By Paul Sandle and Euan Rocha
BARCELONA/TORONTO Feb 25 BlackBerry Ltd
unveiled a new, cheaper touchscreen smartphone
and a "classic" model with a keyboard on Tuesday, as it tries to
stem losses and win back once-devoted security-conscious
business and government users.
The news, coupled with more details about the company's
strategy in its services business, helped send shares in
BlackBerry surging more than 9 percent.
The lower-end Z3 smartphone, priced at under $200, is being
built under a partnership deal with FIH Mobile, the
Hong Kong-listed unit of Taiwanese electronics company Foxconn
Technology Co Ltd.
Code named Jakarta, the device will go on sale in April in
Indonesia, where BlackBerry's BBM messaging service is proving
very popular, said John Chen, who took over as the group's chief
executive late last year.
"It's a 3G phone, and we have a plan to expand the phone to
different parts of southeast Asia after Indonesia," he said at
the annual Mobile World Congress trade fair in Barcelona. "We
have a plan to go global with an LTE (high speed 4G) version of
it some time in the future."
BlackBerry, once a must-have device for every business
executive and government official because of its pioneering
secure email service, has haemorrhaged market share to Apple
Inc's iPhone and rival devices running on Google Inc's
Opening its admired BBM messaging service to other operating
systems - with Microsoft Corp's Windows Phone being the
latest addition - has further hit BlackBerry sales, particularly
in emerging markets. Research group IDC put BlackBerry's share
of the smartphone market in the fourth quarter of 2013 at just
0.6 percent, down 77 percent from a year ago.
BACK TO THE FUTURE
Chen appeared on stage with Foxconn Chairman Terry Gou,
reflecting a burgeoning relationship that is set to deepen as
the Taiwanese company manufactures the new, high-end "classic"
The Q20, available before the end of the year, will have a
traditional BlackBerry layout, aimed squarely at the company's
original core business and government customers, Chen said.
The reintroduction of Blackberry's traditional keyboard was
at the top of customers' wish list, he said.
The line of keys that included the 'Menu,' 'Back,' 'Send'
and 'End' buttons, along with a trackpad, had been dropped on
its high-end Q10 keyboard device that was launched last year.
The lack of the familiar keys, coupled with the device's all
new BlackBerry 10 operating system, had left many long time fans
disenchanted with the Q10 device.
Chen's strategy is to focus more on its profitable services
segment that helps its large government and corporate clients
manage and secure mobile devices on their internal networks.
Admitting the company had spread itself "a little too thin,"
he said it would focus on the 30 percent of the enterprise
market where the strength of BlackBerry's operating system in
terms of security played best - regulated industries like
banking and telecommunications, and government.
"We don't want to lose the rest of the market ... but for
the next 18 months I think you see us very much intent on going
back and winning the regulated industries," he said.
He also unveiled changes to the company's mobile device
management tool for companies and government in Barcelona,
taking prices lower with the aim of winning back some of the
market share lost to competitors.
Although the announcements helped boost BlackBerry shares
about 10 percent to $10.78 on Nasdaq at mid-afternoon, some
analysts remain skeptical about whether the company can turn
around in its fortunes.
"In our view, BlackBerry has yet to prove that it can
stabilize its subscriber base and cost structure, before
establishing a baseline profit level and new path to growth,"
GMP Securities analyst Deepak Kaushal said in a research note.
Despite shifting the focus away from its money losing
handset business, Chen has indicated that the segment remains a
core asset for the company.
The price of BlackBerry's devices, while competitive,
reflect the company's security credentials, he said.
"We need to build very solid phones that are more skewed
toward the high-end," he said. "We are not going to play 'let's
build a $75 phone.' That's not our sweet spot."
BlackBerry signed a 5-year deal last year with contract
Foxconn, in which it would no longer pay upfront for parts used
in its devices. Instead, Foxconn, the trading name of Hon Hai
Precision Industry, will take a share of profits on
each device in return for taking on inventory management.
The partnership also gives Foxconn a step up in the value
chain - a chance to not just assemble smartphones, but help to
develop and design them as well.