By Will Connors and Thomas Gryta
BlackBerry Ltd.'s share of the U.S. smartphone market has fallen
so far that its decision to sever ties with T-Mobile US Inc. likely
won't have much of an effect on either company's bottom line. But
the decision is a stark departure for BlackBerry, which in the past
relied almost exclusively on carrier partners to do much of the
heavy lifting in selling its phones.
BlackBerry said late Tuesday that it won't renew its licensing
agreement with T-Mobile when it expires later this month, a
surprise move that comes two months after the companies' chief
executives sparred online, and six months after T-Mobile stopped
selling BlackBerrys in its retail outlets.
BlackBerry's share of the U.S. smartphone market has dwindled to
less than 1%, according to research firm IDC, from as high as 50%
five years ago. When BlackBerrys were still selling well, the
company depended on the marketing push from carriers to drive
sales. It also relied on carriers for service fees, a lucrative
extra charge BlackBerry levied on carriers to route a phone's
traffic through its secure, proprietary network.
Last year, recognizing that carriers were no longer willing to
pay those fees for phones that weren't as popular with customers,
BlackBerry said it would start to wind down its service-fee
arrangement. The move worried analysts and investors, who are still
waiting to see whether or not the company can come up with a new
way to make up for that lost revenue.
"Regretfully, at this time, our strategies are not complementary
and we must act in the best interest of our BlackBerry customers,"
BlackBerry chief executive John Chen said in a statement Tuesday.
"We hope to work with T-Mobile again in the future when our
business strategies are aligned."
T-Mobile hasn't officially commented on the BlackBerry move, but
Chief Executive John Legere was active on Twitter Wednesday.
"We value all customers but this is 1+% of our base total and a
small fraction of what we add quarterly," he wrote in response to a
post by BTIG analyst Walter Piecyk, who commented on Wall Street's
lack of reaction to the news.
"I can't, for the life of me, understand why @BlackBerry would
take choices away from customers," Mr. Legere wrote to another
user.
In a separate message, he said that T-Mobile is "open to
continuing to work" with BlackBerry.
T-Mobile, the fourth-largest U.S. carrier, ended 2013 with a big
increase in subscribers after bleeding customers for years.
The outspoken Mr. Legere led the turnaround who did away with
long-held industry practices like service contracts. He has also
sharply criticized rival carrier AT&T in television ads and
during sometimes-profanity-laced appearances at industry
conferences.
In February, as part of a broader marketing push, Mr. Legere
sent an email to customers who were using BlackBerrys and
encouraged them to switch to an iPhone 5.
Mr. Chen called the T-Mobile promotion "inappropriate and
ill-conceived" and said, "I can assure you we are outraged
too."
After BlackBerry fans lashed out on social media, Mr. Legere
backtracked and said his company would continue to support the
BlackBerrys on its network.
BlackBerry said Tuesday it would "work closely" with T-Mobile to
make sure current customers aren't affected.
Write to Will Connors at william.connors@wsj.com and Thomas
Gryta at thomas.gryta@wsj.com
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