As it undergoes a massive corporate makeover, BlackBerry will have to reassure its long-suffering investors that its new ambition – to become the universal platform for all connected devices – can really counteract the old, declining smartphone business.
BlackBerry reports its fiscal 2015 first-quarter results on Thursday before markets open. Analysts expect revenue of about $970-million and a loss-per-share of about $0.25 in the quarter ended May 31. In the same period a year earlier, the company posted revenue of $3.1-billion and an adjusted loss of $0.13 per share.
In recent months, BlackBerry appears to have shifted much of its focus from smartphone hardware and software to something much more amorphous and forward-looking – namely, the so-called "Internet of things."
Broadly defined, the Internet of things is shorthand for Web-connected, non-computer devices – everything from dishwashers to thermostats to cars. The prospect of always-connected devices allows a plethora of new functions. For example, a connected refrigerator may one day be able to read the bar codes of the items stored inside it, and display recipes on a door-mounted screen based on the data, or alert a user when she's running low on eggs.
As much as BlackBerry would like to have its own smartphones be the universal remote control for the Internet of things, BlackBerry's share of the mobile hardware market has been shrinking for years. Indeed, a Canaccord Genuity research report issued last month estimated BlackBerry's share of the global handset market at 1 per cent – half what it was a year ago.
Instead, BlackBerry is attempting to build universal platforms that make the Internet of things possible – the software that allow myriad smart devices to talk to one another.
Last month, BlackBerry announced Project Ion, a move to capitalize on the Internet of things by leveraging its network infrastructure. The company hopes its software can act as a universal platform for web-connected devices, even if those devices might run on operating systems built by rivals such as Apple or Google. In effect, the company is betting that, while fewer and fewer consumers might be enamoured with the BlackBerry smartphones, they still value BlackBerry security and reliability.
Last week, the company also announced a three-year partnership with EnStream, an operation run jointly by Bell, Rogers and Telus. to provide a secure platform for transactions between banks and consumers. EnStream is designed in part to protect sensitive credit card information stored on smartphones – part of a move to allow consumers to use their smartphones as digital wallets.
The central question for investors is whether BlackBerry's new shift into software and its push to become a universal platform provider will begin paying off quickly enough to offset the declines in the traditional smartphone business. Investors and analysts will be paying close attention on Thursday to the rate at which BlackBerry is burning through its cash stores, as well as average smartphone selling prices, which may have dropped this quarter as consumers opted to purchase cheaper devices.
Those interested in the company's longer-term prospects, however, will be waiting to hear more details from senior executives about BlackBerry's push to become a universal platform provider – and whether that push is showing any signs of profit.