BlackBerry Inc. (TSX:BB)(NASDAQ:BBRY) is prepping a new device to launch.
Whenever I’ve heard that statement over the past few years, I’ve had a tendency to roll my eyes and utter, “not again…”
Let’s face it–BlackBerry’s hardware stopped being competitive in 2013, and since then the company’s devices have been a myriad of oddly named devices and weird-form factors with under-powered internal components and below-par cameras.
Wait! Wasn’t BlackBerry ditching hardware?
Followers of BlackBerry’s turnaround often cite CEO John Chen’s now infamous pledge to shutter the hardware division if it could not become profitable within a year’s time.
That year time frame is set to expire this month. And while we may hear an update with respect to the fate of the hardware division during results time next week, there’s reason to believe that the company has at least a few more hardware devices planned for the next few months.
BlackBerry launched the budget-minded DTEK50 this past July, and it has received mostly positive reviews. Gone is the physical keyboard and oddly shaped form-factor, and the internals and build quality of the phone are all within the same generation of competitor devices, unlike last year’s flagship Priv, which–despite having mostly relevant components–was shipped with a paltry two megapixel front-facing camera and very creaky chassis.
One factor worth noting is that BlackBerry didn’t actually design the DTEK50; it was built off another manufacturer’s model (the Alcatel Idol 4), which BlackBerry then tweaked with added security features.
That same relationship could be at play for BlackBerry’s next device–rumoured to be called the DTEK60.
Various sources noted this week that BlackBerry’s next device is rumoured to be a high-end, all-touch device called the DTEK60. The DTEK60 is also rumoured to be based off another Alcatel device and is widely believed to be a significant upgrade from the DTEK50, incorporating a better camera and, for the first time on a BlackBerry device, a fingerprint sensor.
Chen has stated on multiple occasions that several new devices can be expected over the next year, and this newest one could drop before the holiday season.
If true, this represents a significant but welcome shift in BlackBerry’s previous hardware strategy. The sub-par internals of BlackBerry-built devices were always destined to fail, especially when released with inflated pricing. To illustrate this, the Priv, which will be celebrating its first birthday soon, still retails for $600 or more in some locations.
If BlackBerry has found a way to license another manufacturer’s devices at a significant discount, then it’s a win for all parties.
There’s more than hardware to BlackBerry
This is something I often tell people when mentioning BlackBerry. Because of the company’s iconic hardware of the past, we are conditioned to look at BlackBerry as a hardware company.
That couldn’t be further from the truth.
One thing that really impressed me when Chen took over is how he put a renewed focus on the company fundamentals and strengths: software, security, and enterprise. This focus has been clear in nearly every quarterly update with software and enterprise sales steadily ticking upwards.
One example of this is BlackBerry’s productivity software suite, which is often seen as the envy of the industry and preference for the enterprise, security-minded, and power users. That suite bundles a unified inbox, highly customizable views, and complementary scheduling, contact, search, and note-taking applications. The only problem is that until recently, in order to get that suite of applications, you had to purchase one of those sub-par devices.
That all changed this past month when BlackBerry released the software suite for download on the Android market. The suite comes either as a free download that is ad-supported, or as an ad-free download with a monthly subscription cost. Either way, this has become a revenue stream for BlackBerry and is finally untangled from the hardware division.
In my opinion, BlackBerry remains a fairly risky investment that most investors would be better off avoiding at the moment. Should the new software revenue stream and licensed hardware model pan out as the company expects, then BlackBerry will become a fairly strong investment option in the future. For now, however, I’m holding back and watching from the sidelines.