In an era where swiping on touchscreen smartphones has increasingly become the norm, BlackBerry is going back to the basics – with a new phone that boasts an old-fashioned keyboard.
“Classic” is how John Chen, BlackBerry’s latest chief executive, puts it.
Could a counter-intuitive move like this, combined with a recent sales burst in countries such as the UAE, help pull BlackBerry out of troubled trenches in the tech sector?
The company, which is headquartered in Waterloo, Canada, still has a long way to go as it attempts a rebound, analysts say. But it has recently tried to convince investors that it is in the midst of a turnaround.
“We are focused on moving the company forward,” says Nick Horton, the managing director at BlackBerry for the Middle East. “We are on the path to stabilisation in 2014, and are targeting to return the company to cash flow positive and possibly break even by the end of [fiscal year 2015].”
Over the past two months, the manufacturer has announced various deals to sell thousands of BlackBerry 10 phones to businesses in Brazil, Venezuela, France and Italy, among other countries. Daimler, the German luxury car maker, has signed on for an undisclosed number of new BlackBerry 10 phones, while Airbus, the French aircraft maker, is upgrading its entire fleet of phones to models with this operating system.
Meanwhile, BlackBerry phone sales in the UAE doubled last month compared with January across the emirates, according to Ashish Panjabi, the chief operating officer of Jacky’s Electronics.
BlackBerry’s stock price has also risen of late on news of Facebook’s US$19 billion purchase of WhatsApp, a tech company that offers an instant-messaging service. The big draw for BlackBerry’s investors has been the company’s BBM service, which works in a similar way to Whatsapp and has some believing it could be spun off and sold for a tidy sum.
BBM has remained particularly popular in the UAE and other countries in the Arabian Gulf. Part of its strategy for growing the service’s adoption even further has been making BBM more widely available in the region on other mobile platforms, including those offered by rivals Apple and Samsung.
“Broadly speaking, the outline of the new strategy are taking shape in the region,” says Matthew Reed, a principal analyst at Informa Telecoms & Media and head of research for the Middle East and Africa.
Yet a closer look behind the headlines reveals BlackBerry still has a lot of ground to regain.
The proliferation of BBM on to other devices, for example, could backfire in some ways.
“In the Gulf, a lot of BlackBerry’s popularity was due to the ease of messaging,” says Simon Baker, a mobile handset analyst with IDC for Central and Eastern Europe, the Middle East and Africa (Mea). “Now that messaging system is being pushed out on to other operating systems, so you don’t have to have a BlackBerry for it anyway.”
While BlackBerry has been quick to announce fresh contracts with companies willing to purchase as few as 1,000 mobiles, the manufacturer has not shared exactly how many phones have been sold in all cases – and it is not always benefiting as much as some investors believe.
For instance, BlackBerry’s share price jumped from about $9 to nearly $11 in January, after news spread that the department of defence in the United States ordered 80,000 BlackBerry phones. But the US government agency later released a statement to The Verge, a technology news website, clarifying “absolutely no new orders have been placed”.
The department, it turns out, had meant to share with the press that it was already supporting 80,000 BlackBerry phones, a detail that got misconstrued as a new order and artificially inflated BlackBerry’s stock price.
All told, BlackBerry says it now secures mobile communication for more than 80,000 enterprise and government customers, although analysts warn that pool has shrunk over the years as some clients have turned to iPhones, Android devices or other mobile phones.
Even the recent sales surge within the UAE is not necessarily because the BlackBerry brand has regained its former cachet but, rather, is due to a new round of price cuts, says Mr Panjabi. He adds that the revenue for BlackBerry units sold as a portion of all mobile phones at Jacky’s has actually dropped over the past year as competitors such as Samsung, Apple, Lenovo and Huawei “have strengthened their presence”.
Meanwhile, both Etisalat and du have started offering cheaper data plans for customers with Google’s Android, Apple’s iOS or Microsoft’s Windows Phone operating systems, whereas in the past it was normally BlackBerry owners who benefitted most from these kinds of programmes.
“The distinct advantage BlackBerry once had in the cost of data plans isn’t there any more,” says Mr Panjabi.
Other technology retailers in the UAE saw signs of trouble brewing for BlackBerry in 2012, about the time of its PlayBook release. This tablet struggled to compete against Apple’s iPad and failed to gain momentum in markets around the world.
“We were surprised since there was a lot of enthusiasm and hype,” a spokesperson from Jumbo Electronics in the Emirates said at the end of 2012.
Last year, BlackBerry’s sales decline in the UAE continued, retailers say. Its mobile phones struggled at both JadoPado.com and ALshop.com, for example, while shipments across the broader Mea region also slumped. In the fourth quarter, BlackBerry’s share in the smartphone market stood at 2.5 per cent in the Mea, which was down from 9.1 per cent during the previous quarter, according to market data from IDC.
The picture looked so bleak some analysts wondered whether BlackBerry might pull out of the handset-manufacturing business altogether, since it was no longer a profit-making part of the company, says Mr Baker.
But its new chief executive is adamant BlackBerry can bounce back, complete with a fresh collection of handsets.
The new models are set to ship to stores later this year, including a lower-end phone for customers in South East Asia that will sell for less than $200 and first go on sale in Indonesia. Perhaps the biggest hopes are pinned on the Q20, which will feature an integrated trackpad and the same kind of Qwerty keyboard that originally made BlackBerry ubiquitous years ago.
“I think there’s probably a certain subscriber who will be particularly keen on having a regular keyboard,” says Mr Reed.
“Maybe it’s the right move to cater to them.”
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