BlackBerry to launch 2 Android phones as it sticks to devices

BlackBerry not releasing any devices with its own operating system in the foreseeable future in what is being seen as its last chance in hardware.

PUBLISHED : Tuesday, 12 April, 2016, 12:14pm
UPDATED : Tuesday, 12 April, 2016, 5:33pm

BlackBerry is planning to launch two mid-range Android devices this year in what analysts are calling the "last opportunity" for the firm to get it right in handsets.

This comes after the company admitted that the Priv, its first phone running Google's mobile operating system, was too expensive. In an interview with Abu Dhabi-based publication The National, BlackBerry chief executive John Chen said there would be one Android handset this year with a keyboard and one full touchscreen, but gave no timing on when they would be released.

Last year, BlackBerry launched its first device running Android called the Priv. It was aimed at the high-end market where the likes of Apple and Samsung play. But Chen said that it was too expensive.

"The fact that we came out with a high-end phone (as our first Android device) was probably not as wise as it should have been," Chen said.

"A lot of enterprise customers have said to us, 'I want to buy your phone but US$700 is a little too steep for me. I'm more interested in a US$400 device'."

But the company faces an uphill battle against the backdrop of a slowing smartphone market and intense competition in the mid-range space, especially as it has lost many of its key differentiating features it once had.

"While the BlackBerry brand is still strong and the value propositions usually have been centered around the best QWERTY keyboard, BlackBerry Messenger and secure platform, however, the conversation has changed," says Neil Shah, analyst at Counterpoint Research.

"Touchscreen has completely replaced the physical keyboard and is much better with predictive analytics capabilities. Barring Indonesia, BBM has been taken over by Whatsapp and other clones."

BlackBerry has struggled in recent times to make its hardware business profitable. In its fiscal year ending February 29, BlackBerry reported a 39.8 per cent year-on-year drop in hardware revenue. It said it recognized revenue related to approximately 3.2 million BlackBerry handheld devices in fiscal 2016, a large drop from the 7 million the previous fiscal year.

Chen has previously said that 3 million device sales a year at an average price of US$300 would get the hardware division to break even. As part of this plan, Chen says there would be no devices for the forseeable future running its own proprietary BB10 operating system.

"I don't think it's any surprise that BlackBerry is not planning any BB10 OS devices because to be profitable making your own OS (operating system) and devices you need to be shipping at a much greater number of units to cover the development of the OS and everything that goes with it," says Ian Fogg, head of mobile at IHS.

"By switching to Android, BlackBerry should be able to be profitable at much lower shipment volumes in the device business."

But moving to Android has its own problems including how to best secure the operating system since it's not entirely in BlackBerry's control because it's owned by Google, Fogg added.

Even if BlackBerry manages to make a compelling and secure device, players from Samsung and Apple to niche firms like Blackphone, have all been pushing privacy as a key feature of their handsets.

The latest comments by Chen show BlackBerry is sticking to hardware for now. Moving to Android has also been a result of developers withdrawing their support for BB10 OS. Facebook and WhatsApp said last month that they would drop support for their BB10 OS apps.

BlackBerry's big focus has been on software recently which has shown strong results. In September, Chen says he would need one year to make the device unit profitable, and if not, consider ditching it .

"If by September, I couldn't find a way to get there, then I need to seriously consider being a software company only," Chen said in an interview last September.

Analysts said that this is the last chance for BlackBerry to get it right in hardware.

"I think this is the last opportunity for BlackBerry to toy with hardware business, ideally, I believe it should focus on its software and services assets to pivot away from hardware and license its solutions to other Android vendors or service providers," Shah said.