Will this be enough?
The reason for BlackBerry’s decline in stock valuation was due to its declining market share in the smart phone space. Even if BlackBerry was to steal market share from eBay Inc (NASDAQ:EBAY), Mastercard Inc (NYSE:MA), Visa Inc (NYSE:V), and American Express Company (NYSE:AXP)., it wouldn’t be reflected in the company’s business performance soon enough to make up for the lagging mobile performance.
According to ComScore, BlackBerry reported a 1.2% decline in market share. The company has cut its advertising budget by $500 million in a period when Apple Inc. (NASDAQ:AAPL) increased advertising spending by $2 billion. Apple’s smart phone has had a negative impact on BlackBerry’s market positioning. It is unlikely that BlackBerry will be able to grow alongside Apple, even with the release of the BlackBerry Z10 and Q10.
Apple’s ecosystem has more than just products. Apple builds long-term customer value by making the products interchangeably compatible, allowing for file and program transfers through an Apple ID. This standardizes product upgrades and additions. As a result, Apple is able to price its products at a premium relative to its competitors. Even with Apple’s premium pricing, the company posted 7.4% year-over-year growth in its Macintosh sales.
An Apple MacBook can easily cost 20% more than its Windows 8 counter-parts, yet consumers are willing to pay more to get less in terms of performance specifications. Clearly it takes more than a faster processor, larger storage, faster memory, and better screen resolutions to win the hearts of consumers these days. Microsoft Corporation (NASDAQ:MSFT) and BlackBerry are losing market share because of this key fact.
BlackBerry isn’t likely to make a buck from its Indonesian payment services anytime soon. Likewise, its declining market share position paired with its poor product innovation practices keeps me a staunch skeptic of the company’s forward growth trajectory. It is far safer to buy Apple rather than BlackBerry.
The article BlackBerry May Not Monetize Its Payment Services Soon Enough originally appeared on Fool.com and is written by Alexander Cho.
Alexander is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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