BlackBerry's Strategy Is The Best One To Retrieve Its Past Glory

| About: BlackBerry Ltd. (BBRY)

In this article I provide an overview of BlackBerry's (NASDAQ:BBRY) business and explain why the strategy used by the company is the best one to retrieve its past glory in the mobile computing arena. BlackBerry's vision consists of being the leader in mobile computing. Its strategy is implemented around two components: hardware and services delivered. Both are complementary.


First, let's talk about the hardware. In the last months, BlackBerry focused on the hardware and launched three new devices (Z10, Q10 and Q5), running on the BB10 operating system (the Q5 was released at BlackBerry Live on Tuesday, May 14, and will be available in July). According to this article and Peter Misek (from Jefferies), the new devices (Z10 and Q10) are selling well in the countries where they have already been launched. As I said in a previous article "Some thoughts about BlackBerry," the Q10 device is unique in the market thanks to its physical keyboard. Moreover, Q10 will be available in the U.S. in June.

But the novelty comes with the Q5, released on Tuesday. The Q5 targets mainly emerging and European markets. In emerging markets such as Indonesia or India where BlackBerry is very popular, Q5 could be a "home run" if its price is not too high (the company didn't mention any price at BlackBerry Live). In fact, BlackBerry market share is really impressive in countries such as Indonesia; according to this article, Indonesians are still very into BlackBerry phones. Moreover, the company had a 37% market share in 2012. Nevertheless, BlackBerry's competition against Android is increasing and this is why BlackBerry should be careful with the Q5 price setting; a high price would drive away these customers. I hope the price will be under $350 (without contract). Ovum analyst Adam Leach said:

BlackBerry is clearly aiming to replicate the success of the BlackBerry Curve in emerging markets, but other manufacturers are also seeking a foothold in those markets with low-cost devices.

There is also a rumor that says that BlackBerry will release a "phablet" phone later this year. In my opinion, it is a great idea to launch a bigger phone. According to some studies, this market will reach 825 million units globally by 2018, which can increase substantially BlackBerry hardware sales and attract new customers under its flag. Right now, there is only one major competitor; the Samsung Galaxy Note.

Services Delivered

BlackBerry is also known for the services it provides to the customers, such as devices with high security level or the BlackBerry Messenger application. Here I will rather focus on BBM.

At BlackBerry Live, Heins said about BBM:

It is a state of confidence. The BB10 platform is so strong and the response has been so good that the time is right for BBM to become an independent mobile messaging platform. We are making the BBM platform more powerful than ever. (…) We're starting with messaging and groups, but we'll bring voice, screen share, and of course, channels later on.

Now, there are two questions that need to be answered. The first one is: how BBM will make money?

Andrew Bocking, executive vice-president of software product management said:

Where the profits will come from, is BBM Channels, a new platform that will serve as a marketing launchpad for businesses and celebrities. It will work like a combination of Facebook Pages and Twitter and allow BBM users to opt in and start to follow popular brands. (…). What we are talking about is enabling and facilitating those brands and businesses to enable BBM users to follow them and those types of interactions would be paid-for interactions.

Another possible answer would be that the application could become a mean of payment (see this article about BBM money in the Indonesian market). It could be interesting to follow this story in the months to come, in order to learn more about it and to see if it is successful or not.

The second question is: will BBM serve as a marketing tool for BlackBerry to promote its brand in other platforms such as iOS from Apple (NASDAQ:AAPL) or Android from Google (NASDAQ:GOOG)?

I think the answer is yes, because BBM will become at least as popular as WhatsApp (which currently has 200 million active users), Viber or Skype. Why should BBM be more popular than WhatsApp, Viber or Skype? Actually, it is quite simple: BBM will offer many more possibilities. In fact, BBM will override these other messaging apps because it offers a variety of possibilities in a single application. As Heins said, BBM will offer screen share capabilities and channels.

BBM will be a marketing tool for BlackBerry, because iPhone and Android device users will discover the BlackBerry Messenger application in the App Store and in Google Play, respectively. Then, they will very likely try it because they will likely realize that it's a more convenient application than WhatsApp, Viber or Skype, because, as I said before, it includes more services in one single application. But the most interesting thing I want to point out is that BlackBerry will be known by iPhone and Android users (they will use BBM directly on their phones), and maybe it will change their perception about BlackBerry. If BBM is successful in other operating systems, the BlackBerry brand image will be stronger in the future and it will help the company to sell more phones.

BlackBerry Enterprise Service is another good example of the importance of services delivered with hardware. With the implementation of BES 10 in the business world, BlackBerry can sell phones to companies more easily. This is why the company is the leader in the business mobile space. BlackBerry gathers both business aspects: services and hardware.


BlackBerry is a very well integrated company in mobile computing. Heins understood that the success of a phone brand also depends on the services delivered with devices. Hardware and services cannot be dissociated because they are complementary, BlackBerry Messenger is the perfect example of the importance of services for a company. Actually, they reinforce each other. BlackBerry Live brought a lot of good news for BlackBerry's future, such as BBM channels or Q5 phones for emerging markets. In my opinion, the next big thing for BlackBerry could be the release of a BlackBerry phablet in the coming months.

Disclosure: I am long BBRY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.