BlackBerry switches focus back on mid-range smartphone market

BlackBerry last week announced it had sold just 600,000 handsets during the three months to the end of March, well below analyst forecasts of 850,000.

BlackBerry chief executive John Chen told The National the company plans to launch two mid-range Android handsets this year. Ravindranath K / The National
Powered by automated translation

BlackBerry has switched its focus back to the mid-range smartphone market after admitting that its recent flagship Android device, the BlackBerry Priv, was priced too high for enterprise customers.

The company's chief executive, John Chen, told The National that BlackBerry plans to launch two mid-range Android handsets this year, one with a physical keyboard and one with a full touchscreen. He declined to say when the new devices would go on sale.

BlackBerry last week announced it had sold just 600,000 handsets during the three months to the end of March, well below analyst forecasts of 850,000. Mr Chen declined to say how many Privs had been sold during the period.

Mr Chen admitted that the Priv “was too high-end a product”, with its target market of enterprise customers put off by the handset’s US$700 price tag.

“The fact that we came out with a high end phone [as our first Android device] was probably not as wise as it should have been,” Mr Chen said during a visit to Abu Dhabi.

“A lot of enterprise customers have said to us, ‘I want to buy your phone but $700 is a little too steep for me. I’m more interested in a $400 device’.”

Mr Chen insisted that BlackBerry’s secure Android handset proposition was one that appealed particularly to enterprise consumers.

“We’re the only people who really secure Android, taking the security features of BlackBerry that everyone knows us for and make it more reachable for the market.”

But last week’s disappointing sales numbers have once again revived speculation that BlackBerry may finally decide to call time on its handset division and focus exclusively on its more profitable software services division, which it expects to grow by 30 per cent in the coming 12 months.

In a further blow to the company, Facebook and WhatsApp announced in March that they would drop support for their apps on BlackBerry’s BB10 operating system, which is on BlackBerry’s Passport, Classic and Leap devices.

Mr Chen said that while BlackBerry would continue to release updates for BB10, there were no plans to launch new devices running the operating system.

“BlackBerry lost the consumer [handset] market a while ago, and now are almost exclusively an enterprise player,” said Roberta Cozza, a research director at the industry analyst Gartner.

“They really need to consider how profitable such a segment is. They could feasibly carry on in what is now a very small market segment but they have to ask themselves, ‘is this what the company should really still be focusing on?’”

Mr Chen said that BlackBerry’s handset division had shown some signs of improvement during the last quarter, with losses halving compared with the previous quarter, but said that the company would exit the segment if it could not achieve profitability.

“Since I started at the company [in November 2013] I’ve been saying I’ll make the handset business profitable.

“If I can’t make it profitable because the market won’t let me, then I’ll get out of the handset business,” he said.

“I love our handset business, but we need to make money.”

Follow The National's Business section on Twitter