When John Chen took over as BlackBerry CEO, he was quick to reassure customers and investors that the company intended to stay in the smartphone business. But Chen revealed in an interview this week that his decision comes with a caveat: The handset group must return to profitability and quickly. “If I cannot make money on handsets, I will not be in the handset business,” Chen told Reuters.
Chen also explained that the smartphone group does not have much time to turn things around. Without giving specific timelines, he added that the time frame was short. His decision will likely be based on the performance of BlackBerry’s new partnership with Foxconn as well as how its next generation of BlackBerry smartphones do. Chen expects that BlackBerry would only need to sell about 10 million devices a year to make money again.
Considering that BlackBerry only sold 1.3 million BlackBerry smartphones last quarter, even 10 million may be a tall order for the company. It would effectively have to double sales per quarter
Chen also reiterated another message during the interview: Security will be at the core of what BlackBerry does going forward. He did not rule out small acquisitions to improve its security offerings. “We are building an engineering team on the service side that is focused on security. We are building an engineering team on the device side that is focused on security. We will do some partnerships and we will probably, potentially do an M&A on security,” he explained.
For now, we know that BlackBerry has three new high-end smartphones in development. One is likely to be the already announced BlackBerry Q20. Another could be the oft-leaked Windermere. BlackBerry also recently announced that it was bringing back the Bold 9900, one of its most successful devices.
Chen knows that time is of the essence. While a long-term roadmap exists, BlackBerry’s future will be decided by a number of short-term decisions: “You have to live short term,” he said. “Maybe the prior management had the luxury to bet the world would come to it. I don’t have the luxury at all. I’m losing money and burning cash.”
Update: It appears that John Chen may have been misquoted by Reuters. He took to BlackBerry’s blog today to clarify the story. Here is his statement in full:
Yesterday, Reuters published an article that said I would consider selling our Devices business. My comments were taken out of context.
I want to assure you that I have no intention of selling off or abandoning this business any time soon. I know you still love your BlackBerry devices. I love them too and I know they created the foundation of this company. Our focus today is on finding a way to make this business profitable.
BlackBerry is not a handset-only company. We offer an end-to-end solution and devices are an important part of that equation. That’s why we’re complementing our Devices business with other revenue streams from enterprise services and software, to messaging. We’re also investing in emerging solutions such as Machine to Machine technologies that will help to power the backbone of the Internet of Things.
We will do everything in our power to continue to rebuild this business and deliver devices with the iconic keyboard and other features that you have come to expect from this brand.
Rest assured, we continue to fight. We have not given up and we are not leaving the Devices business.
The bottom line is that it does not appear that Chen is looking to exit the smartphone business any time soon.
Source : Reuters