Embracing Android, BlackBerry may finally put its BB10 software out of its misery

26 Sep 2015 | Author: | No comments yet »

BlackBerry confirms Android-powered Priv phone coming later this year.

BlackBerry chief executive officer John Chen said the company has found the low-point of its turnaround after second-quarter revenue plummeted and smartphone shipments hit their lowest since at least 2007. Shares in BlackBerry Ltd are down more than two per cent on the Nasdaq, after the Waterloo, Ont.-based company reported a bigger-than-expected loss in the second quarter and revealed plans to launch an Android smartphone.The company also confirmed it will begin making a phone, called the “Priv,” that will run on the Android operating system, part of its efforts to regain customers who left because of the limited selection of applications available on BlackBerry’s system. BlackBerry reported US$490 million of revenue, down 46 per cent from US$916 million in the comparable period last year and well below analyst estimates of US$611 million.

The company says it will continue to “develop and enhance the BlackBerry 10 operating system.” The next update for BB10 will be version 10.3.3 rolling out in March. The chief executive has been working to transform BlackBerry from the shrinking smartphone maker he inherited two years ago into a leading provider of security software for businesses. Current expectations are that Priv will have a slide-out keyboard, a 5.4-inch 2560-by-1440 resolution display, a 1.8GHz Snapdragon 808 processor, 3GB of RAM, 18-megapixel rear-facing camera, and 5MP on the front.

By changing operating systems, Mr Chen is betting that combining BlackBerry’s reputation for security with Android’s huge market will stop losses from BlackBerry’s device division and allow the company to focus more on developing its software products. “This phone is the answer for former BlackBerry users who miss the physical keyboard but also need apps,” Mr Chen said. Device revenue fell 52 per cent to US$201 million, as the company shipped the fewest number of smartphones since 2007, according to data gathered by Bloomberg. “I’m not satisfied (with) … where we are in the overall revenue and profitability, especially the performance of our handset business,” Chen said. Several months ago, the thinking was that BlackBerry wanted its own Android phone to show how BlackBerry’s enterprise servers can manage cross-platform devices. In a bold report this week, Scotia Capital analyst Daniel Chan argued that BlackBerry should abandon its BB10 operating system altogether and shift to the Android platform. “While BB10, in our opinion, is technologically superior to many mobile platforms, it has failed to generate the recovery BlackBerry had hoped for and continues to be the primary source of losses for the company,” Chan said in a research note. “There is a very loyal base in BB10, especially the government, and some highly regulated industry customers, so we will have to see whether we can make money on that base,” Chen said. “If our plan of doing the BlackBerry-Android type of implementation works well, and the security side of the equation is well accepted by the government and this space, of course we could then replace or merge them.” Chen added that the company doesn’t plan to release a new BB10 device this year.

But if the appeal of combining BlackBerry security and the Android OS takes off, Priv may very well be the first of an entire Android line-up from BlackBerry—especially with BlackBerry 10 just a blip on U.S. mobile market share reports. Eight hundred thousand units is really nothing,” said John Butler, senior handsets analyst at Bloomberg Intelligence. “If that effort proves successful and the devices resonate with the core customer base they’ve always gone after, which is government and enterprise, then what’s the rational for sticking with a proprietary operating system with no apps?,” he said. BlackBerry is forecasting “modest” sequential revenue growth in each of the remaining quarters of fiscal 2016, and it anticipates returning to profitability in the fiscal fourth quarter. “I’m still where I started with Plan A.

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