The Passport Can Help BlackBerry Fly Higher

Jul. 1.14 | About: BlackBerry Ltd. (BBRY)

Summary

The positive market reaction to the leaked images of the BlackBerry Passport is a thumbs-up to Chen's aggressive moves to revive handset sales.

The very distinctive design of the BlackBerry Passport confirms that John Chen is willing to experiment to improve the chances of BlackBerry phones' recovery.

The customers who did not like the Z10 and Z30 may find the one-of-a-kind Passport to their liking. Nonconformity is also a form of social status symbol.

BlackBerry (NASDAQ:BBRY) went up notably yesterday. It went as high as $10.26, and closed at $10.24. After-hours trading even brought BBRY to $10.27. The 24.571 million trading volume yesterday is almost double BBRY's 3-month average. BlackBerry is definitely getting much love from investors.

Recent leaked images and videos of the odd-looking BlackBerry Passport most likely inspired investors to push BBRY 4.70%+ on Monday.

Some bloggers called the Passport ugly and weird. On the other hand, BlackBerry bulls apparently like the distinctive look and design of this new BB10 high-end phone. The positive reaction of investors speaks louder than derogatory opinions of bloggers.

BBRY is now closer to the $10.50 price target I discussed in my previous article. The upward momentum of BBRY is still strong.

Investors appreciate that John Chen's plan to put the handset business back into profitability includes targeting not just emerging markets. The Passport is ideal for high-end buyers like corporate users and affluent customers. The September launch of the Passport can help the BlackBerry Z3 win old and new customers.

Chen's Bravado Is Impressive

Chen decided to launch this phone in the same month that Apple will likely launch the iPhone 6. The expected blockbuster launching of Apple's (NASDAQ:AAPL) new phone does not intimidate Chen. His audacity in going toe-to-toe with the iPhone 6 is commendable. Yes, there is a risk that the world may ignore the Passport launch due to the loud noise that comes with every new iPhone release.

On the other hand, fighting the enemy when there is a big audience watching is a good tactic to enhance one's reputation. If the iPhone 6 is just a bigger iPhone 5S with no real innovation, some Apple watchers will be disappointed. Accordingly, the BlackBerry Passport may find appreciation among people who might get dissatisfied with the iPhone 6.

Kantar's report reveals BlackBerry phones enjoyed a small improvement in market share in the U.S., Spain, and Australia. The BlackBerry brand is far from being dead. The war for smartphones is not yet over.

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Source: Kantar World Panel

Chen's willingness to experiment and put an unconventional smartphone in the market is further proof of his bravado. He is not afraid to tout a product that some people call ugly and weird. Chen is betting that the unique design and form factor of the Passport will entice customers who ignored the Z10 and Z30.

Innovation Is Sometimes Better Than Imitation

BlackBerry tried to imitate the aesthetic looks of the iPhone with the Z10 and Z30, but few customers bought these two BB10 phones.

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Source: Geekaphone.com

The 1:1 LCD screen, sharp-edged corner and wide-body design of the Passport defies the current convention of making elongated phones with rounded corners. Look at BlackBerry's FY15 phones below. The Z3 is conventional. The Classic is a throwback to the original design. The Passport looks really odd compared to the other BB10 phones.

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The Passport is part of Chen's overall plan to increase phone sales. Chen is trying to appeal to all types of smartphone customers. The Classic is for loyal BB fans still strongly attached to the old QWERTY design. The Z3 is for price-sensitive customers accustomed to the looks of Android phones. The Passport is for customers who crave to be different.

Chen is targeting people that are weary of the similar designs by current high-end phones. The Passport looks more 'hip and distinctive" when compared to the three premium phones below.

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Source: geekaphone.com

BlackBerry tried and failed to replicate Samsung's imitation-is-easier-than innovation approach. Chen is now using innovation to make more customers notice the high-end Passport. It is not a gimmick or an act of desperation. It is a calculated move to offer something original.

Conclusion

It is not very important that Passport is unconventional. The important point is that Chen is very flexible in his approach to improve the handset business. He is not repeating the mistake of his predecessor. Imitating the look and feel of the iPhone was disastrous for the company.

Chen is starting a trend in selling the very distinctive Passport. This phone stands out in the current crowd of analogous smartphone designs. Remember that the all-touchscreen iPhone was also a trendsetting product in 2007. During that period, BlackBerry, Palm, and Nokia (NYSE:NOK) were doing good business with QWERTY smartphones. However, the high-priced iPhone's uniqueness gradually won over customers.

John Chen cannot replicate the exceptional impact that the iPhone delivered in 2007. However, the Passport's unique hybrid QWERTY/big touchscreen design might win the hearts of some high-paying customers. Furthermore, in spite of the recent big climb of BBRY, BarChart Opinion's short-term indicators give this stock an average rating of 80% Buy.

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This favorable rating from BarChart Opinion could inspire BlackBerry fanatics to continue pushing BBRY higher this week.

Disclosure: The author is long BBRY, AAPL, NOK. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.