BlackBerry practically nailed its own coffin shut earlier this year when it announced it was working toward a sale. Then something drastic happened last month: CEO Thorsten Heins was out the door and the sale was suddenly off of the table. BlackBerry’s incumbent CEO John Chen started to issue letters saying that the company is “very much alive” and that he sees a bright future ahead for the firm. It hasn’t been rare for BlackBerry to speak positively about the future, only to perform negatively, so what’s going on here?
For one, BlackBerry still has a lot of work to do. It’s in the middle of a restructuring in which the company is letting a large chunk of its workforce go. That’s going to take some time; the company is still sinking and reported a massive $4.4 billion loss during the third quarter of this year. During its earnings call, however, we received a glimpse of BlackBerry’s new focus under the tutelage of Chen, and it just might work.
First, BlackBerry revealed that it sold 4.3 million BlackBerry devices during the fiscal third quarter of 2014. Of those, 3.2 million of its units sold ran BlackBerry 7, not its newer BlackBerry 10 operating system. So what does that tell us? That BlackBerry needs to cut its ties to its more expensive BlackBerry 10 products and move forward with low-cost products developed for emerging markets — where BlackBerry 7 is doing better (though arguably not necessarily well against its Android rivals).
Chen told us that’s what BlackBerry intends to do. He revealed a product codenamed Jakarta during the most recent earnings call, in addition to a new manufacturing partnership with Foxconn. Jakarta will hit emerging markets and will launch as an entry-level BlackBerry 10 device, which should prove a worthy upgrade from BlackBerry 7 devices.
We don’t know much else about Jakarta yet, but BlackBerry needs to keep it super entry-level, enough so that it can replace the BlackBerry 7 devices without hitting BlackBerry’s bottom line too hard. As Chen suggested, and we hope he follows through, the company should keep its focus on entry-level phones for the time being, and move completely away from the high-end market where its Z10, Q10 and Z30 devices have so obviously failed. Even still, there are reports that BlackBerry has cancelled two lower-end smartphones instead favoring the high-end, but we hope BlackBerry doesn’t try that path again so soon.
At the same time, BlackBerry will continue to put its focus on software and services. Chen is pushing the company’s latest iteration of BlackBerry Enterprise Server (BES) as the best option around, particularly for IT firms that need support for a variety of operating systems for bring-your-own-device (BYOD) efforts. Meanwhile, the company will try to continue to fight in the messaging market, with advancements for iOS and Android clients expected to hit BBM next year.
Cost cutting will also be key to its survival. We’ll likely see workforce reductions continue in 2014, particularly if efforts to create high-end smartphones are indeed stifled. BlackBerry World next year will be telling: if the company keeps its focus on software, services, and developing markets, we may just see it start to pull itself out of the red. As for new devices to compete with flagships from Apple, Samsung, HTC, LG and others? We hope BlackBerry doesn’t attempt that route too soon, at least not until the company rebuilds its foundation.