Blackberry 2014 Annual Report Download - page 37

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Company experiences further delays relating to the launch of already announced or yet to be announced smartphones or other
products or services, such delays could have a material adverse effect on the Company’s business, results of operations,
financial condition and future prospects.
There cannot be any assurance that the technologies and related hardware or software products and services that the Company
develops will be brought to market by it or network operators as quickly as anticipated or that they will achieve broad customer
acceptance among operators or end users. In the case of the Company’s BlackBerry 10 smartphones, there can be no assurance
that the Company’s existing BlackBerry 6 and BlackBerry 7 customers will migrate to the new BlackBerry 10 devices, which
are offered for sale at a higher price point than many of the Company’s older devices. While the Company is continuing to see
increasing penetration in BES 10 with approximately 33,000 commercial and test servers installed to date, there can be no
assurance that the test installations will convert to commercial installations, or that the installations will result in equivalent
levels of revenue that the Company experienced in the past.
In addition, the machine to machine industry is highly competitive and rapidly evolving, and has experienced, and expects to
continue to experience, intense competition from a number of companies. No technology has been exclusively or commercially
adopted as the industry standard for machine to machine communication. Accordingly, both the nature of the competition and
the scope of the business opportunities afforded by the market in which the Company competes are uncertain. Specifically,
there can be no assurance that the Company will be able to develop, introduce, gain market share and scale the QNX Cloud
platform among intense competition and rapid change in this emerging market. In addition, the Company may be unable to
compete with automotive software solutions based on open source software distributions, including those based on Android and
Linux. The Company’s competitors, including new market entrants, may implement new technologies before the Company
does, and the number of new entrants in the machine to machine communications market can make it more difficult for the
Company to differentiate its products and services. In addition, the Company’s competitors may deliver new products and
services earlier, or provide more attractively-priced, enhanced or better quality products and services than the Company does,
which may, among other things, increase pressure on the Company to discount pricing on its existing and future products and
services.
Some of the Company’s competitors have greater name recognition, larger customer bases and significantly greater financial,
technical, marketing, public relations, sales, distribution and other resources than the Company, and such competitors have
increased their market share at the expense of the Company in recent years. The Company also expects that additional
competition will develop from existing companies in the wireless communications industry, from new entrants, and from
consolidation or other partnership or business combination activities within the market, as demand for machine to machine
products and related services expands and as the market for these products and services becomes more established.
The Company’s ability to compete successfully will also depend in large measure on its ability to maintain a technically skilled
research and development staff and to adapt to technological changes and advances in the industry, including providing for the
continued compatibility of its products and services with evolving industry standards and protocols and competitive network
operating environments.
Uncertainty relating to the Company's previously-disclosed announcements concerning the Company's operational
restructuring, recent Board and management changes and the Company's workforce reductions may adversely
impact the Company's business, existing and future relationships with business partners and end customers of its
products and services, and its ability to attract and retain key employees.
The Company has continued with its CORE program, including significant workforce reductions. The Company believes that
these initiatives increased market uncertainty in fiscal 2014 as to the future viability of the Company and may have adversely
impacted existing and future relationships with business partners and end customers of its products and services and demand
for the Company's products (including, in particular, sell-through levels for the Company's BlackBerry 10 smartphones). The
Debenture Financing also changed the capital structure of the Company and also added additional obligations in the form of
interest payments to the Debenture holders on a quarterly basis.
The Company’s success is also largely dependent on its continuing ability to identify, attract, develop, motivate and retain
skilled employees, including members of its executive team. Competition for highly skilled management, technical, research
and development and other employees is intense and increasing in the wireless communications and embedded software
industries. The Company’s ongoing restructuring activities (including headcount reductions relating to its Cost Optimization
Program and continuing efforts to streamline its operations and increase efficiency through its CORE program), the Company’s
governance changes, the challenges faced by the Company over the past three fiscal years relating to delays in new product
introductions, loss of market share, the Company’s share price performance (particularly for those employees for whom equity-
based compensation has been a key element of their compensation), the perception of the effects of competition on the
Company’s future prospects, and other factors, may impact the Company’s ability to attract new employees and retain existing
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