were once incredibly popular and retain a following (President Obama is famously a Blackberry fan.) However, increasing competition from the Apple and Android smartphones as well as new competitors Nokia and Windows into the smartphone market have led to a downfall of the once dominant Blackberry.
The company’s most recent financial reports from the fourth-quarter of fiscal 2014 show that the company sold about 3.4 million Blackberry devices, of which 1.1 million were the Blackberry 10, the newest Blackberry smartphone. Total revenue was $976 million for the period, about $217 million less than the previous quarter. The company had $2.7 billion in the fourth-quarter of fiscal 2013.