Chen Decides To Get ‘Realistic’ About BlackBerry Ltd Smartphones

BlackBerry Passport John Chenuser1462590383 / Pixabay

BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) CEO John Chen seems to have changed his tune in the last couple of days in a series of interviews that cut against his previous comments. First he cast doubt on his own turnaround efforts, saying that BlackBerry only has about a 50-50 chance of surviving, now he has admitted that the company might have to walk away from the smartphones that made it famous.

Chen will focus more on enterprise clients

“Apple has to sell 58 million phones to get, I’d guess, a 10 to 12 percent margin,” said Chen in an interview with Quentin Hardy for The New York Times. “If you’re not first or second in phone sales, where do you get any margin? You could sell 30 million phones and lose money. I have to be realistic here.”

Before Chen was brought in to lead the recovery efforts, and everyone besides Prem Watsa expected BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) to be sold for parts – it was the intellectual property portfolio and enterprise business that seemed the most attractive. The handset division was thought to be a liability as much as anything, so it was a surprise when Chen said that he hadn’t given up on it, though it was de-emphasized during restructuring.

“I’ve got 80,000 BlackBerry enterprise servers, in a ‘Who’s Who’ of government, legal, Wall Street, hospitals,” said Chen, in a statement that shareholders must be applauding. “I need to work better with those channels.”

Chen compares himself to Jobs

Chen also made a comparison that might surprise some people, but which might actually be quite apt.

“I watched Steve Jobs on YouTube, when he came back to Apple,” said Chen. “He got up and said, ‘I don’t have a new product, I’m insanely focused on my customer base.’ That’s me now.”

It’s hard to remember, but when former Apple Inc. (NASDAQ:AAPL) CEO Steve Jobs returned to the company that he had founded, not everyone saw him as the visionary he’s remembered as today. Apple had a devoted group of users who wouldn’t touch anyone else, but it controlled a tiny slice of the PC market.

But while Jobs’ attention to his core customers may have kept the company from going under, it didn’t become Apple Inc. (NASDAQ:AAPL) as we know it today until it released the iPod, ushering in the era of portable computing. Chen may keep BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) afloat by meeting the needs of his corporate clients, but he is going to need an equally impressive new idea if he is going to return it to its former glory.

For exclusive info on hedge funds and the latest news from value investing world at only a few dollars a month check out ValueWalk Premium right here.

Multiple people interested? Check out our new corporate plan right here (We are currently offering a major discount)



About the Author

Michael Ide
Michael has a Bachelor's Degree in mathematics and physics from Boston University and Master's Degree in physics from University of California, San Diego. He has worked as an editor and writer for several magazines. Prior to his career in journalism, Michael Worked in the Peace Corps teaching math and science in South Africa.

10 Comments on "Chen Decides To Get ‘Realistic’ About BlackBerry Ltd Smartphones"

  1. Foxconn did agree to cover all right downs if they occur. so what is Chen worried about if Foxconn is accepting all responsibilities? hmmm maybe the truth is Foxconn wants out of the deal. I think maybe Chen wants to make everyone thing its his plan to drop handset bus.

  2. you mean to suck you into investing?? So your saying as long as Chen says we are going to lose money, and then does, means that’s a good thing??? lol ur funny

  3. Come on troll; time to bed now…

    BB didn’t want your design; ouin ouin…

    Give it to Apple, they lack of inspiration ouin ouin Dave H, or Devvvvvvv if you prefer….

  4. I think Chen is playing Chess here. He knows people want to hate on Blackberry and so he is lowering expectations and positioning himself to gain sympathies of consumer market. The mainstream still perceives BBRY has a company of arrogance, going back to the Basille days. He’s trying to replace that culture with one of humility and realistic expectations. I think it is brilliant from a psychological perspective.

  5. correct but they need their own brand and design, Its the only solution,

  6. Re; “If you’re not first or second in phone sales, where do you get any margin? You could sell 30 million phones and lose money. I have to be realistic here.” You can get a margin if you develop the Next Generation Smartphone (NGSP), yes Chen you are correct if you only copy what is out there. But however to innovate the NGSP that would prompt a restart in the industry is a different story. It appears Chen is giving up rather then investigating all mean that could very well save this company. I think he realises that the new Foxconn copied handset will not work and will flop as the Z10,Q10.Q5.Z30 did. The only way to win this game is to launch something that is not currently in the market place like BB did in the beginning. MR Chen if you shrink this company down any further to a mere enterprise and messaging mobile app, your stock shares wont be worth as much as they are now. India appears to be adopting Android handsets and that market is growing like wild fire. Apple and Android devices including Windows phone have not yet launched the NGSP to date. It is still not too late for Blackberry to investigate other means of innovation and refocus to make this happen. The NGSP does not rely on keyboards, passwords, voice gestures, finger print, retina scanning or facial recognition software. The NGSP is the restart pertaining to this subject. The NGSP will be adopted by all rivals, the logo “RIM” was meant to be embossed on this handset. Licensing of the NGSP buy other providers, will still have the RIM logo embossed do to its meaning Research In Motion. Chen lets get started.

  7. “…….now he has admitted that the company might have to walk away from the smartphones that made it famous.” NO, he did NOT SAY THAT.
    Do your homework.

  8. Would like to see them maintain the handset business for two or three more years even if break even is the best they can do. The product is very strong and though they don’t have consumer cache at the moment, one hit phone in the next two years could change all that. So it’s worth maintaining that division for a while longer.

  9. BlackBerry handsets must stay because as a business phone there is no alternative to BlackBerry, all others are play phones with all the play applications.
    If BlackBerry can make available affordable handsets, there are huge customer base of small businessmen in country like india.

  10. If any CEO will change the poor public perceptions about BlackBerry, Mr Chen will do it. He is clearly focusing on their core customers. The handset business will do fine over time as the new BlackBerry 10 phones are the best phones available with the worst public perceptions that think the opposite.

Leave a comment

Your email address will not be published.