Despite vowing to get out of the handset business in 2016, there’s still a new BlackBerry Ltd. (TSX:BB)(NASDAQ:BBRY) smartphone coming soon to store shelves near you.
The new phone, dubbed the KeyOne, isn’t actually made by BlackBerry, nor is it marketed or distributed by the Waterloo-based tech giant. BlackBerry has simply lent its name to TCL, a Chinese electronics manufacturer.
The phone is currently available in the U.K., and it will be available to pre-order in Canada on May 18.
Reviews are in, and they’re generally pretty positive. Prominent tech websites like Engadget, PCMag, The Verge, and Gizmodo all had nice things to say about the device; many reviewers were surprised at just how much they enjoyed it.
Reviewers liked the phone’s physical keyboard, especially the fingerprint sensor built in to the space bar. They also liked the handset’s size and overall feel as well as the phone’s customized Android software. Remember, one of the major knocks against some of BlackBerry’s previous generation of phones was the lack of apps for its own proprietary operating system.
The phone is a little pricey with a suggested price tag of US$550 without a contract. Will customers pay that much? And will it matter to BlackBerry’s bottom line?
Low expectations
The first thing investors need to realize is, the company has essentially moved on from the handset business. It generated just US$106 million in device revenues in its most recent quarter.
This is also just a royalty deal. BlackBerry will get paid a certain amount for each phone sold, while TCL gets to keep the rest of the profits. BlackBerry’s main contribution is the phone’s software. The KeyOne will feature things like BlackBerry’s patented message centre, which organizes a user’s texts, emails, and social media mentions in one convenient place.
In addition, it’s unlikely this phone will be anything but a small player in an already crowded market. There are dozens of different phone models out there today. Carriers want to focus on brands they already know will sell. Sure, they’ll carry the latest BlackBerry. They just won’t push it very hard.
Combine all this together, and the overall message is simple: investors shouldn’t expect big things from this new device.
Better reasons to be bullish
After years of languishing, it’s finally good to be a BlackBerry shareholder again. The company’s shares recently surpassed $13 each on the Toronto Stock Exchange, which is a high not seen since 2015.
There are a few reasons why investors are bullish. The software business, which is the company’s new focus, is doing quite well. The balance sheet was recently boosted by a nearly US$1 billion award from an arbitrator over a royalty dispute. And investors are excited about the organization’s recent pilot project testing its self-driving car software. That has the potential to be a true home run.
The bottom line
In short, BlackBerry is doing a lot of things right today. It isn’t dependent on royalty payments from phones any longer. Anything it gets from this new device is a bonus, nothing more.
Still, investors should be encouraged by the new phone. It shows that the company’s licensing strategy is working. Perhaps BlackBerry and TCL working together can bring the BlackBerry brand back somewhere close to its former glory. After years of struggles, the only direction to go is up.
