Chen Is Finally On the Right Path For Devices
When Chen inherited BlackBerry two years ago he took over at a time the devices business was in a shambles. There were many big problems. The biggest problem was that Blackberry as a company was structured to sell tens of millions of devices a year. Chen projected that 10 million devices a year was more reasonable. He cut costs (jobs) so that BlackBerry could be profitable selling far fewer devices than it had in the past.
It didn't work.
Why didn't it work? Chen assumed (incorrectly, it turns out) that BlackBerry could meet its smaller volume projections by selling to government and enterprise. As a result, Chen built enterprise focused devices (Passport, Classic, and Leap) and ignored the consumer market. In doing this I think Chen overlooked the problem that got BlackBerry into hot water in the first place: People in Enterprise are also consumers too. People don't want a phone that doesn't have the apps they want. A secure phone is not a big enough draw to compensate for the lack of apps. Also, and I have no numbers to back it up, but I suspect that in spite of the fact that BB10 had weakness as a consumer platform, consumers still bought a higher percentage of devices than anticipated because of brand loyalty or because of messaging features. In other words, BlackBerry wasn't that successful at selling to government and enterprise. Also, let's face it, over the last two years, BlackBerry did everything it could NOT to talk about devices and to stress that it was not just a devices company. It's hard to sell a product when the company that makes it gives it a half-hearted "here it is if you want it" sales pitch.
But, if you look at BlackBerry's revenue, BlackBerry is still very much a devices company with 40% of its revenue coming from device sales. With other parts of the business either growing but not producing as much revenue as expected or not growing at all, it makes sense to try to grow the devices business.
If you accept that in order for a phone to be successful these days you need to have apps, it is easy to see that a Google blessed Android phone is really the only alternative. So, this is really BlackBerry's only real chance of saving its devices business. Plus, Chen is right to make this phone stand out from the crowd with BB apps, a qwerty keyboard, and a focus on privacy. Blackberry is offering something that you can't get anywhere else. If he fails, you can't say he didn't try.
I think Chen could have had a better initial devices strategy. He was right to cut costs, but he didn't focus on the product that he was selling. As a result, he didn't sell many phones. This is now water under the bridge but is something for an interesting debate.
With Priv, we for the first time see Chen out there trying to sell a phone. What this means is that the company is now organized for the purpose of selling a phone for the first time under Chen's leadership. Assuming that the product is good and the software isn't buggy, I think Priv will be successful.