BlackBerry to focus on software _ not devices

New BlackBerry chairman says company needs to focus on software and services _ not devices

Associated Press
BlackBerry to focus on software _ not devices
.

View photo

FILE - In this Wednesday, Jan. 30, 2013, file photo, Thorsten Heins, CEO of Research in Motion, which is changing its name to BlackBerry, is seen in Toronto on a video link from New York as he introduces the BlackBerry Z10. As of Monday, Nov. 4, 2013, CEO Thorsten Heins is stepping down and John Chen was appointed chairman of BlackBerry's board of directors and interim CEO. AP Photo/The Canadian Press, Nathan Denette)

TORONTO (AP) -- BlackBerry lovers left could be in for some bad news.

The device that was so addictive that it was dubbed the "CrackBerry" might not have much of a future: Its new chairman and interim chief executive says he wants to emphasize software and services — not devices. That could mean the company might ultimately get out of the business of selling smartphones.

The possible change in strategy comes as Fairfax Financial, BlackBerry's largest shareholder with a 10 percent stake, said Monday it won't buy the struggling smartphone company and take it private. It said that instead Fairfax and other investors will inject $1 billion as part of a revised investment proposal.

CEO Thorsten Heins is stepping down and John Chen was appointed chairman of BlackBerry's board of directors and interim CEO. Chen, the former CEO of software data company Sybase, told The Associated Press on Monday that BlackBerry employees need to start thinking differently about the company and accept that "we're really not in phones but we're in phones for software, for services."

Chen said he wants to find a CEO with a strong software and services background.

He noted that BlackBerry Messenger, BlackBerry's popular messaging application, has been downloaded by more than 20 million users since it became available on Google's Android and Apple's iOS platforms in the last 10 days. BlackBerry Messenger, or BBM, works like text messaging but doesn't incur extra fees.

BBM had long been one of the most popular features on BlackBerry devices and only became available on rival smartphones last month. While there are fewer users of the actual BlackBerry smartphone, BBM remains popular. Chen said there are now about 80 million active users of BBM.

"I'd like to find somebody to help me monetize that," Chen said.

Colin Gillis, an industry analyst at BGC Financial, questioned whether that's possible.

"It's like Apple saying we're going to stop making phones and we're going to become an iMessage company," Gillis said.

BlackBerry no longer provides the number of actually device subscribers, and a company spokeswoman said that number would not be "an accurate reflection of our business today."

In June, it said the total BlackBerry subscriber base was about 72 million. Mike Walkley, an analyst with Canaccord Genuity, estimates that there were about around 65 million BlackBerry device subscribers globally at the end of August, down from a peak of around 80 million at end of August 2012. He said he expects the rate of decline to accelerate.

By comparison, smartphone market leader Samsung Electronics Co. shipped 81 million units in the July-September quarter alone, according to research group IDC.

Gillis said BlackBerry might indeed stop selling phones but noted BlackBerry is already obsolete. He doesn't think current BlackBerry users have to worry though.

"They are not just going to shut the lights off," Gillis said.

The decline of the BlackBerry has come shockingly fast. In 1999, BlackBerry became a game-changing breakthrough in personal connectedness. It changed the culture by allowing on-the-go business people to access wireless email. President Barack Obama couldn't bear to part with his BlackBerry. Oprah Winfrey declared it one of her "favorite things."

Then came a new generation of competing smartphones, and suddenly the BlackBerry looked ancient. Apple debuted the iPhone in 2007 and showed that phones can handle much more than email and phone calls. In the years since, BlackBerry Ltd. been hammered by competition from the iPhone as well as Android-based rivals.

This year's much-delayed launch of the BlackBerry 10 system and the fancier devices that use it was supposed to rejuvenate the brand and lure customers. It did not work. Waterloo, Ontario-based BlackBerry recently announced 4,500 layoffs, or 40 percent of its global workforce, and reported a quarterly loss of nearly $1 billion.

"Sadly I think they are already out of the business after the BlackBerry 10 flop," said Mike Walkley, an analyst with Canaccord Genuity.

Walkley said he believes BlackBerry will focus on its mobile device management business, which allows IT departments to manage different devices connected to their corporate networks.

Rates

View Comments (10)