John Chen is about to put in place the last piece of his turnaround plan for BlackBerry Ltd. by doing something almost unheard of in the smartphone business, or the tech industry in general: launching a flagship product with old features the company previously abandoned in the name of progress.
On Wednesday, the chief executive officer of the Waterloo, Ont.-based company will unveil the Classic, a smartphone aimed at its most die-hard, change-averse customers: executives and other keyboard-dependent "power users" who have held on to their aging BlackBerry Bold phones rather than upgrade to the company's newer touchscreen products. Mr. Chen will make the point by unveiling the Classic in the museum-like Italian neo-Renaissance-style surroundings of Cipriani, a restaurant in New York's financial district with painted ceilings and marble columns.
The Classic will restore familiar BlackBerry features like the "belt" – a row of four physical keys for calls, accessing menus and going back one step, anchored by a mouse-like trackpad. The company is also bringing back many keyboard-based shortcuts that were mainstays on older BlackBerrys, such as typing C to compose a message. Those features disappeared from newer "BlackBerry 10" smartphones in 2013.
This is more than tinkering with product features: It is the centrepiece of Mr. Chen's effort to reconnect the struggling firm, which once ruled the smartphone market, with core customers it ignored in its push to match Apple and Android touchscreen devices. Gone is the pursuit of consumers; back is a focus on business people who mainly use smartphones for typing e-mails, and on serving the needs of employers who manage fleets of smartphones, whether or not they are BlackBerrys.
Mr. Chen, 13 months into his BlackBerry rescue attempt, has vowed to win back business and government customers by improving the company's software and services offerings and also by improving its smartphones. He launched Passport, an oversized smartphone aimed at business users in September, but the Classic is his attempt to offer something familiar to old friends.
In an open letter this fall, Mr. Chen said he was guided by the adage, "If it ain't broke, don't fix it," and recently told reporters: "I've spoken to a lot of people and they want it; a lot of people say 'I am waiting for this.'"
But is the Classic the right product to bring BlackBerry back to the smartphone fore? Or will it calcify the company's reputation as a has-been and herald its exit from making phones altogether? Even insiders aren't sure.
"A small subset [of users] will be pleased, but the overall market has completely moved past what this product will offer," said one former senior executive who worked under Mr. Chen. "This is a short-term capitalization play: They can meet [pent-up] demand and probably make some money off it. … But my overall thesis is that BlackBerry will be out of handsets at some point."
Kristina Rogers is the kind of customer John Chen has in mind for Classic. Ms. Rogers, a Canadian based in Istanbul who heads the consumer products group of consulting giant Ernst & Young, now known as EY, is a diehard BlackBerry user who has made do with the all-touchscreen Z10 since 2013. But as a travelling executive who writes many e-mails, she misses the keyboard and plans to upgrade to a Classic.
"People who are actually typing still appreciate the tactile feeling of the buttons," she said. Judging by all the people she sees using old BlackBerrys or keyboard accessories for iPads in airports, Ms. Rogers expects many others will do the same. One such user is Peter Brorsen, deputy executive director of the European Institute of Peace in Brussels, who has used BlackBerrys for a decade. He never upgraded to BlackBerry 10 and considered leaving the fold "but I couldn't really find an alternative.
"Maybe we'll finally get a modern phone that's useful at work, too," he said of the Classic.
Mr. Chen believes there are millions of people like them. He has set a relatively modest target for BlackBerry's hardware division: If it can sell 10 million handsets a year, it will break even. If not, it shouldn't be in the phone business. That's a sliver of the global market (BlackBerry, which sold 3.7 million handsets to end users in the first half of this year, has less than a 1-per-cent market share), but even that could be a struggle; Morgan Stanley analyst James Faucette estimates the company will sell only eight million handsets next year, that division will lose $180-million (U.S.), and BlackBerry will struggle to meet its other revenue targets.
BlackBerry has fallen steadily in the smartphone race since Apple released the iPhone seven years ago. After trying unsuccessfully to compete with touchscreen phones built on its old software, then-co-CEO Mike Lazaridis decided BlackBerry needed a new operating system. But BlackBerry 10 took longer to develop than promised and was conceived at a moment when the leadership was split; Mr. Lazaridis wanted to focus on handsets while co-CEO Jim Balsillie favoured repositioning around offering software and services to carriers. Their successor Thorsten Heins chose hardware, but Mr. Lazaridis, then on the board, grew disillusioned when the new management focused on touchscreens at the expense of its flagship keyboard products.
That was followed by a disastrous launch of BlackBerry 10 in early 2013. Consumers were indifferent to the all-touch Z10 and many long-time power users were bewildered by the Q10, which had a keyboard but was missing popular mainstays like the belt. The user experience was different and non-intuitive compared with past BlackBerrys; customers couldn't figure out how to perform basic functions, including cutting and pasting, and even answering the phone.
"It was such a foreign experience, [long-time users] literally threw up onto it," one former senior insider quipped. Insiders say the company has sold fewer than seven million BlackBerry 10 devices to end users; at its peak four years ago, it shipped nearly twice as many smartphones in one quarter.
Weeks after the BlackBerry 10 launch, U.S. wireless giant Verizon gave the company a list of seven items it suggested should be changed immediately to make the devices more appealing, one former senior insider said. That included restoring the "back" button. BlackBerry's software engineers felt it was no longer needed because of touchscreen functions, but carriers and customers wanted it back. "Verizon got real pointed with us," the insider said. "They stripped us down."
It wasn't until Mr. Chen arrived that those concerns had the CEO's full attention. When Mr. Chen met with CEO-level BlackBerry users, many told him the Bold 9900, released in 2011, three years after the original Bold, was the best product the company ever made – even though it supported few apps and featured a sluggish Internet browsing experience. Mr. Chen decided the company should make a phone that ran on the new operating system but restored the physical keys and functions core users missed that made a BlackBerry feel like a BlackBerry.
"I still would like the user to experience all the new features," Mr. Chen said in an interview this year. "[Launching the Classic] is my statement to tell the world that we value our customers, we understand why some of the discontinuity happened, we are trying to bridge that particular gap."
Mr. Chen killed every other product in development except Passport (a product he initially didn't like but which was well advanced in development) soon after his arrival and directed his engineers to deliver the Classic as soon as possible. Developers initially struggled to meet his demanding timeline. Early models were "so ugly, like a child's flip-flop" sandal with a big rounded top, one insider said. The Classic is now rectangular and a bit taller than the 4.7 inch-long Q10. Meanwhile, developers had to write a lot of code on top of the new touch-oriented operating system to ensure the physical buttons functioned properly.
What BlackBerry has produced, based on company previews and early reviews of the Classic, looks to be a sturdy smartphone that is far from cutting edge, but may be enough of an advance to impress old-fashioned users. The device has an eight-megapixel camera (industry standard on new smartphones, including Passport, is now 13); the screen, at 3.5 inches diagonally, is smaller than the five-inch standard on top-selling "phablet" smartphones, but much bigger than the Bold 9900 (2.8 inches) and the Q10 (3.1 inches). While the company has improved its app offerings by making Amazon's array of Android programs available, it still lags rival platforms. Its touch pad will not work properly in many Android applications as the programs were built for touchscreens and not with physical buttons in mind, tech blogger and app developer Eric Harty said in a recent posting.
"There's probably a segment of loyalists" who will like Classic and see it as an upgraded Bold, said John McKinley, former chief technology officer with several Fortune 1000 companies, including Merrill Lynch. But "I don't think this gets you new customer" demand, he added.
A big question is whether core users like banks and governments will order the device in big numbers. Sources at three Canadian banks say they haven't rushed to make major orders, and are increasingly letting employees pick their own smartphones. Many are choosing Apple's iPhone 6.
"One of the mistakes that BlackBerry made was to move away from their loyal customer base," independent technology analyst Rob Enderle said. "The result was that they lost a lot of customers to Android and Apple – because if you have to relearn something anyway, you might as well learn something totally new" and it will be hard to win them back. The Classic, he added, "is the phone they should have led with two to three years ago."
Some insiders who recently left the company aren't convinced that trying to right a historic wrong is the right answer for BlackBerry.
"It's such a nondescript offer that the only people who will be interested are those who are genuinely mourning the loss of a Bold," one said. "Of the people who say they're interested, only a fraction of them will actually follow through. I do believe it will be a letdown." Another said users expecting an updated Bold might be put off.
"The pitch is familiarity. The story sounds good. But it's still a completely different operating system." Besides, the source added, it is likely to appeal to "a small market. What you are left with are people who don't want to learn something new. It's not a bad idea to go in and grab some of those users, at least for one product cycle."
Will it be enough to keep BlackBerry in the devices business? "I don't necessarily see the Classic being a saviour," said Desmond Lau, an analyst with Veritas Investment Research. "BlackBerry needs to keep innovating every year."
With files from freelance writer Rachel Greenspan and reporter Tim Kiladze