[dbmalloy]

Interesting interview in Australia with Thor.... play attention to comments on Netflix and Instagram

BlackBerry chief lays out survival plan and says iPhone is old news

PAul Smith

BlackBerry chief exectutive officer Thorsten Heins has said the rapidly advancing global smartphone market has left Apple’s iPhone in its wake, and predicted his company would have 100,000 native apps available for its Z10 devices in time for the US launch later this week.

Speaking exclusively to The Australian Financial Review, ahead of the local launch of its make-or-break smartphones, Mr Heins said last week’s launch of the Samsung S4, along with a wave of recent smartphone releases had reeled in the lead Apple used to hold in the market.

He said BlackBerry was making early strides in encouraging users to switch from other mobile platforms to its own, that a follow up to its commercially unsuccessful PlayBook tablet was a long way off and that developers of big name apps like Instagram and Netflix were being won over by the reaction to its new BlackBerry 10 (BB10) operating system.

“Apple did a fantastic job in bringing touch devices to market ... They did a fantastic job with the user interface, they are a design icon. There is a reason why they were so successful, and we actually have to admit this and respect that,” Mr Heins said.

“History repeats itself again I guess ... the rate of innovation is so high in our industry that if you don’t innovate at that speed you can be replaced pretty quickly. The user interface on the iPhone, with all due respect for what this invention was all about is now five years old.”

Mr Heins said one area that the new BlackBerry phones had surpassed the iPhone was in the ability to multi-task - running multiple apps at once - meaning that users could work in the same fashion on their smartphone as they liked to on a laptop.

Along with Samsung, other phone makers, like HTC and Nokia have also impressed industry watchers with the quality of their top-end smartphones, leading to questions about whether Apple needs to speed up its release cycle of new iPhones.

“The point is that you can never stand still. It is true for us as well. Launching BB10 just put us on the starting grid of the wider mobile computing grand prix, and now we need to win it,” Mr Heins said.

Enticing app developers


At the launch of phones running on BB10 in January, many observers praised the technical prowess of the phones but suggested that problems, such as a relatively small amount of apps available, would limit its popularity with consumers. It had 70,000 native apps available at launch, which was well above the number offered by Microsoft at the earlier launch of its Windows Phone OS, but well below the number available in Apple’s App Store and the Google Play Android app store.

Mr Heins said he expected 100,000 apps to be available for the US Z10 launch later this week. Much focus has been placed on the fact that popular apps like photo sharing service Instagram and video provider Netflix had not invested in developing BB10 apps, and Mr Heins said negotiations were advancing.

“We are working constantly on getting these important apps on board,” he said.

“I think we are seeing the dynamic changing over time as they want to watch and see how BlackBerry 10 is making it in the market. They want ROI on their development dollars as well. I think this is a very respectful way of looking at your business, and it is our job to convince them that BB10 is a successful platform”

Mr Heins cited the quiet period ahead of quarterly reporting as a reason why he couldn’t disclose early sales figures for the BB10 devices, but said the company had been pleasantly surprised by the number of customers leaving rival platforms to come to BB10.

However he declined to elaborate on which platforms BlackBerry was taking market share off, saying it varied region by region. He said the company was waiting to see how the launch in the US, and other markets, like Australia, went before discussing broader market trends.

Make or break for BlackBerry


He said since the launch of the new devices he had read commentary around the world that suggested the phones represented a “do or die” moment for the company. While he agreed that it was vital to make waves with the phones, he rejected the idea that the company was teetering on a precipice.

“In the context of the financial viability of the company that is where I shake my head sometimes and wonder what everyone is talking about. The company has no debt, I will report pretty good cash position by the end of March in my earnings call, so I think we did a really diligent job in, not just keeping the company afloat, but also bringing it back to health,” Mr Heins said.

He said success with its latest phones was hugely important in the near term, but BlackBerry was focused on establishing BB10 as a broader mobile computing platform.

This has led to speculation that BB10 will be licensed to other device manufacturers, in a similar way that multiple phones exist running Google Android. Mr Heins said this was an option which was being actively considered following a strategic review of the future of the company, but that more attention was currently focused on the global phone launches.

The campaign to boost the image of BlackBerry in the minds of corporate and consumer phone buyers was boosted late last week by news that a mystery buyer had stumped up to buy one million handsets.

Mr Heins said he was bound by a confidentiality agreement not to reveal who the customer was, but that it was a symbolically important milestone for the company.

“It is the biggest ever in BlackBerry history and we are really happy with the vote of confidence. This is huge, those customers take on inventory and a financial risk, and in doing this it shows that they have a very strong belief that they can be successful with BlackBerry 10,” he said.

Takeover talks


Shares in BlackBerry (or Research In Motion as it was then) rose earlier this year when an article quoted China’s Lenovo Group as saying a bid for the BlackBerry maker was among the options for boosting its mobile business. Mr Heins said the reports came as a surprise and that the reports seemed to indicate that any interest was only in its early stages.

He said that, despite the share rise at the time, he viewed the speculation brought about by the comments as unhelpful for BlackBerry.

“I don’t know why they are going public with anything like that. To me, this is rumours and speculation. We are running our strategic review, and there are various elements in the review that we are considering, but I don’t want to comment on that,” he said.

“What I specifically don’t like about it, is that it can irritate our investors, our shareholders and our customers. My view always is that you go out to the public when you have something substantial to say. It is not helpful for the industry to have these rumours out there and it is not helpful for my shareholder base either. But you know, people talk, they do what they do and I have to deal with it.”

Taking on tablets


The elephant in the room when talking about BlackBerry’s plans to take on the broader mobile computing market, is its failure to make any impact on the tablet market with its PlayBook device. A limited number of apps, the lack of BlackBerry email and indifferent reviews meant the device largely sank without trace.

Mr Heins admitted the company made mistakes in its inital foray into tablets, saying it had been overly ambitious to launch without native email and many apps, but the decision had come from a desire to show off its operating system. However he said internally it had been viewed as a valuable trial run in getting BB10 right.

In the near future he said the business case for taking a plunge back into the tablet market was not compelling.

“I wouldn’t want to do it the same way again, if I do something around tablets, I want it to be really substantial and meaningful, and quite frankly it would need to be profitable as well,” he said.

“I think the profit pool is very very thin. Kudos to Apple, I think they really managed to own that space, so it doesn’t make sense for me to just take this head on. I need to figure out, for my enterprise customers, for my consumers, for my BB10 audience, what can I do that provides them a mobile computing experience in the form factor of a tablet, which goes beyond just the puristic tablet experience.”

Winning New Customers


Mr Heins is in Australia until this Wednesday, he is spending Monday with a series of events surrounding the local launch of the new phones. However some of his more important local engagements will come in the meetings set up with CEOs and chief information officers of local businesses, who he aims to convince to trust in BlackBerry again.

He spent the weekend speaking with a range of execs at the Formula One Grand Prix in Melbourne, and has a packed schedule of meetings ahead of his departure.

“There is a reason why I took a 23 hour flight from cold Canada to Melbourne and that is because Australia is a very important market for us. Australia is a very innovative and mature market, and is also a very wealthy smartphone and mobile computing market,” Mr Heins said.

“Australia is one of our top ten markets, we need to succeed here, so you will see us pumping a lot of energy into this market.”

One pressing issue is the local banking sector, which is competing strongly for mobile banking supremacy through rival apps. Bank technology executives have conceded that they have all but given up developing apps for BlackBerry, due to the low number of local users.

Mr Heins admitted to being concerned by the perception, but felt it was not too late to turn it around.

“Financial services and banking is really our home turf, but the work we are doing is to demonstrate how well we fit into addressing the BYOD (bring your own device) trend in corporate IT,” he said.

“Our devices are great for the consumer use, while being just as good as the old BlackBerrys for corporate use. If you have an open OS then it is open, you have a ton of keys out there to your main entrance door, government and financial services firms understand that.”

[howarmat]

nice article. I found the comments about the playbook interesting. Doesnt look like a new tablet is coming anytime soon. Who knows about bb10 on the PB either

[ddlax22]

hmmm..interesting comments on the netflix ordeal indeed. not a bad article though. i dont use it, but i guess we will find out how the whole app situation (which from what im hearing is not that bad), pans out.

[houshinto#IM]

nice article. I found the comments about the playbook interesting. Doesnt look like a new tablet is coming anytime soon. Who knows about bb10 on the PB either

You're reaching a little there howarmat. Thor has mentioned already in the past that BB10 will come to the PB. His comments were only about any new "plunges" into the tablet market. No need to twist his words around.

[missing_K-W]

I wonder what the liklihood of a new tablet release this year is? I feel confident that BB10 is currently in development for a new tablet. Having a team on this currently makes sense, even as the ceo mulls over the future.

[howarmat]

You're reaching a little there howarmat. Thor has mentioned already in the past that BB10 will come to the PB. His comments were only about any new "plunges" into the tablet market. No need to twist his words around.

Im not reaching at all, i never said it wasnt coming, i just still dont see on the front burner yet at all. There is no money really in bringing BB10 to the PB so I would think once its ready you would also have a new tablet available to put it on.

[dbmalloy]

As for a BB tablet... as Thor states in the interview.... Apple does really have the Tablet market cornered currently.... do not see BB going down that path till they are confident that BB10 is here to stay...

[LuvULongTime]

Im not reaching at all, i never said it wasnt coming, i just still dont see on the front burner yet at all. There is no money really in bringing BB10 to the PB so I would think once its ready you would also have a new tablet available to put it on.

Bringing BB10 to the PB could be a really cheap and effective way to trial how a more mature BB tablet fares in the market. If the Z10 takes off, then I could see new Z10 owners seeking that functionality on a bigger screen.

[Apollo_IV]

I found this very interesting for two reasons:

1. They built BlackBerry 10 on the foundation of the PlayBook OS; simplifying it to be compatible with the tablet shouldn't be too difficult. And by doing so BlackBerry will make a lot of customers happy and will elevate their product in terms of quality.

2. Not having a tablet set for the near future gives me more hope that they will actually pull through with this massively anticipated update.

In regards to Howarmat's post: There isn't immediate money. They have much to gain by showing that they actually care about their customers, as opposed to bombarding them with new products in order to make a quick buck.

[mathking606]

Hmmm. The article is wrong by saying native apps for the 70000 and 100000 apps in the storefront since we all know they are not all native but other than that a good article.

[kevinnugent]

I wouldn't be happy if I were a Blackberry tablet customer.

[Komoto]

Interesting article.

I dont think BB needs a tablet, since i got the Z10 my playbook hasn't been used. the z10 does everything the playbook does but better.

The only issue is screen real estate. So this led me to think.....

instead of another tablet. They could design a portable screen which can be folded, which some how integrates a keyboard and mouse that can be popped out, folded out and then used and packed away quickly.

So for example when you are at the office you use the a dock, which plugs into a monitor. When you are on the move you have the option to set a make-shift office up quickly, anywhere. For example for me i am constantly on the move, at coffeeshops and/or airports. There are some jobs i dont like doing on my phone, because of the size of the screen. If i had this option. i could basically get rid of tablet and laptop.

[BB Marissa]

Very good article. The reporter is fair, honest and doesn't overly glamorise the competition
It's nice to see that Thor feels comfortable as well.
I agree on the tablet front and feel that the Z10 is good enough that a new tablet is a must have option

Posted via CB10

[SaysSmithy]

Yep. My mistake on that. Listened back to my recording of the interview and he didn't say "native" ... I'll amend the article later on.

Edit: sorry that is in reply to the 100,000 apps post

[abass]

Yep. My mistake on that. Listened back to my recording of the interview and he didn't say "native" ... I'll amend the article later on.

Edit: sorry that is in reply to the 100,000 apps post

Haha see a little boost in your analytics from CrackBerry.com and get a bit curious? :P Great article, it was quite an enjoyable read

Always enjoy non-biased articles/interviews like these that get a lot of great questions answered!

Keep it up, and welcome to CrackBerry!

[eve6er69]

He is much better at describing and answering questions than jim and mike.

I'm still a bit discouraged about the app situation and that he said they would have 90% of the top 600 ios apps on launch. I still don't think they hit that mark and that will kill a lot of the us market.

But again the replies he gave were very positive and straight forward. I like when a ceo can claim his company failed and talks positively about the "learning experience" from the recovery.

Sent from my game boy color

[SaysSmithy]

Haha see a little boost in your analytics from CrackBerry.com and get a bit curious?

Heheh ... Indeed I did. Glad you enjoyed the read.

[ubizmo]

I wouldn't be happy if I were a Blackberry tablet customer.

I'm one, but it doesn't bother me. The PlayBook is what it is, limitations and all. I think it's largely a distraction for BlackBerry at this point. It'll be great if we see BB10 on it, but BlackBerry needs to keep a laser focus on the phones and optimizing BB10 for them. If BB10 is to be licensed to other manufacturers, it's the phones that will sell it. Even if not, BlackBerry needs to focus on profitability now and not on improving an old product or trying again in a market where they failed the first time.

[Camelhmpz]

I kinda wish TH would not have called out iPhone by name, kinda seems like a put off for some that may have wanted to switch.

[BBPandy]

What I really liked:

The company has no debt, I will report pretty good cash position by the end of March in my earnings call, so I think we did a really diligent job in, not just keeping the company afloat, but also bringing it back to health,� Mr Heins said.

What I didn't like was him playing down a new tablet
The airline that I work at has a BES server, & is planning on getting either, Apple, Windows or BlackBerry tablets in the cockpit. (currently gov red tape to get their approval) If BB does not have a compelling tablet they will be looking else where. If they end up with an iPad or Windows tablet, I can see them looking at switching away from BB so employees don't have to learn & carry 2 different OS's

Now in the global scheme of things, my lil company wouldn't really matter much, but I can see this problem being repeated around the world. Companies get iPads, & then switch to iPhones.

[eephus1]

I kinda wish TH would not have called out iPhone by name, kinda seems like a put off for some that may have wanted to switch.

Me too...seems the US stock channels have already grabbed onto that quote and it's becoming a "headline"....complete with snickers from the newscasters. Hmmm...

[dbmalloy]

Great example of taking quotes out of context... a lot of media is playing up Apple's lack of innovation angle... but use " ........ " to omit the rest of the quote where Thor gave Apple their due for starting the touchscreen revolution... typical.....

[jimread1949]

Remember the patent application that blackberry made showing a cell phone docking into a type of laptop. I believe the computing power was the cell phone?.

[Orange UK]

Great example of taking quotes out of context... a lot of media is playing up Apple's lack of innovation angle... but use " ........ " to omit the rest of the quote where Thor gave Apple their due for starting the touchscreen revolution... typical.....

Apple? I had HTC touchscreens when apple were still on a pc, with Windows Mobile!

[GV2012]

I could care less if there is a "new" tablet. All that is required for the million(s) who have one of the current models is PBOSoon. For a company with their tech abilities the only reason I see them not having ported it over already with changes req'd for the subtle differences in the PB hardware is they didn't want to take any thunder away from the new phones. Otherwise there could have been a lot of apps being sold on the Playbook now if if the 10 OS was on it. That's assuming not alot of extra work would be required on the Devs part to have the apps made for the Z10 and Q10 jive with the PBs10