Blackberry Growth Strategy

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BlackBerry (BBRY)’s Passport and Apple (AAPL)’s iPhone 6 were both highly anticipated smartphones that launched in September. Apple sold more than 10 million units of iPhone 6 models in the first weekend after launch on September 19. On the other hand, BlackBerry sold 200,000 Passport smartphones during its first few days in select markets. Although Apple’s sales were 50x greater than BlackBerry’s, the latter’s sales might have a more relevant impact on the company’s share price and, thereby make BlackBerry an attractive buying opportunity.

Accurately gauging the impact on stock price
Ultimately, investors’ interest lies in the price change that these sales could bring about. However, to accurately estimate the impacts we should first establish …show more content…

In selling 200,000 Passports, BlackBerry sold 42,283 units per $1 billion of its market capitalization – nearly thrice as much Apple achieved using this metric. As a result, the Passport's sales of only 200,000 units might actually be more meaningful for BlackBerry's stock than the iPhone 6 and 6 Plus are for Apple.

A different revenue mix adds to the impact
BlackBerry’s business model is different from that of Apple’s or any of its competitors for that matter. Over the years, the iPhone has accounted for more than half of Apple’s total sales, representing a primary revenue source for the company. On the other hand, Blackberry – learning from its smartphone debacle – has done well in moving on and setting its sights on a different industry. Therefore, a large part of its success is now measured in clients for its secure software instead of cell phones. Blackberry’s hardware business represents about 40 to 46 percent of its total sales -- to the tune of $380-$415 million per quarter. Its service segment generated revenues of $943 million during the first half of fiscal 2015, while hardware segment generated $796 in the same …show more content…

For years, BlackBerry’s share in the smartphone market has rapidly diminished, but, with the launch of Passport, many analysts believe that BlackBerry is ready to make itself relevant in the smartphone industry once again.

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While the competition has taken BlackBerry to the cleaners in past years, its devices, platforms and messaging services are still among the most secure in the world. Its encryption technology and security features are of special interest to businesses and corporate buyers. Not to mention, it is the only provider to receive Authority to Operate (ATO) and Full Operational Capability (FOC) status from the U.S. Department of Defense for its Mobile Device Management (MDM).

Therefore, it only makes sense for it to focus on its strengths and target enterprise users, and not the broader consumer market. And the company done exactly that with Passport, which is aimed at “Power Pros” – a term coined by BlackBerry for people who do not have time for any nonsense like playing games or sending Snapchats, instead are more interested in getting some work done.

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