Relationships with distributors and carriers are key for BlackBerry
BlackBerry has been reduced to a niche smartphone player (Part 6 of 12)
BlackBerry strengthens its relationships with distributors and carriers
In the previous part of this series, we discussed the importance of relationships with carriers for mobile device companies and how BlackBerry (BBRY) has faced issues with T-Mobile (TMUS). However, BlackBerry has now started to realize the importance of maintaining good relations with both distributors and carriers.
Last quarter, BlackBerry signed new agreements with Ingram Micro and Brightstar. Both these companies are distribution companies that buy devices from companies like Apple (AAPL) and BlackBerry and then re-sell them to consumers in regions where mobile players don’t have a direct sales force. This arrangement would help BlackBerry expand its reach for its hardware devices and also help increase the sale of its software solutions.
BlackBerry has also strengthened its relationship with carriers such as Vodafone (VOD), Verizon (VZ), China Mobile (CHL), India’s Idea Cellular, and Airtel. Plus, BlackBerry has stepped up its efforts to increase its presence on online channels. BlackBerry’s main online channels remain its own site and Amazon.com (AMZN). It has maintained a good relationship with Amazon, but according to BlackBerry, there are over 170 websites now selling its products around the world.
These agreements help BlackBerry save on promotional expenses
Distributors and carriers help BlackBerry in not only increasing reach but also in another key area: savings on promotional and marketing expenses. These companies promote BlackBerry’s products on its behalf. This is important for BlackBerry, especially when it’s looking to maintain its profitability—which we discussed in the first part of this series.
We’re already seeing early signs of control on promotional and marketing expenses from BlackBerry. As the chart above shows, BlackBerry’s SG&A (selling, general, and administrative) expenses as a percentage of revenues have declined in the last two quarters. This is a good sign for the company, and it will help BlackBerry maintain its profitability in the coming quarters as well.
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