BlackBerry's Chen has a knack for attracting top talent, but what about sales?

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John Chen has a knack for attracting top talent to BlackBerry. On Monday, the Waterloo, Ont.-based company said another senior executive with an impressive pedigree is coming aboard: former Cisco senior vice-president Carl Wiese, co-author of the management book The Collaboration Imperative: Executive Strategies for Unlocking Your Organization's True Potential.

Investors should hope that Mr. Wiese, who becomes president of global sales, does as good a job selling the company's wares as Mr. Chen has in convincing senior industry colleagues to join his team. Mr. Wiese's predecessors haven't been that lucky. He is no less than the third person to occupy the top sales role at the fallen smartphone pioneer in the past eight months.

You have to feel for Mr. Chen – less than two years into his attempted revival of BlackBerry, there's little to be excited about, and still much cause for concern. Mr. Chen has brought a keen eye for cost cutting and a plan to turn around the company's fortunes by focusing more on software and services while stemming continued declines in the smartphone business.

But the fact remains that BlackBerry still generates nearly four out of every five dollars in revenue from selling smartphones and collecting monthly fees from the carriers its older smartphones still use. Despite the launch of several new handsets – including the Passport and Classic – the device business is still losing altitude. BlackBerry sold 1.3 million devices to end users in its latest quarter, down from 1.6 million the previous quarter and 1.9 million the quarter before that. One year earlier, users bought 2.6 million devices.

Mr. Chen has stated repeatedly that BlackBerry will remain in the device business, but he has also said he can break even by selling eight million to 10 million devices a year. He's nowhere close to even that modest amount, and there is no evidence the world is clamouring for more BlackBerrys (the company's global market share is less than half of 1 per cent), though perhaps adopting Google's Android operating system is just the ticket. Then again, perhaps it isn't.

The other big problem is those monthly fees, generated by older devices like the Bold. They're falling, and they won't go back up. BlackBerry brought in $1.6-billion last year from the monthly fees, just under half of total revenue. This year they'll fall to about $800-million, and to about $420-million next year based on current trends. The fees will ultimately vanish altogether as those older devices are tossed; newer devices generate no such revenue.

Mr. Chen's big plan is to double revenue from software and technology licensing to $500-million this year from $247-million last year. Most of that gain relies on the company delivering licensing deals like the one BlackBerry signed last quarter with Cisco. But such deals come irregularly: Some are one-time deals, some will result in continuing payments, and all rely on BlackBerry convincing other companies to pay a fee for using its intellectual property (or presumably be sued for patent infringement). Calling the timing, or size of such income, is hard, as Mr. Chen acknowledged last month.

Meanwhile, the base software business – built around tools for helping large organizations manage their fleets of smartphones – is growing by 20 per cent a year, which is good, but not nearly enough to make up for the hollowing out of its two biggest revenue sources, and the device management space is highly competitive. Mr. Chen's promise to build a $100-million business on top of the BlackBerry Messaging app always sounded optimistic given that BBM distantly lags others in the mobile instant messaging game, including WhatsApp; last month, he admitted as much, abandoning the nine-figure revenue pledge, at least for this year.

Clearly Mr. Chen is hoping there are more sales to be had by replacing one of his early recruits, John Sims, with a management culture guru like Mr. Wiese. But the sobering reality is that most of the cash currently coming in the front door is being derived from a dying monthly fee business and a weak device business, while the company's best growth prospects – at least in the short term – are to be had from squeezing more patent payments out of other companies.

It's still unclear what true potential there is to be unlocked at BlackBerry; with $2-billion in net cash and tens of thousands of valuable patents, Mr. Chen still has time, assets and options at his disposal. But BlackBerry seems destined to be a much smaller company before a clear path emerges.