The media knives are rarely sheathed for BlackBerry these days. Last month it was reported that the Canadian firm’s year-long CEO, John Chen, had to ask his wife to stop flashing her Samsung smartphone at company parties. The boss’ wife, articles chuckled, couldn’t stand a BlackBerry. Even President Obama’s fondness for the brand has been met with bemused derision.
When the firm’s latest handset, the Passport, arrived in September, it gave Blackberry’s doubters even more cause for cheer. Here was a company mired in falling profits, consumer apathy and a disappearance of its once-dominant market share, releasing a odd-shaped ‘phablet’ that looked like a fat version of its failing forebears.
But the Passport’s reviews have come in. And the diagnosis is good. Its features, including a 13-megapixel camera, full QWERTY keyboard, 3Gb RAM and 32Gb storage have impressed tech journalists worldwide, who’ve chosen to deem BlackBerry’s offer of up to $550 trade-in for a switch from Apple’s iPhone as inspired, rather than desperate.
Now, with the Waterloo, Ontario-headquartered firm’s first operating profit in five quarters behind it, Chen, who was brought in from Sybase last November, can claim an impressive turnaround. The Hong Kong-born chief immediately launched plans to cull 40% of BlackBerry’s jobs. Manufacturing was outsourced and, in August, much of the company’s IP and core technology was consolidated, with former Sony Ericsson CEO Bert Nordberg hired to head the division.
BlackBerry’s smartphone market share still stands at a lowly 0.5%, from 2011’s 13.6%. But while it remains rooted behind Android, Apple and even Microsoft, many analysts are upbeat about BlackBerry’s Passport-era prospects.
“My impression of where they stand now compared to where they were 12 to 24 months ago, is that it does look like they’re in a better position,” says Richard Tse, technology analyst at Cormark Securities. “They’ve got a good handle on the cash structure. And they’re saying they’ll break even by the end of the year.”
Tse points to hires such as Nordberg’s to a bright personnel future. “They’re picking off people from companies that have had channel experience,” he says. “They’re also picking up competitors on the MDM (mobile device management) side. The stock is down today, but the gyrations of the headlines will take time to focus on that side of things.”
Tse warns that the success of the Passport – whose dimensions ape those of a Canadian passport – rests on a huge degree of execution. And though the product is sold out, even Chen admits that production has been low. But he describes its current product line as deeper and more robust.
“With a new platform in place, a new CEO, and a strategy focusing on the enterprise segment, which has always been BlackBerry’s strength, BlackBerry now has a much clearer strategy going forward but also a more niche market to play,” says Susana Santos, research analyst at WE Mobile Devices.
The Passport “not only stands out from the crowd but also it is immediate recognized as a BlackBerry device thanks to its distinctiveness and popularity a few years ago,” adds Santos. “It brings very competitive specs and it shows some innovation. The Passport also showcases all the services the company has launched recently to serve enterprises (BlackBerry Protected, Blend, Hub, etc.) and consumers (Amazon Appstore access, BlackBerry Assistant and Story).”
The Passport’s niche appeal means that it will not immediately revive BlackBerry’s fortunes, argues Santos, who cannot reconcile its attack on developed markets with BlackBerry’s main volumes in emerging markets. “However, in developed markets it will help the vendor to keep its current market share. It will be very difficult to attract users in the consumer segment but certainly will attract users in the enterprise segment and especially will help keeping loyal customers hooked to the platform.”
Other promising signs for Chen and his charges include a security deal with Samsung, and unlocked consumer discounts at Amazon from $699 to $499. The Passport was Amazon’s biggest smartphone seller during the annual Black Friday feeding frenzy.
Tech expert and consultant Scott Steinberg is bullish about BlackBerry’s prospects, which are changing with an evolved business model. He says: “ They’ve realized that differentiation needs to be a priority. At one point Blackberry was slow to move, and now they’ve realized it’s important to move quickly, and in a novel direction. You have to give them kudos for being a lot more aggressive.”