BlackBerry plays the patriot card
New smartphone aimed at Canadian base
TORONTO — It was a palpably patriotic play by BlackBerry to win back its Canadian home base, launching its unconventional square-screen Passport smartphone at a Toronto hockey pub on Wednesday, bringing Wayne Gretzky to the stage for a Canuck celebrity endorsement.
John Chen, president and chief executive officer of the Waterloo, Ont.-based smartphone maker, said BlackBerry is trying to get Canada to “rally behind us” as it moves out of the restructuring phase.
“We are determined to win our home country back,” Chen said at the BlackBerry Passport launch in Toronto, held simultaneously alongside events in London and Dubai. “This is one of the first moves.”
It was a relatively humble goal, given BlackBerry’s former glory as a global technology pioneer, which set the standard for smartphones with its early keyboard-enabled devices.
BlackBerry’s international smartphone market share has been gobbled up by Apple Inc.’s iPhones, and Samsung Electronics’s devices based on Google’s Android operating system, forcing the firm to undergo a restructuring process over the past three years.
National ambitions might not have suited BlackBerry when it led the whole world, but it now makes sense to focus on key geographical areas, such as Canada, where it still has strong brand recognition, said Brian Colello, equity analyst for Morningstar Securities in Chicago.
BlackBerry is only partly a devicemaker anymore. The Toronto venue, the Canadian patriotism, the regional-market emphasis — they all gave the appearance of changing perceptions of BlackBerry from a one-time rival of Apple’s to the leaner, more focused technology player it is working to become. And a manifestation of the tricky balance BlackBerry faces: developing new smartphones — the new Passport and the upcom- ing Classic, expected this year — that bring profits, rather than losses, while also investing towards its longterm vision based on revenue from software and enterprise clients.
BlackBerry, which reports its second-quarter results Friday, has shed thousands of employees and cut divisions to shore up its balance sheet, and simply doesn’t have the deep pockets of Google or Apple to spread its funds as widely across different priorities, Colello said.
Still, BlackBerry has made adjustments such as outsourcing production of some handsets to Taiwanese maker Foxconn, reducing the number of models it produces, and striking a deal with Amazon to provide apps for its handsets, he added.
The Passport, which has a 4.5-inch square screen and a three-row touchenabled QWERTY keyboard, is targeted toward what BlackBerry calls “power professionals,” such as medical workers looking at X-rays, or finance executives dealing with large amounts of data on a bigger display.
The smartphone will cost $699 in Canada without subsidies, and $599 in the United States, for a limited time, BlackBerry says. When taking into account the current exchange rate, the price discrepancy between Canada and the U.S. is about $40.
It’s a device likely to appeal only to high-end corporate users, a small market that is already being taken on by other players, said Ehud Gelblum, a Citi Research analyst.
He said in a note to clients this market is “simply too small (and getting smaller)” to “target with such an expensive device, and we believe the Passport does little to change the direction of the company.”
But BlackBerry Blend, an app which allows a user to securely share messages, data and files between their smartphone, laptop and tablet, will make the company’s hardware more attractive to enterprise clients, said Maynard Um, equity analyst with Wells Fargo in New York, in a note to clients.
Chen has said if BlackBerry sells more than 10 million smartphones in a given year, its handset division will be profitable. By comparison, Apple sold 10 million units of its new iPhone 6 and iPhone 6 plus this past weekend alone.