BlackBerry CEO John Chen discusses plans, market conditions in a pair of new interviews

BlackBerry has been a mainstay in the Android news cycle for the past year due in no small part to the leaks of a “Venice” which eventually evolved into the precious – yet pricey – Priv. In the wake of said make however, the Canadian company has been confronted with a less than comforting situation: its debut Android smartphone failed to have the impact it arguably was intended to.

More recently, the company’s CEO, John Chen, offered some comments about the future of his company. Today, while attending the Milken Institute Global conference, he has appeared in two interviews to discuss matters further.

With CNBC

The full interview with Mr. Chen can be found on CNBC’s website here, however some of the key points are as follows:

1. When asked if BlackBerry had been the beneficiary of some of the iPhone sales Apple has lost in its recent fiscal quarter, Mr. Chen replied “No I haven’t really seen that evidence. I wish I could…I think the whole high end market has softened for the handset phone business.”
2. When asked what the reason is for said softening, he feel it’s “mostly because of the industry.” This is likely referring to keen competition from Chinese manufacturers who have driven down prices considerably while including increasingly powerful specs and premium builds.
3. When asked about the company’s plans to release new phones, he said, “we have two new phones coming out between now and the end of the year.”
4. Regarding the logic of continuing to make hardware, he referred to the issue as one of “could I get the business to make money?” and answers that “I’m very close.”
5. Regarding the issue of the hardware segment and profitability, he feels that the company is “very close” and that it “will be a profitable one”.
6. When asked if there are plans to release additional hardware after the end of its current fiscal year (ending in February 2017), Chen said “absolutely” however he was careful to note it depends on profitability.

With Bloomberg

Mr. Chen was also interviewed by Bloomberg which can be seen here. Numerous topics were discussed:

1. Regarding the need to keep making hardware, Chen feels that “we have a lot of customers who rely on us”  and that “it’s important that I give them the end to end solution…at least I give them the choice”.
2. Unlike hardware, he stated that “my software business are agnostic to any phones”.
3. Mr. Chen feels that BlackBerry devices “[sic] is the most secure phone, so there are value added there”.
4. He also mentions that by September of this year “I will know” responding to allegations that he has been pushing out the date by which BlackBerry handsets can turn a profit. “But it looks good.”
5. In order to give investors more transparency as to the exact fiscal condition of the hardware business, “I’m going to segmented reporting”.
6. When asked if he “would…keep a handset business that couldn’t generate a 40% gross margin?”, Chen replies that “It depends. As I said it is my connection to a lot of the customers around the world [so] it has value beyond just the margin of itself.”
7. When asked about specifics for the timing of the two hardware devices that are to launch this fiscal year, he replied that “[sic] we’re looking for something late summer, early fall in the first one, and then one that’s later in the year”.

Analysis

The pair of interviews in and of themselves did not yield a great deal of new information, but rather served to double-down on the comments that Mr. Chen has been making for some months now, as well as perhaps give investors some degree of confidence that he seemingly has a solid grasp on the situation facing his company. Of particular interest, however, was that Mr. Chen views BlackBerry hardware as the cornerstone of the relationship between his customers and his company.

The point about software is indeed a valid one, as BlackBerry Messenger has been available for Android handsets for some time now. The hardware represents the complete package and thus the epitome of the company’s services, values, and features. The profit margin comment in particular, shows that the company might be willing to accept a much lower profitability ratio in order to retain customers which include governments and numerous business segments including legal and healthcare.

It would also appear that the company is considering longer term hardware development that could span into the next fiscal year. It is likely any such handsets will be of a more mid-range affordable nature given that the Priv’s high price point arguably was a major barrier to a more wide-scale adoption.

Wrap Up

What do you think about CEO John Chen’s comments? Does he have a firm grasp on the reality of the situation facing his company, or is he unwilling to accept the writing on the wall? Do you feel more confident in listening to his plans? What do you want to see from BlackBerry in the future? Drop a line in the comments section down below!