Jabil (JBL) reported August FQ4 earnings Wednesday afternoon. It has been a principal contract manufacturer for BlackBerry (BBRY) smartphone devices and that business is ending. Following BlackBerry's huge shortfall pre-announcement last week, Jabil and BlackBerry agreed that the manufacture of BlackBerry smartphones by Jabil will end in this current November quarter.
Jabil will be taking charges and lowering its cost structure to account for the loss of the BlackBerry business which had contributed 10%+ of revenues even in Jabil's August quarter.
More than 10 years ago, BlackBerry added a phone to its email-oriented messaging devices. That created the smartphone industry. But then BlackBerry (then Research in Motion) rested on its laurels and was leapfrogged by Apple (AAPL) with the iPhone that was a far more capable device. The original and prior Blackberry management resisted replicating the iPhone's many additional capabilities. And it was too late when today's BlackBerry management tried to catch up. The Apple and Google's (GOOG) Android ecosystems are now so well developed they get nearly all developer attention so it is self-fulfilling that the BlackBerry cannot compete and hence does not sell. The same is quite true of the Microsoft (MSFT)/Nokia (NOK) smartphones and Microsoft Surface tablets.
BlackBerry has 70,000 users and many government and enterprise customers who highly value its secure and independent network. On 9/11/2001, the BlackBerry messaging system continued to work in lower Manhattan when cell phone communications was knocked out.
All of these individual, government and corporate BlackBerry customers are prime prospects for AAPL. And Jabil management's comments suggest that BlackBerry sales will not last much longer. A private buyout is trying to be engineered but the network and IP (not BlackBerry device business) may be all that is of any value.
Apple's principal competitor Samsung sees the substantial potential to replace BlackBerry with governments and enterprises. But in many countries, Apple has the superior reputation for quality, lack of viruses and greater protection against hacking. And it has the more developed relationships with these organizations. In fact, in the U. S., many enterprises and governments have now approved Apple and some have approved Samsung and other Android smartphone and tablet devices for their more sensitive IT systems. Samsung was cleared for U. S. Federal agency use a few months ago. No doubt, other Android device companies are gaining or will gain approvals with many governments and enterprises.
For more on how the smartphone and tablet industries have already become an Apple/Android duopoly, please see my article titled "Smartphones and Tablets - own the Leaders, not the Followers". The recent iPhone and iOS 7 announcements have added significantly to the Apple ecosystem. And next generation iPads are expected soon to add further to the Apple ecosystem.
Google's Android is also well positioned to benefit from the demise of BlackBerry, as its Motorola and other Android device manufacturers get qualified in government agencies and enterprises for high security applications, and of course is already the dominant market share leader among individuals.