In a Q&A with reporters, BlackBerry’s John Chen explained why the company doesn’t have to be a big player in smartphones to continue to sell them.
BlackBerry CEO and executive chairman John Chen couldn’t have made it more clear: His company doesn’t worry about its smartphone market share anymore because such statistics are not relevant to BlackBerry’s ongoing future as a security software business.
In a revealing and intimate Q&A interview with reporters here at the third annual BlackBerry Security Summit, Chen said that even as his company now gets most of its sales and revenue from software instead of hardware as it did in its past, smartphones will continue to be part of its offerings until there are no more reasons to sell them.
“Why am I still in the handset business?” he asked. “First of all, if I came to you [and talked about] a billion dollar software company … that is making money … that does [Internet of things] … and that does embedded technology … you would never ask me a question about handsets” and their market share, he said.
Chen even expressed a bit of friendly aggravation about the constant questions from journalists over the last two years about BlackBerry’s continuing move to specialize in software instead of hardware.
Instead of smartphone market share being key to BlackBerry, Chen said that reporters “have conditioned [themselves] that you must ask that question” every time they write about BlackBerry or speak with Chen.
“You are sounding like my wife” when she brings up something he might have done wrong in the past, he said with a smile.
From a mathematical point of view, however, it still makes sense to sell smartphones because, despite their lower margin compared with software, they still continue to add to the company’s bottom line, he said.
“You have a piece of business that will never yield the kind of margin that a software business will yield,” so you scale properly and make the most of what you can do, he said. About 39 percent of the company’s revenue comes from softw are today, compared with about 31 percent from hardware, he added.
No quick fix
And even if the company would eventually decide to drop the sales of its smartphones in the future, it can’t be done overnight, said Chen, because that would adversely affect customers who have been using the devices for many years. “Before you get out, you’ve got to provide a soft landing for your customers. It is a lot more difficult to do than people think.”
Such questions were raised again earlier in July when BlackBerry announced that it is dropping the production of its BlackBerry Classic smartphone, eWEEK reported recently. The demise of the Classic, with its physical QWERTY keyboard, came just a few days after the U.S. Senate revealed its plans to stop offering BlackBerry phones to members after its existing supplies of the company’s handsets are distributed.
The moves, though unrelated, “could offer more support for the widely held industry beliefs that BlackBerry is continuing on a road map that will see it become a mobile security software company in place of its former position as a powerhouse in the enterprise smartphone market just 10 years ago,” wrote eWEEK.
Continues on page 2…
Originally published on eWeek