Why the BlackBerry Classic is critical to the new BlackBerry
Hint: It's not about smartphone sales volume or market share.
Roger ChengFormer Executive Editor / Head of News
Roger Cheng (he/him/his) was the executive editor in charge of CNET News, managing everything from daily breaking news to in-depth investigative packages. Prior to this, he was on the telecommunications beat and wrote for Dow Jones Newswires and The Wall Street Journal for nearly a decade and got his start writing and laying out pages at a local paper in Southern California. He's a devoted Trojan alum and thinks sleep is the perfect -- if unattainable -- hobby for a parent.
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SABEW Best in Business 2011 Award for Breaking News Coverage, Eddie Award in 2020 for 5G coverage, runner-up National Arts & Entertainment Journalism Award for culture analysis.
The BlackBerry Classic , as its name implies, is a throwback to the company's glory days. But the smartphone plays an important role in BlackBerry's future.
Wednesday's BlackBerry Classic event kicked off like most other phone launches: a video played to hype up the BlackBerry name, CEO John Chen made a few remarks and then pulled out the Classic for a photo opportunity. But as the presentation went on, it was clear whom the company was targeting: the IT guy working in a highly regulated business.
The conversation dashed past the typical walkthrough of the Classic's features, with a healthy chunk of time spent on the phone's enterprise software capabilities. Guests touting the business possibilities included chief information officer for Citco Fund Services, the founder of Niederhoffer Capital Management and the chief operating officer of Ontario-based Mackenzie Richmond Hill Hospital.
It's a far cry from Alicia Keys, the pop music sensation BlackBerry once played up as its "global creative director."
The change in tactic is part of BlackBerry and Chen's attempt to transform the company from a device maker into one more reliant on software and services. Services such as BlackBerry Messenger and its mobile device management platform, BES 12, are the future, but the company still needs BlackBerry phones to keep it in the mobile game -- and generating revenue.
"They need devices to underpin the core value propositions," said Charles Golvin, an analyst at Abelian Research.
A familiar face
The BlackBerry Classic takes its design cues from the BlackBerry Bold franchise -- the last flagship BlackBerry line that resonated with consumers. With its familiar trademark keyboard, it serves as a bridge for diehard BlackBerry users still typing away on their old Bold and Curve phones and gives them a reason to upgrade to the new BlackBerry 10 operating system.
While the smartphone was clearly designed to cater to BlackBerry's existing base, the company hopes to attract new users, touting the physical keyboard, messaging hub and longer battery life as attractive characteristics.
"I invite a lot of people who haven't used BlackBerrys before to have a try at it," Chen said. "I think you'll like it and be surprised by it."
Watch this: BlackBerry Classic tempts hardcore fans with keyboard
But with a new generation of users weaned on touch-screen iPhones and Android devices, it's unlikely that many will take a chance on a platform that still lags behind on games and other personal apps.
"We shouldn't delude ourselves into thinking they will go after a broad appeal," Golvin said. He added the only potential customer growth could come from attracting former BlackBerry users into switching back.
"It's wishful thinking," said Avi Greengart, an analyst at Current Analysis.
Interest in BlackBerrys has waned over the years. Over the past five years, it went from a peak of a fifth of the market in 2009 to just below 1 percent in the third quarter, according to Gartner.
A quiet launch?
But BlackBerry isn't competing anymore in the mainstream smartphone market, a rough-and-tumble arena where Apple's iPhone reigns supreme and rivals such as HTC's One M8, LG's G3 and Samsung's Galaxy S5 battle for second place. While Chen has said his goal was to run a profitable smartphone business, that doesn't necessarily equate to huge volumes.
Just look at the BlackBerry Passport. The smartphone was launched with much fanfare in September, but aside from early preorder numbers, it has largely faded. AT&T, which vowed to carry the smartphone, won't carry it until next year. Analysts regard the Passport as more of a novelty.
Given the demand from hardcore BlackBerry users, the Classic may get different treatment. But Chen declined to comment on whether AT&T and Verizon Wireless would provide marketing support for the Classic, which launches in the quieter post-holiday period in January. BlackBerry is taking orders for the Classic now on its own website, selling a version compatible with AT&T and T-Mobile for an off-contract price of $449. AT&T and Verizon haven't provided specific availability and pricing.
Regardless, the BlackBerry devices play an important role. They remain a major financial pillar, making up 46 percent of the company's revenue in the fiscal second quarter. The company reports its third-quarter results on Friday.
More critical is the role the phones will play in convincing big businesses to switch to BlackBerry services, according to 451 Research analyst Chris Hazelton. While BES12 is able to manage multiple mobile devices, including iPhones and Android smartphones, the BlackBerry Classic gives the companies reason to upgrade their systems.
BlackBerry is offering the Classic with different enterprise and security bundles, an example of how it hopes to make money off of its security aspect. It's a sweet spot that Chen, who boasts a strong history with enterprise software companies, wants to get the company moving toward.
"It is very much enterprise focused at this point, and that's absolutely the future of the company, which I think is a good thing," said Jan Dawson, an analyst at Jackdaw Research.
Chen also has a more ambitious vision for devices, which goes beyond smartphones. "It's also the precursor for the whole [Internet of things] market," he said. "I don't look at devices as just a phone business. I look at it as much broader downstream."