The Motley Fool

3 Reasons to Be Pessimistic About BlackBerry Ltd.’s Passport

It’s been a wonderful week for BlackBerry Ltd. (TSX: BB)(Nasdaq: BBRY). On Friday, the company reported smaller-than-expected losses, and as of this writing, the shares are up over 4% in response.

And earlier this week, BlackBerry released the Passport, the company’s first phablet. Early results for that product are promising too. But there are reasons to be skeptical about the Passport, and below we highlight three.

1. Not an ideal consumer phone

According to The Globe and Mail, the Passport tested poorly among focus groups. It’s easy to see why – due to its large size, phone calls are awkward without headphones. And writing text is practically impossible with only one hand.

This was initially a criticism of Samsung’s Galaxy Note phones. But the Note is a much sleeker phone, and has been accepted for use by everyday consumers. Its screen is only 3.2 inches wide, and includes settings making one-hand use easier. Similar things can be said about Apple’s new iPhone 6 Plus.

To put it another way, BlackBerry is not even trying to make the Passport an appealing consumer phone. And that is severely limiting.

2. BYOD

I know what you’re thinking: the Passport is only meant for business users anyways. So who cares if the everyday consumer won’t like it?

Well first of all, BlackBerry is sending a message: If you want to use the Passport, you’ll likely have to carry another phone (your personal phone) on you too. This is something that the marketplace is increasingly rejecting. More and more people are instead choosing to use their personal phone in the workplace.

And the Bring Your Own Device (BYOD) trend is only set to grow further. Analysts expect 30% growth in BYOD through to 2017, and the Passport will likely be left out of the mix.

3. A security advantage?

BlackBerry has one very strong defense against the BYOD trend: its advantage in security. And security concerns are also growing very quickly, especially with so many high-profile security breaches over the past year.

But this is an area where Apple and Samsung are catching up quickly. And does anyone think that these behemoths will give up the fight? Instead, they will surely use their massive warchest to narrow – or even eliminate – the security advantages that BlackBerry currently enjoys.

The verdict

There are reasons to be optimistic about BlackBerry’s prospects. The company has done an excellent job cutting costs under new CEO John Chen. And Mr. Chen has a fantastic track record of executing these kinds of turnarounds.

But the Passport is not going to save BlackBerry, so analysts and investors should temper their expectations.

Just Released! 5 Stocks Under $49 (FREE REPORT)

Motley Fool Canada's market-beating team has just released a brand-new FREE report revealing 5 "dirt cheap" stocks that you can buy today for under $49 a share.
Our team thinks these 5 stocks are critically undervalued, but more importantly, could potentially make Canadian investors who act quickly a fortune.
Don't miss out! Simply click the link below to grab your free copy and discover all 5 of these stocks now.

Claim your FREE 5-stock report now!

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

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

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss an important event.

Iain Butler and the Stock Advisor Canada team only publish their new “buy alerts” twice a month, and only to an exclusively small group.

This is your chance to get in early on what could prove to be very special investment advice.

Enter your email address below to get started now, and join the other thousands of Canadians who have already signed up for their chance to get the market-beating advice from Stock Advisor Canada.