New BlackBerry chief won't scrap smartphone unit; will 'rebuild' company

New BlackBerry chief won't scrap smartphone unit; will 'rebuild' company

Summary: Besides patents, intellectual property, and an enterprise data network, what else is there at the struggling Canadian smartphone firm? John Chen thinks a lot more.

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BlackBerry's flagship Z10: a massive thorn in the side of the smartphone maker (Image: CNET)

BlackBerry is not scrapping its smartphone unit, despite abysmal recent quarterly sales, according to the company's incoming chief executive.

Former Sybase boss John Chen, who will be replacing Thorsten Heins as the company's lead, confirmed in an interview with the Reuters news agency that he is "doing this for the long term," despite the company's struggling financial position and a failed attempt to rescue the company with private investment.

Describing the business as having "enough ingredients to build a long-term sustainable business," he cited his past experience at the enterprise technology giant, calling BlackBerry's potential turnaround as seeing "the same movie before."

On Monday, after months of trying to find a buyer for the company, investment firm Fairfax Financial, which already put forward its intent to buy the firm for $4.7 billion, shuffled the top positions at the company in order to steer the sinking ship into a profitable port. 

Fairfax said it concluded the search for "strategic alternatives," which included selling the company to a suitable buyer.

The private investment firm said it will attempt to raise about $1 billion in efforts to stabilize the company's dwindling cash position.

Justifying the plan to sell $250 million of debentures, Chen said the firm did the "due diligence," noting that a buyout with a high-yield debt and high interest rates was "not appropriate for this company." 

Despite losing about $500 million in cash during its fiscal third-quarter, BlackBerry has no long-term debt to its name.

The Z10 left the smartphone maker reeling after fiscal second-quarter earnings in late September, which forced the company to swallow a near-$1 billion loss as a result of the failed all-touch BlackBerry Z10.

The company sold just 5.9 million BlackBerry devices during the three-month period. By comparison, Apple sold nine million iPhones during the first three days of sales.

Looking ahead, Chen sees at least six quarters — about one-and-a-half years, pegging in at mid-2015 — for a turnaround. He expects to further shuffle the company's executive team, and bring in "new faces" in order to help change the expected fate of the Canadian giant.

In concluding comments, Chen told Reuters he was "going to rebuild this company."

Topics: BlackBerry, Smartphones

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28 comments
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  • Blackberry should make entry level devices like Lumia 520.

    There are too many choices out there and nobody want to spend big on platforms with uncertain future. Many enterprises are already moving away from Blackberry. So the only way for Blackberry to survive with its smart phone unit is to build affordable devices and gain market share... the rest will follow...

    The negativity and all the bad press is the biggest problem for blackberry now...
    Owl`Net
    • So, your idea

      is for BB to build low cost devices with small margins and enter those into a crowded market space. Seriously, you have no idea about anything!
      1,2,3
    • Enterprises are moving away

      We are moving away, and we have over a hundred users. We will be scrapping our BES in that process. The company is instead paying a more than fair stipend for us to get our own devices, we will connect via Good.

      Good is not in the same league as the BES+BB handsets are in terms of performance and feature set, in fact it is a pale comparison at best. Still, to basically get my own phone for free ain't a bad deal.

      BB needs to give the BES away to enterprise for free - stop charging a mint for it. Then, there needs to be deeeeeep discounts to the point of break even for a while for the big corporate customers to win back a sizable chunk.

      Also, in my opinion, put the physical buttons with the option to not have to touch the screen back on the devices. The track pad and other buttons are really, really, really nice.

      Consumers would possible consider it if it actually had something that the others don't. BB has always had the physical buttons. Added to a high quality model, give a couple of size choices, and the option of a slick physical KB, they would be offering something truly different than everyone else.
      Raid60
      • Consumers would possible consider it if it actually had something that the

        others don't"

        It would have to be something absolutely exceptional because just about everyone has chosen their eco-system and they are now locked to that eco; be it Apple, Google or MS. Good luck to BB in finding something new, something exceptionally innovative, but I doubt that it will happen.
        1,2,3
      • Likewise here.

        My university, with 25,000 users, dropped BB last year. They were too little...and WAY too late...with their hardware & software modernizations.

        And they are now looking out 18 months for their "turn around"? Right...good luck with that. They're already 2 years behind right now.
        IT_Fella
      • Thoughts

        I have a couple issues with your comment.

        1. Blackberry is already providing both no cost and low cost options to adopt Blackberry Server 10. Any company with BES 5, can upgrade to BES 10 for no cost for BB10 devices. That's free outside of you might need another virtual server for your build as they don't support in place upgrade yet.

        2. The CAL for iOS and Android is now under $20 and you can likely get lower based on volume. Find any MDM with that low a CAL.

        We cannot move off Good Technology quick enough. It was a stop gap for many companies to provide support for iOS and Android. Good is also expensive. Like 4x the cost of BES. There are a host of additional servers needed to even approach what Blackberry provided, on top of that it's not stable, has it's own NOC outages, extra data costs for Android (just like Blackberry of old) and the server capacity is really low so a larger footprint to support.

        Go talk to any current Good customer and I'd be shocked if you found any that are happy with the product. They take forever to bring features to their MDM and once they do it's often an extra cost or not what they outlined it would be. Now some of this is on Apple and Google as they don't play ball with enterprise.

        The good news is Apple has a nice API stack now and you can lock down iOS pretty good if you desire. The bad news is you have to deal with iTunes accounts and consumer usage on devices which you may not desire enabled. So it's hard for me to say it's "better" than what Blackberry provided. Blackberry 10 is fairly decent OS, growing enterprise Apps and features but doesn't have consumer WOW factor. The ongoing health and execution questions are what is hurting them the most. It doesn't help they have done little marketing to correct many incorrect statements and blogs writing about them.
        MobileAdmin
    • BlackBerry's biggest barrier to sales IS negative press coverage

      BlackBerry makes the affordable Q5 for the budget conscious. And the Z10 is a very good phone, discounted because of lack of good marketing and negative press about company finances. Many carriers offer Z10's for free on a contract, which are a HUGE step up quality wise from poorly made Nokia (my last not so smart phone)


      I would recommend a functional BB10 smartphone to any small or large business user or professional.

      A Z10 is a great bargin, and actually more current intuitive software than finicky iPhone with its security flaws!
      HenselM
  • 2 items for turnaround

    1) Make all devices unlocked, carrier free.

    2) Play up security. In the wake of the NSA spying, go bold and do something like enabling encrypted handset-to-handset voice conversations, and even encrypted data transfers at 56k through the voice channel. This would be great for business people and government workers.
    ITTech001
    • Unlocked phones already available direct from BlackBerry

      Done weeks ago at shopblackberry.com
      sagec
    • I'd take the marketing much further than that.

      The Z10 and its contemporaries are simply superior phones with superior hardware and software, and I'd really go for the balls in marketing.

      From market ticker dot org:
      "The Z10 (and I presume the Q10) have cutting-edge RF. Better than any other device in the "smartphone" category I have ever tested. So take one and a competitor's phone (you know damn well which one to use!) to a marginal service area, stage a "flat tire", and then do the old "Can you hear me now?" phone call. For good measure make the person in the car a cute young woman with a flat tire in a ****ty part of town with some menacing young men headed her way.....

      The Z10 has outrageously fast LTE support. I hit a sustained 30Mbps in the last week in Detroit. While I've seen other people talking about 10Mbps data rates with other devices (e.g. Galaxy and iPhone) I've seen nobody talk about 30Mbps rates. That's three times faster than the commonly-published numbers and faster than my home broadband! And this is with today's carrier hardware on a real road while moving at 70mph -- not pie-in-the-sky stuff that is not yet in the wild or in a lab somewhere. Take the other devices, and the Z10, to one of those places that's lit and do a nice big file transfer side-by-side. Can you download me now?

      Time shift camera. Family picture time. Take a nice landscape-aspect picture of a half-dozen people and then use time shift to get the instance where nobody has their eyes closed. Good luck with the other devices on that. Of course the "event" in question is a once-in-a-lifetime family reunion with an obviously-infirm member who won't be breathing the next time. Hoh hoh hoh.

      I left my Excel Spreadsheet at the office by accident; forgot to put it on the laptop. Oh darn. So on the Z-10 (or Q-10) you simply connect to your desktop machine at your office and click the filename, and voila -- it opens on the phone in the built-in app. For good measure make it a PowerPoint and plug the HDMI cord into a projector at the client's office. Contrast against the cluster**** that ensues when you try to accomplish that with an IOS or Android device. Joe closes the sale as if nothing ever happened; Jack loses the $10 million contract.

      From today, and a real kick in the balls for the young adult set that relies on their music: You're plugged into your car stereo listening to music. A text message comes in. Is your music interrupted? On the Z-10 the answer is no. On the Android device, even the current 4.2.x JellyBean devices it sure as hell is and it really sucks! This one will blow the young people's minds and reach directly to what matters to them. Just get in the car, link the phone (Bluetooth streaming if you don't want to to plug into the headphone jack), start playing your music and then have someone send a staccato set of text messages to you and watch the hilarity ensue. My kid (who has my SGS-II) phone with official JellyBean on it had the phone jacked into the car stereo this afternoon and had this very thing happen, despite the Android apologists right here on my forum claiming this was fixed in current Android releases. No it's not and it's damned annoying -- enough so that it got her pissed off. BB10 handles this correctly and leaves your music undisturbed; I know because I use Bluetooth streaming daily while on my bike or jogging and never have my music broken up."

      "Here's a short "script" idea for a 60 second spot:

      Split-screen -- left side Z10 (or Q10), right side "the other guys" (in monochrome)

      Opens with the user tracking a stock chart (in real-time) and music playing through the phone.
      "I think I'll take my kid to the movies tonight" (checks Flickster for movie location and times)
      "Is that stock moving yet?" (quick flick-back -- nope)
      "And I need some coffee" (opens maps, types in "Starbucks", up it comes)
      "So I can close the $10m sale -- oh $#@! -- my presentation is on my office computer!" (Ah, opens File Browser, selects DESKTOP COMPUTER at office, clicks file, it opens the PowerPoint seamlessly. The guy on the other side has a very long look on his face as he realizes the $10m sale got blown.)
      "Thank God for BlackBerry....." (the "other side" fades out)"
      Jacob VanWagoner
      • lumias

        Jacob,

        But the bigger Lumias already have most of what you are talking about, besides now you say Starbucks, you don't need to type it anymore. Better than Android is not the highest barrier that BlackBerry needs to leap.
        mswift@...
  • LOL, your Z10 image is a Z30

    Holy cow, the cover image for the story is the wrong phone!
    sagec
    • Well they don't really worry about facts and accuracy

      More important to work in lines like: "The company sold just 5.9 million BlackBerry devices during the three-month period. By comparison, Apple sold nine million iPhones during the first three days of sales."

      They must be getting huge payouts from Apple, got to make sure Apple gets their props.
      greywolf7
      • Using an analogy or comparison is an effective method

        of making a point.

        How could they have used MS? BB sold 5.9 million devices in three months whereas MS has 6 million Surface RT sitting unwanted in a warehouse? Sure, it might be factual but it hardly helps anyone understand the BB situation.
        1,2,3
        • You mean BB channeld 5.9 million devices in 3 months

          yes, but not sold.
          Ram U
    • wrong phone

      I could be wrong buy I think the reason for the z10 is due to the problem it has caused for the company. Also considering the marketshare of apple vs the marketshare if BB it would stand to reason there would be a huge number difference in the amount sold, channeled or whatever you want to call it. The comparison to apple is not a fair one. It is like comparing David and Goliath. Currently the battle is more for third place in the phone OS arena and comparisons to be fair should be made on that basis.
      striker67
      • THIS +1

        This is what annoys me. Blackberry should be compared to pure smartphone companies like HTC, Motorola etc. Apple and Samsung are much larger companies with larger marketing and other product lines.

        It's like comparing lawn mowers and riding mowers.
        MobileAdmin
    • Z10 vs DROID

      I went with a Sony Xperia ZL due it's larger screen size, low cost $29 upgrade, good camera with Sweep Panorama, IR Remote and FM radio vs the the Z10's smaller screen for $0 upgrade cost. The Z30 wasn't available from my carrier but cost and features would have been a big factor.
      tmorg
  • Rebuild BlackBerry is the Wisest Decision

    Building a long lasting company is hard. Do not pray God for easy life but endurance to last. Once you turn BlackBerry around you can sell them to a right suitor. Break up companies and sell in pieces are for cowardice and lazy pimp with no gut.
    Nothing can stop brilliant minds with a purpose. Everybody deserves a second chance.
    Inflections involve improving performance, cost, or both. More important, they simplify systems for their users.
    Technology Inflection points occur when there is a fundamental change in how technology achieves some goal or how you use that technology. These changes can profoundly affect entire industry, but inflection points are sometimes not apparent when they are occurring. A company’s ability to recognize and respond to these inflection points can mean the difference between becoming a huge winner and turning out as a historical footnote.
    Netteligent
  • We're having problems sourcing enough Blackberrys to cover break/fix

    OS 7.1 devices that is. We've had one of our telcos place an order for 10 and the rep has had to put a specific note in the file to stop their ordering system simply cancelling it for lack of stock on the given day. How many other enterprises are facing this sort of confusion simply because they don't think BES 10 is quite there yet?
    dowlingm