BlackBerry: The Story Line Continues

2016 Telecommunications Trends: More Choices, Less Lock-In

Things seem to be continuing apace for BlackBerry. That fact is a lot better than the old status quo – that the company is doomed – but it doesn’t mean that it is smooth sailing ahead.

For what seemed like an interminable amount of time, it looked like BlackBerry was doomed. That fate was averted. Now, it is in the process of transitioning from a hardware/software and services company to one more fully focused on software. Whether the hardware side survives as a sort of loss leader on steroids or whether it finally must be jettisoned will take a long time to play out.

The quarterly and fiscal end of year results announced last week are part and parcel of that long transition. The bottom line is that the business to which BlackBerry is transitioning did well. The one it is de-emphasizing did poorly. In a day, it shows that the strategic direction that was taken is a savvy one.

The Globe and Mail said that the company had software sales and services of $153 million for the quarter, a 106 percent increase over the year-ago quarter. For the full year, revenues for this category were $527 million, which beat the goal of $500 million. CEO John Chen said that the company wrote 10,000 customer orders for the full year – 70 percent of which are recurring. He promised a 30 percent increase during the next fiscal year. It would be achieved, he said, without relying on revenue acquired by acquisition.

The hardware side of the business is not doing as well. Hardware was about 39 percent of total revenue. Revenue fell from $214 million in the third quarter to $180 million in the fourth. The story outlined options that the company is exploring to right the hardware ship. The deadline for hardware profitability is September.

The highest profile piece of news on the BlackBerry hardware front was the introduction of the Priv, which runs on the Android operating system. The device has gotten great reviews. The challenge, though, is that it is quite pricey. Zacks reported that sales have been disappointing:

BlackBerry’s deteriorating sales had compelled the company to adopt the popular Android platform. However, the sales of the latest device failed to impress. As per industry experts, nearly 600,000 Priv devices were sold in the recently released fourth quarter of fiscal 2016 against market expectation of 850,000 units.

Though the hardware business is failing, it is important to BlackBerry for its high profile and customers in the business, military and governmental sector. A number of options appear to be on the table. Two possibilities: getting out of hardware altogether – despite the advantages it brings the company – or introducing a lower-priced version of the Priv. The Globe and Mail story suggested that such a unit may not have a physical keyboard.

BlackBerry soldiers on – which, of course, beats the alternative.

In another bit of BlackBerry news, the company is making two features – Retract and Time – available for free to anyone who wants them. Retract enables the deletion of a message on both the sender and recipient ends. Timer limits how long a photo or message can be viewed, according to The Verge.

Carl Weinschenk covers telecom for IT Business Edge. He writes about wireless technology, disaster recovery/business continuity, cellular services, the Internet of Things, machine-to-machine communications and other emerging technologies and platforms. He also covers net neutrality and related regulatory issues. Weinschenk has written about the phone companies, cable operators and related companies for decades and is senior editor of Broadband Technology Report. He can be reached at cweinsch@optonline.net and via twitter at @DailyMusicBrk.