When John Chen took over as the Chief Executive Officer of BlackBerry in November 2013, the Canadian phone maker was on ventilator. The company, then known for its QWERTY keyboard devices, was fast losing market share to Apple and Samsung, which had launched new generation smartphones with touch screen, high pixel cameras and lots of interesting applications.
Chen undertook a transformation roadmap that focused on turning BlackBerry from just a device maker to a software firm, centred around its strong portfolio of security solutions. BusinessLine met Chen to know how far he has succeeded in this turn around strategy and if BlackBerry is still relevant in the mobile phone segment. Edited excerpts:
How do you assess the success of the transformation roadmap you started two years back?
When I first came in two and half years ago, the company was almost 100 per cent dependant on the mobile handset business. It was losing lot of money and there was a lot of concern whether the company will survive or not. We have not completed the transformation but we have made the company safe. The company has turned cash flow positive.
We now have a good strategy in place where we focus on enterprise and security — both hardware and software. The transformation is definitely two-thirds through. I still need to make hardware profitable. This is my biggest goal this year. On the software side, we have proven ourselves with revenues doubling.
Given that you have lost out to Apple and Samsung, why is hardware still relevant? Is there a September deadline for you to decide on the future of the handset business?
It is still about 30 per cent of the business. People ask me why I am in the handset business when my software business is growing and has better margins.
Firstly, I have commitments to my customers who are using BB10 devices. This includes many governments and top government officials around the world. We can’t just say I am done and not expect to have negative repercussions.
These are the same customers I have to sell my software to. I have to be in the handset business for a long time. Therefore, the most important thing is to make money on the handset business.
We have looked at every aspect of this business to come with innovative way of doing things. Last September, someone asked how much time I will take to turn around the hardware piece and I said ask me a year later. Maybe I should have said 5 years. But I genuinely believe it can be done.
One of the things you have done to revive the handset business is to shift to Android. This has also not worked. Why?
BB10 is a good operating system but one problem with BB10 is that it does not have enough apps. So, while BB10 is popular with governments and enterprise, phone business is about volumes. Since we need a phone business with volume we looked at the various options. There is Windows but that has the same problem like BB10.
Then we have iOS but that is not open. So I have Android as the option. Android has 80 per cent of the market but most of the devices are in the mid to low-end segment.
There is a void at the high-end segment. So I thought the marriage between Android and our strengths such as security, enterprise features, encryption features would be great. But though people who use it, see it — they love it, it has not been working out well for us so far. Reason- high pricing.
It is basically in the range of the iPhone. The high-end phone market is also soft. Our distribution is also suspect.
Why haven’t you got the pricing right?
It’s because our component costs are high.
India used to be among the top 10 markets for BlackBerry at one time. Where does it figure now in your overall scheme?
We lost a lot of ground in India. We have now hired a seasoned enterprise executive — Narendra who has been mandated to build a team and partnership programmes. We want India to be back among the top 10 markets for us.
Are you looking at government contracts in India?
We do secure mobile communications — voice, data, text — and for that we are in discussion with a number of government agencies. But I think in India, it takes a long time to get anything done, especially if you are a multi-national.
We have been in discussion and I am here hoping to show our commitment.
Are you looking at licensing your security solutions to Indian Android OEMs? How are you approaching the SMB market?
Since our software is cross platform we support Android for Work and it has been growing. India will be driven by SMB. But most of Indian SMBs will not deploy a server or a CIO.
It may go for cloud-based solutions from a telecom operator, for example. So maintaining relationships with telecom operators is important.
What is the status of rolling out Movirtu - for offering virtual SIMs?
We are in the process of the rolling out in three countries. It’s a great concept. By May-end, we have three carriers in final phase of launching. This could be one area where we will do well.
Have you had any success with QNX in India, especially in the automobile segment?
Around 250 car models around the world has QNX today. We have a customer in India as well but I am unable to give out the name.
In a nutshell what would be your top-3 priorities?
Every year is different. I have to get device profitable. I have to maintain the lead on software to grow it as 30 per cent compared to a 20 per cent growth in market. We have to remain cash flow positive that gives us ability to stay and give time to execute and ability to invest.
You have done six acquisitions. Any potential buy outs in India?
We are very multinational. We have done acquisitions in Germany, the United Kingdom, Israel and the US. So, when it fits into our strategy and if it’s affordable we will do it.