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Looking to its past won't save Blackberry's future

Column Perhaps giving up on mobile phones will
Mon Mar 31 2014, 15:20

CANADIAN SMARTPHONE MAKER Blackberry announced its fiscal fourth quarter earnings on Friday, and although the figures weren't as bad as many had expected, they still highlighted the company's continuing struggles.

For its latest quarter, Blackberry posted a loss of $432m. This was much less than the $4.4bn loss the firm posted in the third quarter, but it's even farther from the $98m profit it posted in the same quarter a year ago.

While these numbers paint a pretty clear picture of the struggle that continues at Blackberry, the firm's smartphone sales paint perhaps a more interesting one.

During the firm's earnings call last week, Blackberry CEO John Chen revealed that the firm sold 3.4 million smartphones during the three month period. While that doesn't sound too shocking, Chen went on to reveal that Blackberry 10 powered smartphones accounted for just 1.1 million of these sales, with the majority of phones sold - 2.3 million, to be precise - running the company's older Blackberry 7 operating system.

While for most companies this would be a head-in-hands moment, Blackberry appeared quite pleased with the fact that while Blackberry 10 is an obvious failure, it's previous Blackberry 7 mobile operating system isn't in such dire straits. In fact, the firm was so pleased that Chen announced that the Blackberry Bold, which first debuted in 2011, will be going back into production to attract those who apparently are still buying Blackberry 7 handsets.

Speaking on Friday's call, Chen said, "One of the reasons we will still supply Blackberry 7 devices is because customers want it, there is a lot of demand out there. There are other products going to come out that people will like.

"We are very focused on making money from handsets, and we'll continue to make these devices available and support the operating system as long as there is customer demand."

While this move could be viewed as smart, with Blackberry realigning its focus on robust handsets with market-leading keyboards, we're not entirely convinced.

While there are a few hangers-on out there who are still buying Blackberry 7 devices, it's unlikely that they will remain dedicated for much longer. Blackberry's app selection is severely lacking compared to those of its rivals, and developers are unlikely to begin rushing out apps for Blackberry 7.

If Blackberry isn't careful, it could end up with another raft of unsold smartphones, much like the pile of unsold Blackberry Z10 smartphones it has accumulated so far.

Given that Blackberry is now aware of the dramatic failure of its Blackberry 10 operating system, we think the firm should give up on the smartphone game completely, perhaps aside from supplying governments with highly secure mobile phones.

Instead, it should focus on its services. Given Facebook's recent $19bn purchase of Whatsapp, privacy-focused app users are desperately looking for an alternative - Blackberry Messenger (BBM) for example. The app has already racked up millions of downloads on iOS and Android, and with a Windows Phone launch just around the corner, Blackberry should focus on making BBM the best messaging app available to smartphone users, a move which could boost the firm's shrinking cash pile. 

Its QNX embedded operating system should be another long-term focus for Blackberry. No, we're not saying the firm should make another Blackberry Playbook, but instead it should make the embedded platform a core focus, with QNX having over 40 big auto manufacturers on board and Apple's Carplay running on the system.

So, instead of looking to its past to save its future, Blackberry should think outside the box instead. µ


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