Blackberry 2015 Annual Report Download - page 31

Table of Contents
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systems and mobile devices, the Company may be forced to divert resources from its preexisting product roadmap to
accommodate these changes. In addition, if the Company fails to enable IT departments to support operating system upgrades
upon release, the Company's business and reputation could suffer. This could disrupt the Company's product roadmap and cause
it to delay introduction of planned products and services, features and functionality, which could harm the Company's business.
Operating system providers have included, and may continue to include, features and functionality in their operating systems
that are comparable to certain of the Company's products and services, features and/or functionality, thereby making the
Company's platform less valuable. The inclusion of, or the announcement of an intent to include, functionality perceived to be
similar to that offered by the Company's products and services in mobile operating systems may have an adverse effect on the
Company's ability to market and sell its products and services. Even if the functionality offered by mobile operating system
providers is more limited than the Company's products and services, a significant number of potential customers may elect to
accept such limited functionality in lieu of purchasing the Company's products and services. Furthermore, some of the features
and functionality in the Company's products and services require interoperability with operating system APIs, and if operating
system providers decide to restrict the Company's access to their APIs, that functionality would be lost and the Company's
business could be impaired.
Intense competition, rapid change and significant strategic alliances within the Company’s industry, including
recent and potential future strategic transactions by its competitors or carrier partners, could continue to weaken
the Company’s competitive position or may continue to require the Company to reduce its prices to compete
effectively.
The Company is engaged in an industry that 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 wireless communication, messaging or 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. In particular, there can be no assurance that the Company will be able to develop, introduce, gain
market share and scale the BlackBerry IoT Platform among intense competition and rapid change in this emerging market. The
Company’s competitors, including new market entrants, may implement new technologies before the Company does, and the
number of new entrants in the wireless communications industry 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. In fiscal 2015, the
Company's hardware revenues were negatively impacted by significant price reductions designed to drive sell-through for
legacy BlackBerry 7 and BlackBerry 10 smartphones.
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 does, 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 wireless access products
and related services expands and as the market for these products and services becomes more established. In addition, network
infrastructure developers, independent software vendors, smartphone vendors, PC, PDA and tablet vendors, Internet application
vendors, key network operators, content providers and others may seek to provide integrated wireless solutions that compete
with the Company’s products and services. The impact of competition could result in fewer customer orders, loss of market
share and reduced gross and operating margins. In addition, customers that may question the Company’s ability to compete or
remain viable as a provider of mobile communications solutions over the longer term could decide to replace the Company’s
products and services with those of its competitors. There can be no assurance that the Company will be able to compete
successfully and withstand competitive pressures.
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 or to use the Company’s network infrastructure, or designs its solutions to
operate on competing operating systems, such actions may negatively impact demand for the Company’s products and services,
which impact may not be offset by the benefits of such initiatives to the Company through the potential 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 may require it 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. Such changes can result in reduced margins and reduced cash
generation, may require the Company to record inventory provisions, and could adversely affect the Company’s results of