This summer, BlackBerry Ltd. CEO John Chen made some big promises to his customers, employees and investors. Chief among those promises was an end to the company’s painful restructuring process and an eventual return to profitability. Now, the time has come to deliver.
One of the most important seasons in BlackBerry’s corporate history begins this week, as the company unveils a brand new smartphone, announces its latest quarterly earnings and sets the tone for a final quarter of the year in which it will launch a number of vital services and products.
BlackBerry on Wednesday will unveil its newest smartphone, the Passport. The widescreen, premium device is aimed at luring BlackBerry’s core demographic – enterprise customers – away from rivals Apple and Samsung.
“This week is about as big as it gets for the company,” said independent technology analyst Carmi Levy. “[The] Passport launch is much more than a simple hardware release – it is being looked at as a lens into the health of the company and a sign that most of the negative stuff the company has garnered over the last few years is behind it.”
In an interview with the Wall Street Journal, Mr. Chen indicated the Passport will go on sale in the United States at a no-contract price of $599 (U.S.). He added that the phone should cost around $700, but that the company is trying to drum up interest by lowering the price.
The $599 price tag compares favourably to both the iPhone 6 and Samsung’s Galaxy S5 – the two current flagship devices in the Apple and Google Android markets. Both those phones come at a no-contract price of between $600 and $650. The larger, more premium iPhone 6 Plus retails at a no-contract price of $750.
But price tags may not be enough to drive sales. The BlackBerry Passport launch comes as Apple announced on Monday it sold 10 million new iPhones in just the first three days since the two new smartphones went on sale – a new company record.
“Expectations [for the Passport] are much more modest,” said Mr. Levy. “What matters is how well the Passport is received by BlackBerry’s core enterprise customers.”
Since Mr. Chen took command of the company in November of last year, BlackBerry’s focus has been squarely on services and software, rather than its iconic smartphones, which have been waning in popularity for several years. This week’s launch of the Passport (and a likely sneak peak at the BlackBerry Classic, due out later this year), represents a temporary break with that strategy, as the company tries to reinvigorate its loyal customer base with new hardware.
On Friday, two days after its smartphone unveiling event, BlackBerry is expected to announce its 2015 fiscal second-quarter results. Analysts expect sales of between $900-million and $940-million, on average, and a loss per share of about $0.16. The results mark the first major financial event since Mr. Chen sent a memo to employees in early August claiming that the company’s long and painful restructuring process is finally over. Mr. Chen also promised that, barring unexpected market downturns, BlackBerry will begin hiring employees again in modest numbers (after years of massive layoffs), with a goal to return to profitability next year.
This week’s quarterly results will go a long way toward showing how realistic that goal is. But it will also set the stage for the coming months, during which BlackBerry is expected to release a number of important new products. Most significant among them is the new BlackBerry Enterprise Server 12 software, which lets corporate IT departments manage their employees’ smartphones – even if those smartphones aren’t BlackBerrys.
More than any handset, it is the success or failure of products such as BES 12 that will determine whether BlackBerry is able to reinvent itself as a provider of services, rather than a hardware-maker.
“BES12 may be one of the most important product launches in BlackBerry’s recent history,” noted RBC Dominion Securities analyst Mark Sue.Report Typo/Error