What's Next For Blackberry?

NEW YORK ( TheStreet) - Once the cellular phone industry leader Blackberry ( BBRY) is now forced to consider its next moves. New smartphones are not enough. Blackberry needs bold moves just to stay afloat.

Blackberry's Board of Directors announced it's officially looking for strategic alternatives to boost the company's shares. In the official press release a complete sale of the company might also be considered. "The Board of Directors has formed a Special Committee to explore strategic alternative to enhancing value and increasing scale in order to accelerate Blackberry 10 deployment. The alternatives could include, among others, possible joint ventures, strategic partnerships or alliances, a sale of the Company or possible other transactions."

Blackberry were advancing 1.37% to $11.08 mid Wednesday trading.

Following the January 2013 introduction of the touchscreen Z10 Blackberry, sales soared. The new handsets were scooped-up by Blackberry's fans as fast as they could get them. First quarter sales figures looked promising. There were even dreams of challenging Samsung and Apple ( AAPL) for smartphone sales supremacy.

By the time Blackberry announced the release of its new Q10 phone it seemed the initial momentum had slowed to a crawl. Buyers who should have wanted new "Crackberries" no longer seemed to care. iPhone and Google ( GOOG) Android models had taken up the slack. And now, thanks to Nokia ( NOK), even Microsoft ( MSFT)Windows Phones are being shipped more often than Blackberries.

It's been a slow decline. Blackberry's core strengths had always been superior handling of corporate email. The company's first product was a two-way pager - an email only device not a cell phone. In the mid-1990's the company's founders realized pocket email was the "next big thing". Blackberry's superiority came from it's exclusive server-side email solutions for the enterprise as well as bleeding-edge technology on the cell phone hardware side.

However, that superiority could only last so long without being challenged. Smartphones threatened to handle email just as well as many of the other tasks which, up to that point, had been left to desktop and laptop computers. Instead of rising to the occasion, Blackberry decided to stick with what had made it famous but, to increase appeal to the masses cheaper handsets were introduced.

That strategy worked well in emerging markets. India became a huge Blackberry market. Same for the rest of Asia, Eastern Europe and Africa. But in the United States and the Canadian home market, less expensive means less exclusive; less exclusive made iPhones and Androids more appealing. In addition, the cheaper handsets weren't as well made as everyone's favorite classic model. Blackberry sales suffered.

The company's attempt at making tablet computers didn't go well either. While a fairly competent performer, the PlayBook was a flop. 500,000 units were reportedly sold in the first quarter following its April, 2011 release. Only 200,000 in the next quarter. An estimated 2.,5 million PlayBooks have been sold to date. Apple sold 14.6 million 14.6 million iPads in its last quarter alone.

Recently Blackberry announced it would not upgrade the PlayBook's operating system, angering the device's fan base. Basically, PlayBook is now a dead issue.

Without hardware what's left? There are the underpinnings of the current operating system. Blackberry purchased QNX to use that company's software as the basis for the new Blackberry OS 10. Now Blackberry could license QNX technology to other companies. The ones that aren't using Android, Windows, Linux or any other modern OS.

Another asset is the famous Blackberry messaging delivery system. The hardware/software solution is so secure that some countries have forced Blackberry to share gathered data or face a service ban. In the long run, that BlackBerry technology is worth something. Especially to other companies which might need an already-functioning, super-secure smartphone email solution.

Selling the company might be the only way out. Then again, the board might find a Canadian "White Knight" who rides in at the last minute and saves the day. Motivation for a move like that might include bolstering home-grown, national pride.

Even if that scenario could ever come true Blackberry, would still be a known as the company which created portable, secure email but just couldn't keep up.

--Written by Gary Krakow in New York.

>To submit a news tip, send an email to: tips@thestreet.com.
Gary Krakow is TheStreet's senior technology correspondent.

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