Does BlackBerry Ltd. Really Need the Priv to Succeed?
As BlackBerry Ltd. (TSX:BB)(NASDAQ:BBRY) prepares to launch its first Android-powered handset, CEO John Chen doesn’t want to look too far ahead.
“I’d like to see the receptivity of the phone before I just come out and say something outrageously regretful,” said Mr. Chen to Business News Network reporter Amber Kanwar. This is fair. There is no reason for him to publicly speculate about BlackBerry’s next move at a time when we don’t know whether or not the Priv will be successful.
As for the rest of us, we can’t help but wonder what comes next if the Priv fails to meet expectations. It probably means the company would be finished selling smartphones in the consumer marketplace. But is that really such a bad thing?
We take a look at three schools of thought below.
Why a Priv flop would be a big negative
We all know by now that BlackBerry is transitioning from smartphones to software, but the handset business remains very important to the company, generating over 40% of the company’s revenue last quarter.
Turning around the handset business is important for another big reason: the brand. As it stands, BlackBerry is still seen as a company in decline, and this is hurting its software sales as well. And if the Priv turns out to be a disaster, the brand would suffer another serious setback.
Why a Priv flop wouldn’t matter
As part of BlackBerry’s transition from hardware to software, the company can now manage iOS- and Android-powered handsets in addition to BlackBerry models. This was a necessary step to take as the bring-your-own-device-to-work trend gained momentum.
Thus BlackBerry’s success in the consumer market, or lack thereof, no longer has much impact on its software business (other than the issues with brand). Even if the consumer handset business is discontinued altogether, BlackBerry’s offerings on the software side wouldn’t really change at all.
Besides, BlackBerry would still be making phones for the few institutions, such as governments, that still issue smartphones to their employees.
Why a Priv flop would be a positive
There’s a growing school of thought that BlackBerry needs to abandon its handset business altogether. Some, including some of us here at The Motley Fool Canada, have even suggested the company would be better off if the Priv was a failure.
It’s an interesting case to make, but it has some merit. If BlackBerry abandoned the consumer handset business, then it would instantly transform from a declining handset maker to a fast-growing software provider. The company would have greater focus on what really matters. Many employees would lose their jobs, but this would likely shorten the path to profitability.
So, if you’re a BlackBerry shareholder, but are concerned about the Priv, you don’t need to sell your stock just yet.
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As BlackBerry Ltd. (TSX:BB)(NASDAQ:BBRY) prepares to launch its first Android-powered handset, CEO John Chen doesn?t want to look too far ahead.
?I?d like to see the receptivity of the phone before I just come out and say something outrageously regretful,? said Mr. Chen to Business News Network reporter Amber Kanwar. This is fair. There is no reason for him to publicly speculate about BlackBerry?s next move at a time when we don?t know whether or not the Priv will be successful.
As for the rest of us, we can?t help but wonder what comes next if the Priv fails to meet…