As the parent of three primary school-aged children, I am all too familiar with schoolyard squabbles. They can be loud, they’re often a result of one kid overreacting, they escalate quickly and, more often than not, they leave everyone scratching their heads.
The very public spat between T-Mobile (TMUS) and BlackBerry (BBRY) reminds me an awful lot of these spats. It has now escalated beyond mud-flinging on blogs and Twitter (TWTR) … with BlackBerry making a very real business decision, announcing it is ending its licensing agreement with T-Mobile.
When your company is in survival mode and desperately struggling to get its smartphones into the hands of customers, removing them as an option for the country’s fourth-largest wireless carrier seems like a poor strategy no matter how angry you might be at it. This is the kind of disconnect from reality that has resulted in BlackBerry stock losing nearly 90% of its value over the past three years.
So … how did this fight get so far?
Here’s the T-Mobile BlackBerry fight, in a nutshell:
Stage 1: The Insult
T-Mobile sent an e-mail to its BlackBerry-using customers, offering them a zero-down Apple (AAPL) iPhone 5s if they switched from their BlackBerry. The move, which easily could’ve been seen as kicking BlackBerry while it was down, inflamed BlackBerry owners, BBRY stock investors and CEO John Chen.
Stage 2: The Angry Blog
Taking to his company’s official blog, John Chen writes about T-Mobile’s “clearly inappropriate and ill-conceived marketing promotion,” expressing the “outrage” felt by himself and BlackBerry’s loyal customers.
Meanwhile, BBRY stock took a hit.
Stage 3: The Apology
Clearly recognizing that this developing T-Mobile BlackBerry fight was escalating, T-Mobile CEO John Legere quickly took to Twitter, proclaiming: “BlackBerry users, I’m hearing you loud and clear.”
TMUS then published its own blog post that took a shot at John Chen for wanting to “limit customer choice,” but included a pretty sweet offer for its BlackBerry customers: Trade in your old BlackBerry device and get $200 towards any smartphone. Better yet, trade it in on a “beautiful new” BlackBerry Q10 or Z10 smartphone and get an additional $50 off.
So BlackBerry customers get the chance to upgrade to a more modern device and a financial incentive to stick with BlackBerry and give its new BB10 operating system a whirl.
That should have been the end of the T-Mobile BlackBerry fight.
Stage 4: Uh Oh! The Apology Backfires
Well, this was embarrassing — and not a good sign at all for BBRY stock holders holding to hope that that those BB10 devices would mark the start of a turnaround.
Of the BlackBerry faithful who took advantage of the new T-Mobile offer, 94% ditched their old BlackBerry for a new anything else. Could have been an iPhone, a Samsung (SSNLF) Galaxy or a Windows Phone device, but it wasn’t a BlackBerry.
The point is, after all the name-calling and outrage, when existing BlackBerry owners were offered an additional $50 to upgrade to a new BB10 device, all but 6% of those who gave up their Bolds and Storms took less money to flee the BlackBerry camp altogether.
Stage 5: This Is Not Going Our Way, So We’re Outta Here!
Clearly not taking the news of BlackBerry desertion very well, BBRY issued a press release announcing it was parting ways with T-Mobile, ending the carrier’s license to sell BlackBerries, effective April 25. The reason?
“Regretfully, at this time, our strategies are not complementary and we must act in the best interest of our BlackBerry customers.”
Existing T-Mobile BlackBerry customers will continue to receive support, but that’s it. Supplies of BlackBerry devices are drying up at T-Mobile’s 2,000 or so U.S. stores, and the only ones currently showing up on its website are the Q10 (new and refurbished).
By ending its license agreement with T-Mobile, BlackBerry effectively took all its toys and stormed off. This T-Mobile BlackBerry fight — justified or not — was the last thing the struggling smartphone maker needed, especially as Microsoft (MSFT) and Nokia (NOK) continue to make gains and grow Windows Phone’s third-place mobile market share.
Yanking BlackBerry smartphones out of T-Mobile showrooms has no real impact on TMUS — that’s just more shelf space to display phone that are selling — but this sort of behavior will ultimately catch up to BBRY stock.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.