BlackBerry Limited (NASDAQ:BBRY) stock just received some bad news that could put a huge dent in its turnaround plan. Last month, “WhatsApp,” which is owned by Facebook Inc (NASDAQ:FB), announced that it decided to stop supporting BlackBerry’s mobile OS, saying that BlackBerry mobile devices don’t have the right capabilities to expand the app’s features in the future. Now Facebook is following suit. BlackBerry stockholders may want to pay attention.
Facebook just dropped its support for the BlackBerry operating system, meaning BlackBerry users won’t be able to use the Facebook app to access the world’s largest social network.
On BlackBerry’s blog, the company wrote, “We are extremely disappointed in their decision as we know so many users love these apps. We fought back to work with WhatsApp and Facebook to change their minds, but at this time, their decision stands.” (Source: “Great Apps on BlackBerry! A Strong Commitment to BlackBerry Users and Developers,” BlackBerry Limited, March 17, 2016.)
BlackBerry revealed that “BBOS” users will also lose support for Facebook contact syncing, “BlackBerry Hub” integration, and the ability to share media.
To counter the move by Facebook, BlackBerry said that on March 31, it will replace the official Facebook app with a new native app that will direct users to the web version of the social network.
The move by Facebook is not surprising, considering that BlackBerry has been in decline and losing market share for years. BlackBerry controlled about 20% of the market for smartphones back in 2009, but that number is now down to less than one percent.
Alphabet Inc’s (NASDAQ:GOOG) “Android” and Apple Inc.’s (NASDAQ:AAPL) “iOS” operating systems dominate the global smartphone market today, accounting for about 98% of total market share in the fourth quarter of 2015. Android alone accounted for 80.7%, while BlackBerry’s own operating system made up a measly 0.3% of global market share. (Source: “Global market share held by the leading smartphone operating systems in sales to end users from 1st quarter 2009 to 4th quarter 2015,” Statista, last accessed March 21, 2016.) Considering these numbers, it’s obvious why Facebook dropped support for BlackBerry’s OS.
Revenue also has the same pattern as market share. BlackBerry revenue peaked in 2011 at about $20.0 billion, which is now down to $3.35 billion in fiscal 2015.
Losing Facebook support seems like one of the last nails in the coffin for BlackBerry. One of the few things going for BlackBerry is its small userbase of faithful customers. But now there are even fewer reasons for them to stay.
Is all lost for BBRY stock? Not at all.
BlackBerry’s operating system is done, with no chance of being resuscitated; the company knows this. That’s why they’re starting to wean off their own operating system.
The release of the “BlackBerry Priv” last November is the first major step in this direction. Although BlackBerry has allowed the use of Android applications on its smartphones since early 2014, the Priv is the company’s first phone that completely ditches the company’s OS.
And yes, users of the Priv will be able to use Facebook.
The move will have significant advantages for BlackBerry, as its market exposure goes from almost non-existent to having access to the largest smartphone market.
BlackBerry no longer has to worry about a lack of apps or using resources to try to pull market share away from iOS and Android.
And now that BlackBerry phones will have access to Android’s massive universe of apps, the company can focus on its fast-growing enterprise software. In the latest earnings report, revenue for BlackBerry’s software and services hit $162 million, up 183% year-over-year and up 199% from the previous quarter.
The Bottom Line on BBRY Stock
Losing Facebook support might seem like a big loss for BlackBerry, but the company is already in the process of migrating to Android, so BBRY shareholders shouldn’t be worried. BBRY stock also reflects this sentiment, as there hasn’t really been any movement in the stock since the news was announced. BBRY still has some life left in it.