There was once a time when BlackBerry smartphones were considered by the masses as the quintessence of innovative technology. The company, called ‘Research in Motion’ at the time, was born on the principles of personal success, efficiency, power, and privacy, while their products resonated with that very same philosophy.
Unfortunately, as smartphones expanded into the mainstream market, the balance shifted with captivating consumer-focused products based on the platforms created Apple and Google who then took a commanding lead of the mobile platform market. Accordingly, the last few years has seen BlackBerry fade to the background of consumer technology news.
These days, high-end devices like Apple’s iPhone, Samsung’s Galaxy S, HTC’s One, and Google’s Nexus series of smartphone are selling in volumes in the North American market, providing high-margin sales and lifting the value of the brand they represent.
But we all know this.
The Current Strategy
In contrast, BlackBerry as it is now has apparently shifted its primary focus to the enterprise market, where it’s currently in a much more solid position. With revenue from service fees tied to older BlackBerry devices rapidly disappearing, BlackBerry has turned to its highly profitable (and growing) enterprise mobility management (EMM) business and accelerating enterprise software sales to pick up the slack in terms of revenue. Crucially, though, BlackBerry is also relying on its declining (but still present) hardware sales revenue streams.
John Chen, the CEO of BlackBerry, has stated that BlackBerry could once again focus on the consumer market when the time is right, but will focus on enterprise at the moment. Meanwhile, the company is hovering around the break-even point balancing declining service fee and hardware revenues with new software solutions. BlackBerry is still sitting on some cash, and isn’t losing money, so it’s very possible they can succeed. Yet this enterprise strategy for BlackBerry relies heavily on maintaining consumer sales during the transition with sales of the Passport, Classic, Leap and soon a Slider.
I have a problem with this approach.
BlackBerry’s pretending to shift away from the consumer space, then releasing a phone for the consumer space, not marketing it properly, and then expecting consumers to buy it while also talking about turning the business into a software company.
If BlackBerry’s fate is to become purely software and services company, this strategy could work. There are consequences to this, however. The company would have to become smaller in the short term, and their unique hardware business and carrier relationships that they have built up to this day would disappear.
The Current Lineup
Sales of the BlackBerry Leap, BlackBerry Passport and the BlackBerry Classic are expected to generate revenue in BlackBerry’s hardware business from consumers. Except, all these devices are not marketable to the majority of the smartphone market. These are great products that are intended to sell based on QWERTY-keyboard loyalists and with a brand value that has been tarnished beyond recognition and has been in free-fall for years. Of course, a significant portion of their device sales is to the enterprise clients who worry less about how cool a smartphone is perceived. Yet I’m afraid that they are not enough to support the transition and also not immune to declining brand value.
Consumers in general have believed for years that a large touchscreen smartphone with a virtual keyboard and the latest technology is a high-end and desirable device. As BlackBerry continues to release niche products with little mainstream appeal, their brand suffers and it becomes more difficult to sell their other products (while great) to their respective markets.
The announcement of decidedly midrange devices like the BlackBerry Leap gives the impression that BlackBerry has left the business of bleeding edge, flagship smartphones that fuel the lust of tens of millions of technology fans and provide the sky-high brand values and profit margins other OEM’s enjoy. The BlackBerry Classic only caters to the traditional user base and alienates the rest. My personal favourite, the BlackBerry Z30 of late 2013, while a great phone was never really a high-end phone even when it was launched. Interestingly, the Z10 is BlackBerry’s most popular BlackBerry 10 device, even though the company is mostly known for their QWERTY models. This is due to a few factors: the mainstream appeal of all-touch phones, and the large amount of carriers and volume it launched with as the first BlackBerry 10 smartphone. The Passport has seen its share of success, thanks to no compromises on premium specifications and unique design. Why not extend this strategy to the full-touchscreen smartphones that most consumers actually want?
It’s hard for BlackBerry to sell significant volumes when the brand is represented by smartphones with little appeal. But it doesn’t have to be this way.
Saving the BlackBerry Brand
Price and sales volume aside, BlackBerry’s brand and hence their ability to sell smartphones is in trouble. In my opinion, BlackBerry shouldn’t even bother with the Leap if they can’t stack anything beside it that’s actually a premium touchscreen BlackBerry device. The Leap is expected to represent BlackBerry’s full touchscreen smartphone lineup with a slow CPU, mediocre camera, and low-resolution screen. Without a flagship all-touch smartphone, the Leap will further cement the sentiment that consumers have that BlackBerry is a low-end phone. If they want to stay in consumers hearts and minds, and we all know enterprise users are becoming increasingly synonymous with consumers, BlackBerry needs more truly premium, standout, high-end smartphones.
Despite my detest for the company, Apple has its smartphone business model right. They heavily market their most expensive smartphone for sale while having older models like the iPhone 5S, 5C, and iPhone 5 devices at slightly lower prices. People think Apple and they think of the latest iPhone iteration, not the dated iPhone 4S that most people own. And the value of the lower-end iPhone devices stays high as a result.
BlackBerry should have at least pretended to be coming back into the high-end market, release a limited run bleeding edge touchscreen phone to make it appear like they are back. Then, with the core demand for those phones, sell out of them (which is easy with low production). This would give the company something to point to as a true flagship. The brand would gain immensely from this, and help other devices like the Leap sell faster.
On the enterprise side, the current development (which I think is a sound strategy) can stay its course with less risk due to this buoyed consumer hardware revenue.
The upcoming BlackBerry ‘Slider’ phone with its sliding keyboard and curved screen is still a bit of a niche product. For it to be successful, it must stick to low volumes and enhance the keyboard with software in some way. I’m afraid that this alone will not be enough to shift the tide for BlackBerry’s consumer handset business. A simple slate touchscreen phone is what the market wants, and if BlackBerry isn’t going to market their new slider effectively then it doesn’t have a chance in changing that. Hoping that mainstream consumers want a sliding keyboard without selling it to them is just wishful thinking. Polls have confirmed that a majority of BlackBerry users, and clearly iPhone and Android users, continuously want all-touchscreen phones.
I believe that BlackBerry should create a BlackBerry with the following specifications:
- Snapdragon 810 or better
- 4GB of RAM
- 64GB minimum storage
- 5-5.5″ QHD screen
- 4200 mAh battery
- HDMI/SlimPort/DisplayPort out
- 22MP f/1.8 camera
- USB type-C
BlackBerry should aim to create a high-end large touchscreen phone that functions like Samsung’s Note series. The stylus lends well to productive work, and the huge battery should keep it going for a day no matter what. The video output is a key differentiator for presentations. The camera must be able to take great photos, and include automatic document OCR/tagging. The high-end specifications are necessary to keep the device running all Android apps seamlessly.
Professional equipment does not compromise on quality, and BlackBerry shouldn’t either. They build phones for professionals. The Passport is a device that exudes quality, and BlackBerry’s all-touchscreen offering should follow that recipe. The no-compromises approach is something BlackBerry has talked about, but their latest product are all about compromises (minus the Passport).
Putting together such a device isn’t an easy task when you’re the underdog, but considering what OnePlus has done with their “One”, it could work. The profit margin isn’t going to be there on the lower volumes, especially with those specifications, but the goal is to improve the BlackBerry brand, not sell millions. The other devices BlackBerry is selling can benefit from having the flagship around by providing a respectable brand to point to, while giving a cheaper option for consumers to buy like the Leap.
With the amazing operating system such as BlackBerry 10, and the hardware expertise shown in the Passport, it seems like BlackBerry would be uniquely positioned to deliver the gold standard of what a smartphone should be for the most discriminating users.
Regardless of the path BlackBerry takes, I will be buying their latest smartphones as they excel on efficient communication, have tons of useful features that help with being productive, have great battery life, and can run virtually every Android app (plus the apps unique to BB10).
How do you think BlackBerry should proceed in their hardware business? Have you been craving a high-end all-touch BlackBerry? Let’s us know your view in the comments below!