The Transport Guy: BlackBerry hasn't given up on smartphones yet (BBRY)

Steve Kovach May 18, 2015 at 09:58AM

You may have written BlackBerry's smartphone business, but its CEO John Chen hasn't.

BlackBerry's global smartphone market share has dwindled dangerously close to 0%, and the company only sold 1.6 million phones in the last quarter it reported. Compare that to the 61.2 million iPhones Apple sold last quarter.

In an interview with Business Insider, Chen said he'll make BlackBerry's smartphone business profitable again. Under Chen, who took over as CEO about 18 months ago, BlackBerry has refocused its business toward enterprise and governments instead of normal consumers. You can still go into your carrier's store and buy a BlackBerry phone, but most are being sold to large organizations.

If things are so bleak, then why does BlackBerry continue to make smartphones at all?

Chen says BlackBerry phones are the entry point for customers into the company's security business. BlackBerry can still provide a secure backbone for other devices like iPhones and Android phones, but Chen says you get the most security with a BlackBerry phone. There are a lot of important customers that still need that level of security.

"I can only make iPhone so much more secure, but I can't make it as secure as a BlackBerry device," Chen said. "If you look at the US Army, they're still rolling out all BlackBerry. If I tell them there are no more phones, I lose that account. The question is how do you make phones profitable at the volume those people represent?"

In other words, there are a lot of specialized customers like the military, governments, and certain big companies that need the security BlackBerry promises with its phones. But that market is only a tiny sliver of the consumer market. Chen seems to think there's an opportunity to make the phone business profitable, but he's not saying exactly how he'll pull it off other than pointing to BlackBerry's advantage in security and building on top of that with unique designs like the funky-looking BlackBerry Passport.

"It's a combination of everything," Chen said. "First of all you really do have to have a focus on design. At the end of the day, a big part of this is about the product." 

Realistically, that's going to be tough. Plenty of hardware manufacturers like HTC and Motorola have made great phones that simply don't sell at the same volume as iPhones or Samsung phones. Chen seems to think coupling nice phones with a promise of security is a big piece of the puzzle. But he's not saying what the other pieces are. 

SEE ALSO: The Apple Watch review

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BlackBerry hasn't given up on smartphones yet (BBRY) from Business Insider: Steve Kovach