There’s already been plenty of controversy surrounding John Chen as CEO of BlackBerry, but his latest offering is the most mind boggling yet. BlackBerry shot to success with handset devices, and there was a time when the company couldn’t be touched. However, Apple and Samsun quickly caught up and surpassed BlackBerry, leaving it in the dust—Chen was supposed to save the company, but he might be sinking it quicker than ever. He’s only been at the helm for less than a year, and he’s noted that any future will be in selling security and mobile management to agencies and corporations.
And then Chen made a reach for the smartphone market again. He’s pitching Passport, which will be the first new BlackBerry phone device since he took office. This is a last ditch effort. If it fails, it will likely be the end of BlackBerry as we know it and (perhaps) the end of Chen’s rein. Unveiled in Dubai, Toronto and London, Passport has admittedly modest features including an actual keyboard and simple square display.
Although Chen believes in BlackBerry as a smartphone leader, he says he’s also realistic. “It could be extremely important to me in the turnaround as part of the strategy, but it does not have to be. As long as it does not lose money, this will not affect my turnaround plan in a negative way. We will make money on the handsel; if we don’t, we’ll have to get out.”
The target market for Passport will be BlackBerry’s tried and true demographics, including industries like government agencies, military, banks and healthcare. However, security concerns are already popping up, taking precedence over the sticker shock. Experts are saying that there are a plethora of obstacles for BlackBerry to tackle before even think about releasing the BlackBerry Classis. It’s slated to nip at the heels of Passport depending on how Passport is received.
The experts weigh in
According to an analyst with ABI Research, Nick Spencer, “I do wonder how they can actually have an impact. It’s an awfully long way back for them.” Getting back into the hardware game with a goal of just breaking even is a strategy that requires cost and price analysis. Unfortunately, the Passport can’t be touted as an executive phone that demands a high price since it simply doesn’t have the features or clout to do so.
The majority of analysts agree that Apple has tapped out the top tier for smartphone costs. Compare the base model iPhone 6 at $550 to the Passport at $600 and there’s no reason for the $50 difference. Of course, smartphones are designed for massive manufacturing which leads to big savings. Scale can make or break a hardware business and it’s not something that BlackBerry excels at now.
A fighting chance?
It was estimated by research company IDC that Apple ships around 33 million iPhones per quarter. BlackBerry only ships 1.5 million. BlackBerry is doing moderately well selling bargain-priced phones to developing countries, and that might be where their smartphone ventures end. In these markets, security concerns aren’t an issue but in Canada and the US there’s no getting around it.
Chen guesses that about 70 percent of the Passport’s innards are on par with all other companies. However, he notes that the higher Passport cost is due simply to smaller production. There’s no excuse or luxury item tucked away. It doesn’t seem like Chen is going to pull through, but it’s still too early to tell how the Passport will be greeted by the public.
Author Bio: Larry Alton is an independent business consultant specializing in social media trends, business, and entrepreneurship. Follow him on Twitter and LinkedIn.