04-05-15 08:53 PM
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  1. birdman_38's Avatar
    If I read the financials right, HW is still 42% of the revenue. So, much as we both seem to think Chen would love to reduce/stop HW, he hasn't got anything else to plug the financial hole that would leave at the moment.
    If BlackBerry would pull or offset the hardware division, they'd also pull any overhead that goes along with it. They'd be a leaner, more specialized company.

    But judging from Chen's comments this morning, that's not in the cards.
    JeepBB likes this.
    03-27-15 11:18 AM
  2. RubberChicken76's Avatar
    Day'm RC, you're starting to sing from our hymn sheet.

    I don't disagree with anything you've written here.

    You may get that badge after all !
    Shocking! :-)

    I think it's misunderstood that "I'm a fanboy" sometimes. I'm interested in Chen's challenge and how it plays out from a business point of view.
    JeepBB and techvisor like this.
    03-27-15 12:12 PM
  3. ccbs's Avatar
    Isn't that record cash on hand in large part from a loan they got when Watsa took over?
    I think it is from reducing the working capital on handset project. Essentially, they are trying to tie up less cash in payment for hardware built including BOM, fab and assembly cost. Those cash are now in the book for other investment.
    03-27-15 02:39 PM
  4. JeepBB's Avatar
    Shocking! :-)

    I think it's misunderstood that "I'm a fanboy" sometimes. I'm interested in Chen's challenge and how it plays out from a business point of view.
    Yes, I'm also riveted by Chen's challenge. It's a really tough gig, but I hope he succeeds.

    I really like the guy, his humour and pragmatism, and what he's doing at/for BB. While his stated direction for the company won't please fans of BB10 and the phones, I'm pretty sure he will pull it off for BB (the company), and I reckon he represents BB's best (last?) hope of recovery as an enterprise software/services going concern... and if he can't do it, well... I doubt anyone else could either and BB will likely be broken up for parts.

    The only thing about Chen that makes me chuckle is his reluctance to use the term "BB10" and the verbal loops he goes through to avoid saying "BB10 devices". I don't recall him ever using it, though I guess he may have. I wonder if, at some subliminal cod-psychology level, he doesn't want to get on first-name terms with something he's likely to end up killing?
    Maxxxpower likes this.
    03-27-15 02:40 PM
  5. Maxxxpower's Avatar
    Good news
    Device sales of 1.3 million
    That's no good news at all! (Even though 1.6 mio devices were sold through to end customers)

    The only thing about Chen that makes me chuckle is his reluctance to use the term "BB10" and the verbal loops he goes through to avoid saying "BB10 devices". I don't recall him ever using it, though I guess he may have. I wonder if, at some subliminal cod-psychology level, he doesn't want to get on first-name terms with something he's likely to end up killing?
    Full Ack. Some words concering the future of BB10 would be nice.
    JeepBB likes this.
    03-27-15 02:44 PM
  6. JeepBB's Avatar
    If BlackBerry would pull or offset the hardware division, they'd also pull any overhead that goes along with it. They'd be a leaner, more specialized company.

    But judging from Chen's comments this morning, that's not in the cards.
    42% leaves a big hole to fill, even accepting your point about reduced overheads. I doubt Chen thinks the time is quite there (yet).

    It must be difficult times for anyone in the HW division right now. Pretty much the world + wife + dog is sure that that division's days are numbered. The corporate equivalent of being on death row... and hoping against hope for the slim chance of the Governor's pardon.
    eyesopen1111 likes this.
    03-27-15 02:46 PM
  7. markmall's Avatar
    I have the sense that they were afraid to shoot their load, so to speak, with respect to marketing BBten devices. They were so concerned about cash burn that they were not willing to invest in marketing their devices and rehabilitating the brand image. Instead of having a small chance for success, they were left with no chance for success.

    Are they going to change anything or are they just going to wind down the handset business? I mean how many years can they continue doing the same thing and getting almost no results and acting like it is acceptable? How will anything change unless they market the handsets differently?

    Who are all these sales people marketing to IT departments? Are they not achieving anything? I think the truth is that the "consumer" market and the "pro" market are one and the same right now. BBRY needs to forge its own niche, and it can't do it without spending money at this point.
    03-27-15 03:09 PM
  8. markmall's Avatar
    Jeep, he's starting to sound like Hitler in the bunker to me. Talking about armies that no longer exist or wonder weapons like QNX. My wonder weapon QNX will be ready soon, and then we will achieve victory.

    Chen needs a marketing genius. Apple had one in its corporate ranks, but BBRY does not. Chen might like keyboard phones but if there is a market for them he does not know how to tap into it.
    03-27-15 03:12 PM
  9. JeepBB's Avatar
    Jeep, he's starting to sound like Hitler in the bunker to me. Talking about armies that no longer exist or wonder weapons like QNX. My wonder weapon QNX will be ready soon, and then we will achieve victory.

    Chen needs a marketing genius. Apple had one in its corporate ranks, but BBRY does not. Chen might like keyboard phones but if there is a market for them he does not know how to tap into it.
    He definitely didn't sound a fluent and confident speaker in the Q&A today. There was a lot of stuttering and (frankly) waffling - both generally, and about BES licenses in particular. I sense from what/how Chen said it that the uptake of paid licences isn't stellar!

    I don't know if I'd go so far as to call it the start of a bunker mentality, but the stresses do seem to be telling on him. Like I said above, its a tough gig.

    I doubt that Chen sees QNX as a "Wunderwaffe", or at least I hope he doesn't, because it isn't. It's a widely used commodity item that brings in a steady return of a few bucks ($68M this quarter was it?). It's been around for years, and hasn't yet set the world on fire, and probably never will, despite some CB'ers believing it to be better'n sliced bread and an IoT killer.

    Whether he needs a marketing genius I don't know, but he definitely needs someone to light a fire under the EZ Pass and enterprise operation "real soon" if it's going to offset the HW side, which is clearly going nowhere except down (and out?). Selling 1.5M phones in a quarter is pitiful. If each of those phones was a diamond-encrusted item that brought untold $$$ to BB, those sales numbers might be acceptable, but... they're not, and it isn't.
    03-27-15 03:38 PM
  10. cgk's Avatar
    He definitely didn't sound a fluent and confident speaker in the Q&A today. There was a lot of stuttering and (frankly) waffling - both generally, and about BES licenses in particular. I sense from what/how Chen said it that the uptake of paid licences isn't stellar!
    The BES answer was pretty painful, he's just went on and on and on and tried to say 1) Nothing and 2) something positive sounding but vague enough he cannot be sued for later...
    JeepBB likes this.
    03-27-15 04:33 PM
  11. eyesopen1111's Avatar
    My thought is that the more obvious it is that BB10 is on its way out, the more that sales of BB10 devices will plummet into a steeper and steeper nosedive. The 1.5 million sales per quarter seen this quarter is on pace for only six million sales per year, and that just aint cutting it. This is no where close to whats needed to make the 10 million unit sales Chen discussed as a target for 2015. And of course you can forget about future BB10 developer support.

    Does BlackBerry even launch the Slider under these conditions? It seems like an expensive effort for another low-selling niche device. I just hope that its too late to scrap the Slider and associated R&D.
    JeepBB likes this.
    03-27-15 04:49 PM
  12. EchoTango's Avatar
    The BES answer was pretty painful, he's just went on and on and on and tried to say 1) Nothing and 2) something positive sounding but vague enough he cannot be sued for later...
    Yes, I to felt the prevarication on his part. He seemed to be genuinely uncomfortable with the question.

    One would have thought his staff would have rehearsed the difficult questions with him.
    JeepBB likes this.
    03-27-15 05:00 PM
  13. early2bed's Avatar
    Does BlackBerry even launch the Slider under these conditions? It seems like an expensive effort for another low-selling niche device. I just hope that it’s too late to scrap the Slider and associated R&D.
    I don't see how they can support four or more different configurations of screens and keyboards with something like 1.5M units sold each quarter. The BB10 guys must be pretty taxed with personnel cuts and other cost cutting. We have already seen a pretty half-baked update which didn't get enough quality control before being released. I would imagine that's why the slider really wasn't any kind of working device when shown.
    JeepBB, eyesopen1111 and Eumaeus like this.
    03-27-15 05:01 PM
  14. cgk's Avatar
    Yes, I to felt the prevarication on his part. He seemed to be genuinely uncomfortable with the question.

    One would have thought his staff would have rehearsed the difficult questions with him.
    As soon as he said "I don't have those numbers to hand" you knew there was a problem because a small child would know that question was coming up - so you don't bring them and then can legally and truthfully state "I don't have those numbers to hand".
    JeepBB and Eumaeus like this.
    03-27-15 05:24 PM
  15. JeepBB's Avatar
    I don't see how they can support four or more different configurations of screens and keyboards with something like 1.5M units sold each quarter. The BB10 guys must be pretty taxed with personnel cuts and other cost cutting. We have already seen a pretty half-baked update which didn't get enough quality control before being released. I would imagine that's why the slider really wasn't any kind of working device when shown.
    I doubt we'll ever see a slider - which is a shame as I'm a fan of that form-factor. As you say, the HW division must be stretched enough already, and everyone working there must sense the axeman practising his swing just out of eye-line.

    Like others, I don't believe the devices shown at MWC were anything more than mock-ups with static displays. There are 9 months left in 2015 and, even if the will (and the development cash) were there, to go from mock-up to FCC approved device sitting in retail packaging in stores around the world... well, I simply don't believe it possible.

    Though, as has been mentioned by others, I'm not one of life's eternal optimists, so maybe I'll be wrong.
    early2bed likes this.
    03-27-15 05:26 PM
  16. markmall's Avatar
    I haven't listened to the call, but might at some point. It is sad, but what really gets me is why did Chen think that he could sell more hardware phones without marketing better than before? What miscalculation did he make? Did he think that BBRY still had these inroads with IT departments? Did he think that BBRY had enough loyal users worldwide?

    Maybe he did everything he could but it seems that $200M or more would have been enough to put out a marketing campaign that convinces people that BBRY is alive and that its devices have something to offer.
    03-27-15 06:04 PM
  17. early2bed's Avatar
    I think it's pretty clear that John Chen isn't a hardware guy and he certainly wasn't hired to revive the Blackberry smartphone business. From the very beginning he focused on breaking even with hardware. That means selling to your existing customers what they want right now - you know, the ones that you hardly have to spend any marketing on. Keyboard phones, restocking BBOS phones, etc. Pretty much nothing new. The Passport only exists because it was too far along for him to kill. The slider wasn't even a working mockup when shown - it was a light behind a screen overlay.

    The hardware business is winding down. He can't allow any hint that this is the case because it would be the death knell for carrier and enterprise relationships. The focus is entirely on profit which keeps the hardware division from dragging down the turnaround - not on growth.
    03-28-15 01:13 PM
  18. EchoTango's Avatar
    I think it's pretty clear that John Chen isn't a hardware guy and he certainly wasn't hired to revive the Blackberry smartphone business. From the very beginning he focused on breaking even with hardware. That means selling to your existing customers what they want right now - you know, the ones that you hardly have to spend any marketing on. Keyboard phones, restocking BBOS phones, etc. Pretty much nothing new. The Passport only exists because it was too far along for him to kill. The slider wasn't even a working mockup when shown - it was a light behind a screen overlay.

    The hardware business is winding down. He can't allow any hint that this is the case because it would be the death knell for carrier and enterprise relationships. The focus is entirely on profit which keeps the hardware division from dragging down the turnaround - not on growth.
    I don't agree.

    Chen has repeatedly said he will only stay in the hardware business if it makes money (which it now does) and any future device will have to have a strong business case before it gets produced. Further, he also said that hardware is a critical part of the total end-to-end solution and that by making the devices, provides a higher level of security for the client. Remember, Blackberry is currently the only provider offering the whole package, which if abandoned, makes Blackberry just a "me to" provider without any market differentiation.

    However, I do think the coming devices will be more targeted high end niche and fleet replacement devices while largely ignoring the consumer segment.
    03-28-15 01:32 PM
  19. RubberChicken76's Avatar
    If BlackBerry would pull or offset the hardware division, they'd also pull any overhead that goes along with it. They'd be a leaner, more specialized company.
    That's a key point, often missed on these forums. I've seen people say, "How can BlackBerry survive without hardware?".

    The cold, nasty reality is that they probably go from 7000 people to 700 or 1000; do a bunch of re-structuring charges; get a bunch of headlines about "plunging revenues" and "mass layoffs" ...

    but then could very well have a profitable business sustaining 700 or 1000 employees.

    The BlackBerry many of us remember would be no more though.
    JeepBB and MarsupilamiX like this.
    03-29-15 07:58 AM
  20. birdman_38's Avatar
    That's a key point, often missed on these forums. I've seen people say, "How can BlackBerry survive without hardware?".

    The cold, nasty reality is that they probably go from 7000 people to 700 or 1000; do a bunch of re-structuring charges; get a bunch of headlines about "plunging revenues" and "mass layoffs" ...

    but then could very well have a profitable business sustaining 700 or 1000 employees.

    The BlackBerry many of us remember would be no more though.
    Idk if it would be that low, as they'd still have three other divisions to sustain. Maybe it'd drop by 60% or something.

    From what John Chen is saying, that's not going to happen anytime soon. If they could offload a division and make for a healthier balance sheet, he likely would have done so already. Never say never though.
    JeepBB likes this.
    03-29-15 08:16 AM
  21. birdman_38's Avatar
    I do think they need to get creative to try to increase hardware sales through the right marketing, sales incentives, better in-store presentation, and unique products. Also more partnerships and alliances must be formed. Maybe even adopt a 2nd or 3rd operating system. The current formula isn't working.
    03-29-15 08:21 AM
  22. RubberChicken76's Avatar
    From what John Chen is saying, that's not going to happen anytime soon. If they could offload a division and make for a healthier balance sheet, he likely would have done so already. Never say never though.
    One thing that struck me when he took over compared to his predecessors, was that he very clearly broke the company into specific business units, with specific goals and specific initiatives and specific scrutiny.

    I personally liked it. When everything is tied to a device sale, it's easy to hide.

    When every unit has their own initiatives, their own revenue targets, and flashlights shining on them individually, it becomes more accountable and easier to make tough decisions about. If it performs, it expands. If it doesn't, it gets scaled back or jettisoned.
    EchoTango, JeepBB and Andy_bb_king like this.
    03-29-15 08:50 AM
  23. eyesopen1111's Avatar
    Given the current BlackBerry strategy, I just dont see how Chen can slow or halt the continuing decline in BlackBerry's hardware sales, which looked terrible to me. Remember that Chens sales target for 2015 is still 10 million devices sold, as confirmed in this Bloomberg story from only two days ago: http://www.bloomberg.com/news/articl...reasing-prices

    The problem with BlackBerry's "surprise profits" is that they seem to be linked to cutting important expenses like research and development and yet more operational cost cutting generally, all while sales are down a whopping 32% YOY. BB10 looks more hopeless long term than Ive ever seen it because the sales numbers are so low that no developers will be attracted to what is currently the weakest development environment of the major OSes. Plus, BlackBerry is cutting R+D, which hurts its future ability to compete against rivals by improving its poor-selling product portfolio. Which customers, apart from the hyper-security microsegment, would invest in BB10 right now?

    At this rate, I think BlackBerry's hardware sales may collapse before software grows anywhere close to the size to pick up the resulting slack in revenue. Who here believes Chen when he targets software revenue of $500 million by March of 2016 when this quarter was only $67 million?
    JeepBB, Eumaeus and exiledcanadian like this.
    03-29-15 11:22 AM
  24. Danny Ocean's Avatar
    ...The 1.5 million sales per quarter seen this quarter is on pace for only six million sales per year, and that just aint cutting it...
    Not to nitpick, but this isn't exactly correct as not all quarters are created equal in what is effectively retail sales.

    Posted via CB10
    03-29-15 01:10 PM
  25. eyesopen1111's Avatar
    Not to nitpick, but this isn't exactly correct as not all quarters are created equal in what is effectively retail sales.

    Posted via CB10
    True, but is the difference large enough to impact the narrative or the logic concerning BlackBerry sales? I just dont see where the sales are going to come from. I think BB10 is much more exposed to the consumer market thoughts and behaviours than Chen's enterprise focus accounts for. Thats one of my theories as to why the sales numbers are in decline.
    03-29-15 01:29 PM
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