Blackberry 2013 Annual Report Download - page 55

In addition, to the extent that the Company licenses its technology to enable other device manufacturers or software developers to
equip their products with BlackBerry functionality, including the Company’s push technology, or use the Company’s network
infrastructure, such action may have the effect of impacting demand for the Company’s products and services, and the benefits of
such initiatives to the Company through the generation of alternate sources of revenue may not be realized in the manner anticipated
by the Company, or may not offset the competitive impact such actions could have on the Company’s business.
The intensely competitive market in which the Company conducts its business and the current economic uncertainty may require it to
continue to reduce its prices. The Company’s competitors, particularly some of those that utilize Google’s Android operating system,
have in the past, currently and may in the future offer deep discounts on certain products or services in an effort to capture or maintain
market share, to reduce inventory levels or to sell other products and services. As demonstrated by promotional activities the
Company undertook in fiscal 2013 to drive sell-through of the BlackBerry 7 smartphones to end customers, the Company has been,
and in the future may be, required to lower prices on its products or services or offer other favorable terms to compete successfully.
Such changes can result in reduced margins and reduced cash generation, may require the Company to record further inventory
provisions, and could adversely affect the Company’s results of operation and financial condition. The Company’s entry into the
consumer market has already had an impact on its pricing and this risk may further intensify due to the broader choice of
smartphones, tablets and other devices, products and services offered by multiple vendors in this market segment and the BYOD
strategies currently being utilized or considered by some of the Company’s enterprise customers.
The Company has encountered challenges due to the impact of BYOD strategies being adopted by some of its enterprise customers,
as some information technology departments that previously required employees to use the BlackBerry wireless solution because of
its emphasis on security and reliability are permitting employees to choose devices offered by the Company’s competitors, and this
has been reflected through a decrease in the Company’s enterprise subscriber growth rate. Also, some of the Company’s competitors
have increased their marketing efforts and focus on the enterprise market. To address this evolution of the market, the Company has
introduced products to provide manageability and scalability solutions including BlackBerry Enterprise Server Express, BlackBerry
Enterprise Service 10 (formerly BlackBerry Mobile Fusion) and BlackBerry Balance, which give IT departments the ability to
securely manage BlackBerry devices as well as device on other operating system platforms through a single interface and to securely
protect corporate data on an employee’s personal smartphone or tablet. The Company will also continue to seek partnerships that will
further enable the Company to have a complete BYOD offering. There can be no assurance that these new product offerings,
including the launch of BlackBerry 10 smartphones, will strengthen its position in the BYOD enterprise segment.
Changes in the competitive landscape as a result of mergers or strategic partnerships can also adversely affect the Company’s ability
to compete effectively. The Company’s competitors may establish or strengthen co-operative relationships with its carrier partners,
sales channel partners, suppliers or other parties with whom the Company has strategic relationships, thereby limiting the Company’s
ability to promote its products and services. The use of Google’s Android operating system by existing and emerging manufacturers,
as well as the acquisition of Motorola
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