BlackBerry Intends to Stay in Handset Business, Chen Says

 
 
By Michelle Maisto  |  Posted 2014-04-10
 
 
 

NEW YORK—BlackBerry has no intention of exiting the handset business. Getting that message out loud and clear was a primary order of business April 10, as the company's BlackBerry Experience: New York event got under way.

"First of all—love the handset business," CEO John Chen told a group of reporters, grinning at his bit of theater. Chen was quoted the evening before by Reuters as saying he'd consider leaving the handset business if it remained unprofitable. The comment was given headline status.

"The question was, can I make the handset business profitable. My answer was: 'I think we can make it profitable. I'm working very hard to make it profitable,'" Chen said, explaining the context of the remark.

"Being a business person, if you try long enough and you can't make money at something [you stop doing it]," Chen continued. "But the only news is, we're committed to the handset business, and we're going to make it work. That's the only news."

Before Chen surprised reporters by joining a briefing session with John Sims, BlackBerry's global president of enterprise solutions, Sims had explained that he was present when Chen made the remark.

"He bookended it with, 'I'm confident,' but the bookends fell away," said Sims.

"He said, 'I'm confident we can make money in the device business.' He said, 'I'm going to work on it for the next few years,'" Sims continued, quoting Chen. "They said, 'But what if you can't [make it profitable]?' He said, 'Then I'd look into it. But I'm confident we can make money [on it].' He's very pragmatic."

BlackBerry, in the early days of the iPhone, dominated the smartphone space; in 2009, it controlled a nearly 21 percent share of the worldwide mobile OS market. But while BlackBerry smartphones worked well, often called the "gold standard," they didn't offer as simple-to-use an interface as iPhones and later Android devices did. BlackBerry's old leadership was also slow to grasp the importance of making beautiful devices that gave users real pleasure to use. By the time they did, it had lost droves of customers, who with their iPhones infiltrated the enterprise—once sacred, BlackBerry-only territory.

During BlackBerry's Dec. 20 earnings call, it announced a fiscal 2014 third-quarter loss of $4.4 billion, but also a new five-year deal with Foxconn, its China-based manufacturing partner.

In addition to building BlackBerry's new phones, Foxconn will help develop them, as well as handle BlackBerry's device inventory and the logistics of its supply chain.

Chen described Foxconn as alleviating BlackBerry of its "biggest chokehold."

With that stress removed, and BlackBerry readying to deliver the Classic, a flagship smartphone that will bring back the "tool belt" of dedicated on-phone features BlackBerry's longtime users have been saying they miss, as well as the Z3 "Jakarta," for users in developing markets, there's little to suggest the company isn't prepared to stay in the handset game and readying for a fight.

In a statement posted to the BlackBerry site April 10, Chen repeated, "I want to assure you that I have no intention of selling off or abandoning this business any time soon. I know you still love your BlackBerry devices. I love them too and I know they created the foundation of this company. Our focus today is on finding a way to make this business profitable."

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