With the growth of iOS and Android phones taking the lead, BlackBerry (BBRY, Financial) has been driven into a corner. Its market share has shrunk considerably, and things are looking bleak for it. In the midst of this mayhem, BlackBerry has confessed that its future lies in creating cutting edge software and selling these services to professionals who would like to get more done on the go. The question, which then arises, is this – why does BlackBerry keep making new phones?
The New BlackBerry Phones
The recent unveiling of three new handsets has been nothing short of a surprise. On Tuesday, after the Canadian company unveiled the Leap – a debutant touch screen phone, they also announced plans to launch three more handsets during this year. In the second half of 2014, BlackBerry launched two new handsets – Passport and Classic, both of which come with attached keyboards. This has indeed been surprising, because the company has already claimed to be amidst a complete software turnaround. So what's the deal here? A large section of technology experts believe that the major software overhaul that BlackBerry is planning, won’t be complete without revenues from selling hardware. Right now, they need the money to keep flowing in. They have already partnered with Foxconn Technologies (FXCOF, Financial) to create most of their hardware, and therefore it is quite likely that their new phones will at least see moderate success in the already difficult technology market.
Future Plans
After the worst financial quarter in the company's history, John Chen took over BlackBerry as its new Chief Executive Officer. His plan was to replace the revenues coming in from hardware by opening up BES12, a new device management service, which would now be extended to non-BlackBerry phones as well. This would help them build a new, more profitable software business. However, the company has to go a long way before it can reduce its reliance on hardware. In fact, hardware sales continue to account for 46% of the company's entire revenue. Now, as the company sets itself some optimistic growth targets, the strategy is to grow at a very fast pace for the next few years. That is the only way they will be able to meet their software growth target of $500 million. This transition will be helped by the revenues from their hardware sales.
Final Thoughts
Industry analysts are not very optimistic of BlackBerry's future, especially because it is focusing its energies on keyboard equipped phones, which have almost become obsolete. True, there is still a user segment that prefers using keyboard smartphones, but this percentage is small enough to not account for any significant profits. In fact, some experts say that introduction of several models in the keyboard equipped phone niche will make the attainment of BlackBerry's goals all the more difficult. Though BlackBerry's latest Leap is geared towards touch-screen inclined business users, there are a lot of other touch-screen smartphones that have established a reputation in the market. In such a case, BlackBerry would need to create some differentiating factor that helps it grow and bring in the big bucks to support its ambitious turnaround. This would be a challenge to BlackBerry's marketing team, which probably is still reeling from the fact that not too long ago, the company's market share shrunk to less than 1% and has remained so ever since.
