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Prepare for More BlackBerry Losses

Meanwhile, recent data compiled by independent research firm IDC, revealed that BlackBerry's global market share was cut by more than half in the recent quarter, falling from 6.6% global share to 2.9%. This is while both Apple and Google occupied a combined 92% share of the smartphone market.

While Apple and Google showed moderate growth, Microsoft (MSFT - Get Report) was able to exploit BlackBerry's weakness, bumping BlackBerry down to the fourth spot of the order. Poor device sales are one thing, and in BlackBerry's case, it's no longer a surprise. However, the implication will have severe consequences on the services business, which has been my point over the past six months.

For instance, in the recent quarter the company's global subscriber base declined by another 5% to 72 million. This comes on the heels of a 4% drop from 79 million in the fourth quarter. So after the service business peaked at 80 million last summer there has been nothing but customer cancelations. Now, with weaker-than-expected device sales, enterprise customers have to consider shutting off (altogether) their BlackBerry Enterprise Servers (BES) -- if they still have one.

BES has been what has kept BlackBerry afloat amid poor sales. It served as the engine that allows users to get their emails and synchronize corporate calendars in a secure manner. The other option was to upgrade to the new BlackBerry 10 operating system. But what would be the purpose? Though the cost savings would be ideal, a shutdown of BES would also render the devices useless as they would lose what had once made them popular in the first place.

BlackBerry understands this reality. On June 25 management announced Secure Work Space, which is a newer version of BES. Unfortunately, it's not a "new" idea. BlackBerry also had this same service, but it was called Mobile Fusion, which brought along similar features that supports devices from competing platforms, including Apple's iOS and Google's Android. I don't believe this is going to work -- not without significant marketing expenses.

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