BlackBerry chief predicts second life for its phones BlackBerry chief predicts second life for its phones
https://www.ft.com/content/ed71a126-108f-11e7-a88c-50ba212dce4d High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our
T&Cs and
Copyright Policy for more detail. Email
ftsales.support@ft.com to buy additional rights.
https://www.ft.com/content/ed71a126-108f-11e7-a88c-50ba212dce4d Licensing others to make distinctive handsets is strategy as software future beckons Read next BlackBerry boosted by $815m Qualcomm refund John Chen, BlackBerry chief executive © FT montage / Bloomberg Share on Twitter (opens new window) Share on Facebook (opens new window) Share on LinkedIn (opens new window) 8 Save YESTERDAY by: Nic Fildes, Telecoms Correspondent It has only been six months since BlackBerry took the decision to stop making the handsets that bear its name, but John Chen, the chief executive who pulled the plug, is already predicting the phones will make a comeback. Sample the FT’s top stories for a week You select the topic, we deliver the news. Select topic Enter email addressInvalid email Sign up By signing up you confirm that you have read and agree to the terms and conditions, cookie policy and privacy policy. The Canadian company that once dominated the smartphone market has licensed its brand to three “white label” phonemakers in Indonesia, India and China, who now manufacture handsets designed to appeal to the 14m BlackBerry users around the world — a number that has dwindled from 80m at the company’s peak. Even so, Mr Chen is happy to have made the decision for BlackBerry itself to have left the highly competitive smartphone market. Sitting in the basement of the Bulgari hotel in London, he is pleased with the move out of hardware, describing the smartphone market as “commoditised” and the latest models from his former rivals as “boring”. “Something has to happen. I’m glad to let my partners deal with it,” he says of the uniformity of smartphones. Instead, BlackBerry has, in the words of Mr Chen, gone “back to its roots” by focusing on its security software, servers and productivity tools, while also tapping into new markets including connected cars. BlackBerry’s switch was perhaps inevitable under the pragmatic Mr Chen. The latest industry data from Gartner showed that BlackBerry’s share of the mobile operating system market had plunged to a rounded 0.0 per cent in the fourth quarter of 2016. It had launched phones using Android’s software, but none sparked the turnround in volumes to justify continued investment. Yet he believes that using the local manufacturing “muscle” of its partners — China’s TCL, Indonesia’s PT BB Merah Putih and India’s Optiemus — means that BlackBerry phones may enjoy an unlikely second life. “A couple of years from now, more people will be buying BlackBerry phones than today. My prediction, and I could be wrong, is we will have a comeback in handsets,” he says. If the strategy succeeds, it will bring in licensing dollars, but not enough to restore its denuded revenues line. BlackBerry reported fourth-quarter revenues of $4.2bn in 2012, when it was still riding high in the smartphone market. Five years on, the equivalent fourth-quarter figure was $286m. Mr Chen, who was appointed in 2013 with the business on the brink of collapse, is unfazed. The former Sybase chief argues that he has achieved his aim of turning around BlackBerry. “I am no longer in a turnround state. I am in a growth state,” he says. As evidence of its transformation, the software and services portion of BlackBerry’s revenue has grown from $100m to $640m since he joined. Fourth-quarter results showed that losses had been reduced to $47m compared to $238m a year earlier, and guidance that the company should be profitable this year sent shares up 12 per cent. An extra boost came last week in the form of a $815m refund from chipmaker Qualcomm — ironically, a result of its failure in the smartphone sector. The payment boosted the company’s cash balance and could clear the way for a more aggressive tack on acquisitions. The move back to software and security reflects a world that has become more attuned to the cyber security threats of unprotected mobile phones, especially in an office environment. Governments also remain large customers of BlackBerry technology, with all G7 countries using its software. The company estimates that the market for its “enterprise of things” technology is worth $17.6bn. Mr Chen also sees an opportunity to introduce a sub-brand similar to the famous “Intel Inside” strategy pioneered by the chip company. The company’s acquisition of software maker QNX in 2010 has also made the business a player in the connected car market. It works closely with Ford, which took on 400 BlackBerry staff this month to boost its in-car connectivity development. There are now 60m cars on the road that use BlackBerry software. BlackBerry is testing two autonomous vehicles and expects to do real road tests in the late summer in Toronto. Mr Chen argues that cars have become little more than big chains of code. “It’s like a very expensive golf cart running around,” he says of future autonomous vehicles. Yet he admits that his efforts to distance BlackBerry from its smartphone heritage has been somewhat hampered by its brand. He opines that he is constantly asked about new handsets in meetings and that he did consider changing the name of the company back to Research In Motion to draw a line under its legacy. He has now ruled out such a move, saying that only “weak” companies change their names in the middle of a turnround. “I have a joke that if my son is not doing well at maths at school, I don’t change the name of my son. That does not improve the maths,” he says.