According to some documents submitted in court, it has been revealed that the much anticipated Blackphone smartphone from Silent Circle has not been able to sell well in the market.
To be fair, the smartphone has sold a decent amount of units to companies and the general public but the reception has been nowhere near to what was expected before launch date.
Every individual is entitled to his (or her) own opinion but if number of smartphone units sold is anything to go by it seems that the general demand amongst the population for smartphone that enhance and protect your privacy during online communications and offline work isn’t even close to what most people would have expected.
Investigators at Forbes have looked into the matter in quite a lengthy process and have found worrying troubles through which Silent Circle (up and coming Blackphone manufacturer) is currently going through.
Bad, is the word some might use after reading the current state of affairs regarding the company as it has had to cut down its workforce by a massive 20 percent. That comes to almost a fifth of the total workforce.
And not only that, Silent Circle is also in hot waters with Geeksphone (a Spanish smartphone company that was founded in 2009 and has been involved in the development process of devices that work with Firefox OS) and the companies are battling it out with each other on the legal front.
You might legitimately ask the question, what has Silent Circle done wrong to be in such an undesirable situation and the answer is quite simple.
The company believed its own hype and looked forward to selling many thousands of these smartphone devices. Devices that actually no one wanted to buy or test out. That, in a nutshell, is the reason why the company finds itself in such turmoil.
Documents submitted to the court also show that people who get paid the big bucks at Blackphone smartphone (the executives of course) couldn’t accurately predict market demand. They not only were unable to estimate consumer demand but also were wildly off target when it came to networks who initially wanted to buy their Blackphone smartphone.
Have a look at these names:
- BigOn Telecom
- America Movil
These names have one major attribute right now and that is all these companies showed a decent amount of interest in actually buying the Blackphone smartphone from Silent Circle before the product actually came out.
The companies gave reasonable indications that they would buy devices in the thousands if not tens of thousands or even hundred of thousands from Silent Circle.
Silent Circle made the classic mistake of equating commitment from interested parties to actual sales. In the ruthless world of technology and business, there is no such thing as a guarantee let alone guarantee of units sold and that is why savvy companies always have contingency plans at hand.
Silent Circle, mistaking potential client’s interest into revenue generated, took out loans to get their smartphone devices manufactured and was able to get enough funding to produce around 250,000 units of their Blackphone smartphone.
What really happened was that America Movil only bought six thousand smartphone units when before they had initially expressed interest in buying a hundred thousand Blackphones.
Sumion and BigOn went one step further and pulled out from the deal altogether.
The Probable Cause
Even with all media campaigns and other forms of paid offline advertisements, the simple fact is that the smartphone industry has peaked.
Some have even gone further and believe that the market has actually gone beyond the peak. For all the Huawei’s and Xiaomi’s of this world, the reality is that there are only a handful of companies that can produce smartphones, sell them and turn in a profit.
Even established brands like OnePlus have recently admitted to “surviving on razor thin margins” so it is no wonder that only the elite smartphone manufacturers can do business in this industry for an extensive period of time.
The initial, rather large, number of companies that entered the niche market of high-end privacy smartphone gave some the impression that the industry would be able to survive and may even prosper.
Silent Circle’s competitors like Sirin Labs, Turing, and Sikur all have tried and continue to try their hardest to appeal to a crowd that, according to the number of sales, may not even exist. Yet.
The appeal of privacy in your daily communications is quite obvious but even with the bad press the NSA has received in the last couple of years since the Snowden incident and all the camera hacking accusations, the average customer has not shown enough concern or interest in making privacy their priority when buying smartphone.
Either that or the general population simply don’t want to go through the hassle of making sure that their communications and data files are safe from the prying eyes of the government.