Bloomberg News

BlackBerry to End Sales With T-Mobile U.S. After IPhone Spat (2)

April 02, 2014

BlackBerry Ltd. (BBRY:US) won’t renew its contract with T-Mobile US Inc. (TMUS:US) when it expires this month following a spat over the carrier’s promotions for Apple Inc.’s iPhones.

T-Mobile, the fourth-largest U.S. wireless carrier, will no longer be able to sell new BlackBerry products when the contract ends April 25, BlackBerry said in a statement. Existing BlackBerry users on a T-Mobile contract won’t be affected, and the Waterloo, Ontario-based company said it will help customers who want to switch to other carriers.

“BlackBerry has had a positive relationship with T-Mobile for many years,” Chief Executive Officer John Chen said in the statement. “Regretfully, at this time, our strategies are not complementary and we must act in the best interest of our BlackBerry customers.”

Anne Marshall, a T-Mobile spokeswoman, didn’t have an immediate response when contacted.

Chen in February chastised T-Mobile for encouraging users in ads to switch to iPhones, the device that presented the first real challenge to BlackBerry when it was introduced in 2007.

“As we were never told of their plans in advance, I can only guess that T-Mobile thought its ‘great offer for BlackBerry customers’ would be well received,” Chen wrote in a blog post that month. “T-Mobile could not have been more wrong.”

While T-Mobile CEO John Legere didn’t directly address the BlackBerry breakup today, he did let his Twitter followers know that he was focused elsewhere when it comes to the business customers historically targeted by BlackBerry.

“That @windowsphone is awesome! Great for business customers, #amiright?!,” Legere wrote.

Not Critical

Keeping T-Mobile is no longer as critical for BlackBerry now that it’s focusing more on software and targeting a narrower customer base, said Colin Gillis, an analyst at BGC Partners (BGCP:US) in New York. The three largest U.S. carriers -- Verizon Wireless, AT&T Inc. (T:US) and Sprint Corp. (S:US) -- still sell BlackBerry phones.

“It’s not a positive,” said Gillis, who recommends selling BlackBerry shares. Still, given their new focus, “you don’t necessarily need broad carrier support.”

BlackBerry rose 1.4 percent to $8.21 at the close in New York, while T-Mobile gained a penny at $33.49.

The move reflects Chen’s stronger response to critics and threats than his predecessors. In recent weeks, BlackBerry has taken legal action to try to stamp out product leaks and just won a court order convincing a judge that Typo Products LLC probably infringed its patents with its clip-on keyboard.

Chen is working to revive profitability and sales growth at the company since he took over in November. Last week, he said that revenue probably won’t resume growth until at least a year from now.

Devices Removed

While T-Mobile has offered BlackBerry’s Q10 and Z10 since they were introduced last year, the carrier began removing the device maker’s products from its stores in September, requiring buyers to have the phones shipped to them instead.

After the February ads ran, some BlackBerry users expressed anger on social media at the T-Mobile promotion, prompting the mobile-phone carrier’s CEO, John Legere, to write on his Twitter feed that he had heard them “loud and clear.”

“We are happy to be a BlackBerry partner and apologize for any confusion,” T-Mobile said Feb. 19, adding that it would start providing free, expedited shipping of BlackBerry devices.

Low Volume

The end of the licensing agreement may not be as significant to either T-Mobile or BlackBerry as it once would have been, said Michael Cote, a former sales executive for T-Mobile who says he signed the original supply agreement with T-Mobile in 2001.

“The driving factor for T-Mobile was probably the lack of volume in sales, combined with the fact that there’s an additional service fee,” said Cote, who’s now a managing partner with RapiDemand Corp., a Chicago-based technology M&A finance and advisory company.

“BlackBerry is moving more toward software and de-emphasizing hardware,” he said. “This breakup isn’t nearly as important as it once was.”

To contact the reporters on this story: Hugo Miller in Toronto at hugomiller@bloomberg.net; Scott Moritz in New York at smoritz6@bloomberg.net

To contact the editors responsible for this story: Sarah Rabil at srabil@bloomberg.net Niamh Ring


We Almost Lost the Nasdaq
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

Companies Mentioned

  • BBRY
    (BlackBerry Ltd)
    • $9.92 USD
    • -0.08
    • -0.81%
  • TMUS
    (T-Mobile US Inc)
    • $31.63 USD
    • -0.16
    • -0.51%
Market data is delayed at least 15 minutes.
 
blog comments powered by Disqus