BlackBerry fans are in an uproar over the company’s decision to wind down the Classic.
“Change is necessary,” they say. “Change is good.” But for BlackBerry’s survival, change is required.
BlackBerry has an obvious problem: declining device sales. In the last quarter, the count of sales for all devices fell from 500,000 units to 400,000.
“Our Mobility Solutions revenue represented 36 per cent of revenue. Total Mobility Solutions revenue for the first quarter was $152 million. We recognized revenue on roughly 500,000 units and ASP was approximately $290,” according its conference call.
The company said the hardware unit is not profitable. Without a sales volume ramp-up, the devices will not make money. Though server software sales are promising, BlackBerry must find a way to survive by selling devices. The BBOS10 offers a superior multitasking and productive interface – the Android OS is simply too overwhelming.
Classic’s end is not an evolution for BlackBerry. It is an end to building quality, productive devices. This is a market that is under-served because consumers and businesses will accept the frustrations of typing on a touch screen. Even with voice-recognition not replacing physical keyboard typing speed, BlackBerry is still losing share.
Likely game plan for BlackBerry
BlackBerry made a token price cut in the Priv, but it is still too expensive for what it offers. Sure, the company offers support for a year, but the price paid matters greatly for consumers. On eBay, a new Priv device is around 20 – 30 per cent less than retail.
Their response could be to:
- Cut the price of Priv further through promotional discounts that drive direct sales.
- Immediately announce an Android successor to the Classic.
- Make the screen bigger (taller) and keep the price in the range of $349 – $449.
- Release a successor to the Passport device but running Android.
- Continue advertising BES12.5 to the enterprise, touting the positive developments integrating Good Technology with the BlackBerry MDM.
Cash Infusion
It is easy for fans to demand support for BB10.3 and to spend more on marketing, but BlackBerry does not have sufficient cash flow to spend freely. There are still a few ways it may gain cash flow from its existing assets. CEO John Chen hinted it will get a deal with an Asian smart phone maker to license the company’s IP.
Running a BB10 skin on an Android OS would win over business users who care about productivity. The software keyboard, HUB, and security layer is an easy sell.
Will Kim Kardashian hoard Classic?
When you think IT, you don’t necessarily think Kim Kardashian. But celebrities have a huge influence over the popularity of a product, especially smartphones.
Kardashian is known for buying used BlackBerry’s because of the value of the keyboard. If someone that famous likes the product but BlackBerry is winding it down anyway, something is amiss. If Glu Mobile, a game maker, found a way to partner with Kardashian, BlackBerry may consider ways of levering a celebrity’s status to improve sales.
Bottom line
BlackBerry once continued making Bold devices because the demand was still there. Since demand is falling for Classic, winding it down also makes sense.
BlackBerry’s next step may require toying with a Classic Android release. The world certainly wants this happening.