BlackBerry Ltd. isn’t ready to give up on the hardware market just yet.
The Waterloo, Ont.-based technology company, hit by a huge loss of market share as consumers abandoned its smartphones for competing devices, announced this week two new models aimed at keeping its remaining group of BlackBerry fans, and winning back some who left.
The company released a throwback physical-keyboard phone, the Q20, and a region-specific touchscreen device, the Z3, at the Mobile World Congress trade conference in Barcelona on Tuesday.
The move to release two new smartphones at a time when the company is transitioning to software services underscores a difficult reality for BlackBerry. Even though some of its software, such as the BlackBerry Messenger chat tool, is hugely popular, it still doesn’t generate very much profit. On the other hand, BlackBerry smartphones are still major revenue sources thanks to their popularity in various overseas markets, such as Indonesia and Venezuela – even as more and more consumers in the U.S., Canada and parts of Europe lose interest in the devices. Until BlackBerry's software starts making the sort of money necessary to replace or at least mitigate the falling revenue of smartphone sales, the company appears inclined to keep building a variety of handsets for its die-hard fans.
“We have engineered a new strategy to stabilize the company and restore our customers’ confidence in BlackBerry,” John Chen, the company’s chief executive officer, said at MWC in Barcelona.
BlackBerry shares surged on the news, jumping 8 per cent on Tuesday to $10.60 (U.S.) on the NASDAQ.
The value of BlackBerry’s newest hardware, however, is yet to be seen.
Virtually everything about BlackBerry's new phones is tailored to the company’s most loyal consumers. The Q20 is the latest in BlackBerry’s Q line of physical keyboard phones – but in some ways is a throwback to older models. The popular Back, Menu, Send and End buttons – as well as the traditional BlackBerry Trackpad – are all featured prominently on the device. The design change is aimed at assuaging long-time BlackBerry users who complained about the way those keys were stripped from some of the new BlackBerry devices released in the last year.
BlackBerry’s other new phone released this week, the Z3, is customized to an even more niche audience. The relatively low-cost phone, priced at $200 without a contract, will only be sold in Indonesia – a country where BlackBerry still remains a dominant smartphone platform.
The Z3 is the first built by the company’s new manufacturing partner, Foxconn. If the financial calculus of the new device – BlackBerry’s total gain from a phone that costs less to build but also retails at a lower price – works, the company may be able to have Foxconn build more region-specific, low-cost phones for various international markets, while BlackBerry itself focuses on its transition to services and software.
BlackBerry shares have been on a tear, thanks to a number of positive indicators. On Monday, news broke that the Ford Motor Co. would soon drop Microsoft Corp. as the builder of its in-car entertainment and information system, opting instead for technology designed by BlackBerry subsidiary QNX (both Ford and QNX have refused to confirm the news). Also on Monday, BlackBerry announced it will make its popular BBM messaging software available on Windows Phone and Nokia platforms, allowing users of smartphones based on those operating systems to use the device. The move is an extension of a policy that saw BlackBerry recently open BBM to users of Apple- and Google-powered smartphones. The company also appears to be benefiting from an increased interest in BBM-like software in the technology industry. In recent months, some of the biggest tech firms have paid eye-popping sums to buy instant messaging applications – most notably, Facebook’s planned $19-billion acquisition of WhatsApp. Although nobody has publicly indicated any interest in putting such a lofty valuation on BBM, investors have nonetheless raised its implied value in the last week.