BlackBerry to focus on software — not devices
The device that was so addictive it was dubbed “CrackBerry” might not have much of a future: Its new chairman and interim chief executive says he wants to emphasize software and services, not devices. That could mean the company might ultimately get out of the business of selling smartph
The Associated Press
TORONTO — Those few BlackBerry lovers left could be in for some bad news.
The device that was so addictive it was dubbed “CrackBerry” might not have much of a future: Its new chairman and interim chief executive says he wants to emphasize software and services, not devices. That could mean the company might ultimately get out of the business of selling smartphones.
The possible change in strategy comes as Fairfax Financial, BlackBerry’s largest shareholder with a 10 percent stake, said Monday it won’t buy the struggling smartphone company and take it private. It said that instead Fairfax and other investors will inject $1 billion as part of a revised investment proposal.
And Chief Executive Thorsten Heins is stepping down. John Chen was appointed chairman of BlackBerry’s board of directors and interim CEO.
Shares of BlackBerry plunged 16.4 percent to $6.50 on the Nasdaq on Monday.
Heins, a former Siemens executive in Germany, became chief executive in January 2012 after James Balsillie and Mike Lazaridis, the longtime co-chairmen and co-chief executives, resigned in the face of a rapid decline in BlackBerry’s business and the failure of its PlayBook tablet computer.
Formerly the head of the handset business, Heins heavily promoted the new line of BlackBerry 10 handsets as the company’s salvation. They proved, however, to be a commercial failure.
Chen led Sybase from 1998 until the company was acquired by SAP of Germany in 2010. He is widely credited with saving Sybase from bankruptcy. When he arrived, Sybase had lost much of its corporate database business to Oracle, IBM and Microsoft. Unprofitable, it had also developed a reputation for producing unreliable software.
Chen told The Associated Press on Monday that BlackBerry employees need to start thinking differently about the company and accept that “we’re really not in phones, but we’re in phones for software, for services.”
Chen said he wants to find a CEO with a strong software and services background.
He noted that BlackBerry Messenger, BlackBerry’s popular messaging application, has been downloaded by more 20 million users since it became available on Google’s Android and Apple’s iOS platforms last month. BlackBerry Messenger, or BBM, works like text messaging but doesn’t incur extra fees.
“I’d like to find somebody to help me monetize that,” Chen said.
Colin Gillis, an industry analyst at BGC Financial, questioned whether that’s possible. “It’s like Apple saying we’re going to stop making phones and we’re going to become an iMessage company,” Gillis said.
Gillis said the company might indeed stop selling phones but noted BlackBerry is already obsolete. He doesn’t think current users have to worry, though.
“They are not just going to shut the lights off,” Gillis said.
The decline of the BlackBerry has come shockingly fast. In 1999, it became a game-changing breakthrough in personal connectedness.
It changed the culture by allowing on-the-go business people to access wireless email. President Obama couldn’t bear to part with his BlackBerry. Oprah Winfrey declared it one of her “favorite things.”
Then came a new generation of competing smartphones, and suddenly the BlackBerry looked ancient.
Apple debuted the iPhone in 2007 and showed that phones can handle much more than email and phone calls. In the years since, BlackBerry been hammered by competition from the iPhone as well as Android-based rivals.
This year’s much-delayed launch of the BlackBerry 10 system and the fancier devices that use it was supposed to rejuvenate the brand and lure customers.
It did not work. Waterloo, Ontario-based BlackBerry recently announced 4,500 layoffs, or 40 percent of its global workforce, and reported a quarterly loss of nearly $1 billion.
“Sadly I think they are already out of the business after the BlackBerry 10 flop,” said Mike Walkley, an analyst with Canaccord Genuity.
Walkley said he believes BlackBerry will focus on its mobile-device management business, which allows IT departments to manage different devices connected to their corporate networks.
Material from The New York Times is included in this report.