LAST CALL?
If BlackBerry’s new phone isn’t profitable in a year, the company may abandon its hardware division,
Smartphone pioneer BlackBerry Ltd. could leave the physical smartphone business if it fails to turn a profit in a year, to focus solely on selling secure software across mobile platforms, chief executive John Chen suggested Thursday.
While showcasing BlackBerry’s next-generation handset, the Android-powered Priv, Chen told the Code Mobile conference in California that the company’s hardware operation is in a make-or-break phase. He said the business needs to turn a profit next year: “Otherwise, I have to think twice about what I do there,” tech news website Re/code reported.
A “business case” would determine whether BlackBerry continues to make devices, Chen said, even as he expressed confidence the high-end Priv can succeed.
“Android in the enterprise is a very underserved space. With our connections, our accounts, our security know-how, this has expanded our market. The market wants privacy and security and they also want apps.”
BlackBerry, which launched its first two-way pager in 1999, has seen its once-dominant share of the mobile handset market evaporate amid competition from Apple, Samsung and a host of other equipment makers. Its user base has plummeted and the company continues to lose money on hardware despite outsourcing some manufacturing to Taiwan’s Foxconn.
The BlackBerry Classic handset un- veiled last December and the unusually configured Passport failed to ignite sales, with handset shipments falling to just 800,000 in the most recent quarter. Chen is targeting at least five million handset sales a year.
The Priv aims to reboot BlackBerry hardware by offering the full range of Android apps along with enterpriseready privacy features.
To launch before the end of the year, BlackBerry says the slider-keyboard Priv will bring the most secure experience possible to the widest audience, with early response to the device from reviewers and in social media largely positive.
Chen has said the company continues to make handsets so it can offer customers an end to end mobile solution.
“I’m in the handset business because I believe there’s value added and a market that is underserved,” Chen told the conference.
The company has stood by hardware as an entry point for sales of software products, while many questioned whether potential exists for meaningful device sales.
“While we have applauded the attempt to find a place for BlackBerry hardware in the market,” Rosenblatt Securities’ analyst Brian Blair wrote in a note to investors, “we believe it’s time to move on.”
Strategy Analytics’ Neil Mawston said BlackBerry’s best hope for a hardware turnaround is to launch multiple Android smartphone models in quick succession “and pray one of them be- comes a hit.”
BlackBerry shares, however, have strengthened since the Priv plans were confirmed in September and gained on reports about future hardware plans, although the shares fell five cents (U.S.) after hours to $7.24.