BlackBerry Ltd.'s share of the U.S. smartphone market has fallen so far that its decision to sever ties with T-Mobile US Inc. likely won't have much of an effect on either company's bottom line. But the decision is a stark departure for BlackBerry, which in the past relied almost exclusively on carrier partners to do much of the heavy lifting in selling its phones.
BlackBerry said late Tuesday that it won't renew its licensing agreement with T-Mobile when it expires later this month, a surprise move that comes two months after the companies' chief executives sparred online, and six months after T-Mobile stopped selling BlackBerrys in its retail outlets.
BlackBerry's share of the U.S. smartphone market has dwindled to less than 1%, according to research firm IDC, from as high as 50% five years ago. When BlackBerrys were still selling well, the company depended on the marketing push from carriers to drive sales. It also relied on carriers for service fees, a lucrative extra charge BlackBerry levied on carriers to route a phone's traffic through its secure, proprietary network.
Last year, recognizing that carriers were no longer willing to pay those fees for phones that weren't as popular with customers, BlackBerry said it would start to wind down its service-fee arrangement. The move worried analysts and investors, who are still waiting to see whether or not the company can come up with a new way to make up for that lost revenue.
"Regretfully, at this time, our strategies are not complementary and we must act in the best interest of our BlackBerry customers," BlackBerry chief executive John Chen said in a statement Tuesday. "We hope to work with T-Mobile again in the future when our business strategies are aligned."
T-Mobile hasn't officially commented on the BlackBerry move, but Chief Executive John Legere was active on Twitter Wednesday.
"We value all customers but this is 1+% of our base total and a small fraction of what we add quarterly," he wrote in response to a post by BTIG analyst Walter Piecyk, who commented on Wall Street's lack of reaction to the news.
"I can't, for the life of me, understand why @BlackBerry would take choices away from customers," Mr. Legere wrote to another user.
In a separate message, he said that T-Mobile is "open to continuing to work" with BlackBerry. [...]