Just about everyone who’s followed the ongoing turnaround of BlackBerry Ltd. (TSX:BB)(NASDAQ:BBRY) has offered the same advice to the company: get out of the hardware game.
The company is traditionally viewed as one of the pioneers of the smartphone era, but it’s had a hard time keeping up with competitors that have larger budgets, flashier phones, and, most importantly, more sales. To combat this, BlackBerry pushed into the Android market, launching the Priv handset late last year to very positive reviews but ultimately few sales.
This has led the company to expand out from the software and services segment of the company, which has always played a major but quiet part in the company’s earnings. Company CEO John Chen has stated on more than one occasion that when it comes to hardware, he would consider shutting down the division if it could not be profitable within a year’s time.
Well, that timeline is fast approaching, and BlackBerry has released a new Android device, the first of at least two slated for this fiscal year.
Meet the DTEK50
First off, the DTEK50 addresses one of the biggest flaws of nearly every single device BlackBerry has released in the last four or five years: price.
Even the mid-tier devices BlackBerry has launched in the past few years have had only mild success due to the fact that the company priced the devices in the upper range of what mid-tier devices go for (approximately US$400-450 per device) and packed them with dated hardware components that consumers didn’t want.
The DTEK fixes both of these concerns. BlackBerry’s pre-release pricing sets the device at a very affordable (but likely not very profitable) US$299. Under the hood, the device sports an HD screen and a respectable 13 MP rear and eight MP front camera. Again, this addressed the fiasco of last year’s flagship device, the Priv, which launched with a paltry two MP front camera.
So the pricing is aggressive, and the components in the device are acceptable for a mid-tier device, so now the real question is, Will the device sell?
Can the DTEK line of devices save BlackBerry’s hardware division?
It might be able to do just that and more. Here’s why.
The DTEK50 is the first of several new devices that will likely be released in the DTEK line of devices that put an emphasis on security. BlackBerry is already the de facto leader in mobile security, but it lacks the adoption it needs to succeed. Android is well known for its lack of security, but it’s wildly successful in terms of usage and adoption. A marriage of both would be beneficial to both the platform and BlackBerry.
At the current price point, the DTEK50 should appeal to those holdouts still on BlackBerry’s older BB10 platform as well as potential customers who have been waiting for a full touchscreen keyboard offered by the company, which has been releasing primarily physical keyboard-only devices for the past three years.
One of the biggest source of device sales for BlackBerry is fleet sales to businesses. Despite some media outlets saying that BlackBerry is being dropped for other devices, there are still countless governments, banks, and organizations all over the world that have and distribute BlackBerry devices to their employees as a secure form of mobile communications. Most of those companies passed on purchasing the Priv because of the high price. But the DTEK, priced at less than half of what the Priv’s launch price was, will likely adopt a huge following in the enterprise market.
Finally, there are other devices coming. Chen has stated that there would be at least two devices coming this fiscal year, and with the DTEK50 already announced, that leaves another device, a rumoured physical keyboard successor to the company’s Classic smartphone, slated to be released within the next few months.
BlackBerry may be able to save the hardware division, but there’s still a ways to go before the company can be viewed as a strong investment option. In my opinion, BlackBerry is still too risky an investment, but if sales of this new device prove to be as positive as the early reviews, BlackBerry may finally get back to turning a profit in hardware.
