When BlackBerry Ltd. (TSX:BB)(NASDAQ:BBRY) released the Priv last year, the company was hoping it had a winning formula for success that would turn it around and restore the hardware division to profitability.

BlackBerry got only half of that right.

As premium as the Priv was, it was not a device that many potential customers were willing to drop $800 or more on. Premium, Yes. But worth the price? Not so much.

CEO John Chen famously stated that if the hardware division could not sell five million devices within a year then it would be closed, and the company’s focus would turn solely on software and services. As BlackBerry became more efficient, this figure was recently revised downwards to three million handsets.

The Priv was a hard but necessary lesson for the company

The Priv launched to mostly positive reviews. Customers who previously had a BlackBerry but abandoned the platform for Android were pleasantly surprised to see the iconic BlackBerry hub, keyboard and application suite on Android. Unfortunately, that’s where the love affair ended.

Industry pundits will be quick to point out that the smartphone market is saturated, and they are right. Just take a look at Apple Inc.’s first earnings miss in over a decade as proof of this. Consumers will pay only so much for a device, and without a new, compelling reason or feature, they will not fork over $800 or more for a phone.

BlackBerry learned this lesson through the disappointing sales figures of the Priv. Chen noted recently that future devices would be priced lower, along a mid-tier range. Two new devices are slated to be released this year; one is said to be sporting the iconic physical keyboard and the other a full-touch slate.

Why not just give up the hardware?

As vocal as critics have been on BlackBerry’s hardware, the target audience for the devices are, for the most part, still satisfied with what BlackBerry offers. That target audience includes key segments of the government, military, medical, legal, and banking industries.

Users in those industries are more focused on the security that only BlackBerry can offer as well as efficiency in cranking out emails. The flip side of this is that they are only able to pay a certain amount for those devices, which is precisely where the Priv failed and what Chen is targeting to correct with the next devices.

A mid-tier device that is priced in the US$400 range could have mass appeal to users in those target industries, assuming that the hardware is current, the price is right, and there is some general knowledge of the product, either through BlackBerry’s marketing department or through the carriers themselves.

BlackBerry has survived through a huge transition under Chen, but the turnaround that investors want is just not there yet. Investors who have an appetite for risk and want to chance it on BlackBerry may be handsomely rewarded if the next two devices launch successfully.

In my opinion, the stock is risky investment, but based on Chen’s recent comments, BlackBerry is not as risky as it was just a few months ago and will likely be less risky a year from now.

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Fool contributor Demetris Afxentiou has no position in any stocks mentioned. David Gardner owns shares of Apple. The Motley Fool owns shares of Apple.