BlackBerry Ltd. (TSX: BB)(NASDAQ: BRRY) had a rough go for a few years with the phone maker struggling to keep market share amid increased competition. Now, under the leadership of John Chen, a new business strategy to focus on the company’s niche market rather than trying to go head to head and beat other phone makers in their new markets has been a positive for the company.
Since Chen took over BlackBerry’s stock has appreciated 40% and Chen is just getting started with his turnaround strategy. The executive is now eyeing an increased marketshare in China, a move that could make BlackBerry the turnaround story of the decade.
What are BlackBerry’s strengths?
Compared to the competition, BlackBerry’s products are larger and have a set up that makes it easier for users to view spreadsheets and larger documents. Another characteristic of BlackBerry’s products is that they have the best security and encryption. Yes, compared to the competition BlackBerrys can be bulky, and no, they may not have all the fancy apps, but if you are an executive, a large screen to view spreadsheets and presentations and increased security are far more important than being able to play the newest games with your friends.
Under Chen’s leadership BlackBerry has been focusing on generating increased revenue by rolling out products that cater to its niche market, and ironically, these characteristics also make BlackBerry products ideal for Chinese consumers.
A product catered to Chinese consumers
In China, the world’s largest smartphone market, bigger is better and security is paramount. To understand the difference between Chinese and American consumers, in China Samsung has really given Apple Inc. (NASDAQ:AAPL) and its iPhone a run for its money, whereas in the U.S. the iPhone easily dominates. This is because Samsung makes products that have the characteristics that Chinese buyers prefer, when compared to American consumers. Of course, BlackBerry also makes phones that have these characteristics, and with Samsung losing some market share, the timing for the entrance of a new competitor might be just right.
Why now?
The reason why Chen is looking to China for increased market share right now is that the company is finally in a financial position to consider expansion into new markets. China is the largest market for smartphones, and BlackBerry’s new focus on its niche market is creating products that Chinese buyers will demand. In order for the company to continue down the road to recovery growing revenue is extremely important, and the timing is right.
There are rumors that Samsung and Sony’s recent loss of market share has the companies looking at moving their focus elsewhere. If this is true, the timing is ideal for BlackBerry to swoop in with its products that cater to Chinese consumers and beat out the competition. While I am not 100% convinced that BlackBerry could dominate China’s market, I think its products could do very well, and very well is enough of an improvement and could give BlackBerry a solid new revenue stream that could really boost shareholder value.
