BlackBerry CEO tries to demo upcoming Android phone

28 Sep 2015 | Author: | No comments yet »

BlackBerry Ltd continues shift to software-only model.

BlackBerry CEO may be immensely proud of his company’s upcoming Android-powered Priv smartphone, but he still has a few things to learn about using it. Smartphone maker BlackBerry Ltd reported weaker-than-expected quarterly results at the weekend but forecast higher revenue and said it might replace its operating system with Google Inc’s Android platform.

As a result, ongoing pressure on the stock has pushed it down to its lowest level since December 2013, right after chief executive John Chen was appointed.BlackBerry taking the plunge and creating their first phone that runs Android was always going to take some getting used to for many die-hard users – even including the company’s head John Chen apparently. In an on-camera demo of the Priv for BNN, it’s apparent that the exec hasn’t used Android much — he talks about how it “runs Google,” and has trouble launching basics like Chrome. Indeed, it’s is a far cry from what consumers have come to expect from rival companies such as Apple, which engineer all aspects of their product demos.

The Waterloo, Ontario-based company, which is pursuing a turnaround plan based on selling more software, said it expected modest revenue growth in the remaining two quarters of this fiscal year, after nine quarters of falling sales, and a return to profitability in the fourth quarter. The company still expects to meet its US$500-million software revenue target for fiscal 2016, but this business had a 46-per-cent decline in quarterly sales in Q2.

In a video hands-on showing off the much rumoured Priv for the first time, Chen is clearly enthusiastic about his firm’s new device – but also struggles to navigate it, as well as deal with some lag issues. He awkwardly taps the glass six times, finds that the app is not yet set up, and proceeds to exit it. “So is this going to be the phone that brings back the BlackBerry user that abandoned because they needed a different operating system?” the reporter asked him. “I think everyone loved the BlackBerry 10.

This marked a shift away from its own BlackBerry 10 platform that failed to regain market share ceded to Apple Inc’s iPhone and a slew of Android-powered devices. “This phone is the answer for former BlackBerry users who miss the physical keyboard but also need apps,” Chief Executive Officer John Chen said on a conference call. They really do,” he said of the company’s proprietary operating system, which claims a paltry 0.3% market share, according to research firm IDC. “But there’s not enough apps.

The company could jettison its own platform if the Android device gains acceptance with its core base of government and financial industry clients, Chen added. “What they said on the call, speaking more about the outlook as opposed to the results itself, painted a less bleak picture,” said Cormark analyst Richard Tse. That’s part of the reason why BlackBerry is launching a flagship slider device, the Priv, which will run on the Android operating system and offer access to Google Play.

As for the Priv itself, this was BlackBerry finally admitting something that thanks to endless leaks most of us already knew; that they were making an Android phone. Moving to Android is a big help for newcomers and people who’d left BlackBerry for greener pastures, but it might alienate loyal fans who’ve never tried another company’s platform. So if I could provide all of the apps of BlackBerry 10 that would be a smashing success.” “Unfortunately, I can’t put the two together for all the practical reasons and logistic and financial reasons,” he said, referring to the company’s decision to debut a phone powered by Google’s mobile operating system Android. “But this is really the best thing we could do.” BlackBerry, whose smartphone market share has dwindled, said earlier this month that it would buy rival mobile software maker Good Technology for $425 million. It expects the deal to help win new clients for its services business, a priority as it shifts its focus to device management software for enterprise customers. “I’m happy to give them credit for patent licensing, but that’s not what we’re talking about in terms of high-value recurring revenue,” said CIBC analyst Todd Coupland.

Excluding restructuring charges, a non-cash credit tied to the value of debentures and other one-time items, the company reported a loss of 13 cents a share for the second quarter ended on Aug. 29. Morgan cut his forecast for BlackBerry’s smartphone shipments by 1.7 million to 3.7 million in fiscal 2016, and by 2.4 million to 3.2 million in fiscal 2017 after the company’s big Q2 miss. A phone that has a focus on privacy is likely to appeal given the seemingly endless cyber attacks reported each day, and the concern they create among users.

Whether an increase in the number of apps available and sliding keyboard are enough to bring customers will only be known for sure once the Priv goes on sale later this year. You’ll get to keep your current user name (as long as it doesn’t contain invalid characters, in which case you’ll have to go through a few extra steps to make the transfer), and all your old comments will eventually (not immediately) migrate with you.

If Priv is successful, Li believes it will give BlackBerry more options to further optimize its cost structure, including the possibility of abandoning its hardware business. RBC Capital Markets analyst Mark Sue doesn’t think Priv will match the robust security on BB10 devices, but noted that enterprises have evolved to a “good enough” security model. “Governments appear the lone holdout,” Sue said in a research note, adding that the shift to Android reduces both the costs and time it takes to bring new devices to market. “The Android-based devices takes the company another step closer towards a software-only business,” he added, noting that break-even for BlackBerry’s handset business has fallen to five million units per year, from eight million previously.

Sue also pointed out that the company’s ongoing transition from perpetual revenues to subscriptions causes a near-term drag on revenues, but it improves long-term visibility.

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