BlackBerry Ripe for Growth, Predicts CEO Chen
It appears CEO John Chen may have put the brakes on BlackBerry's dramatic death spiral. The company's recovery "will be slow and gradual, but you can no longer ignore BlackBerry," said Trip Chowdhry, managing director of equity research at Global Equities Research. Chen "is one of the most sophisticated executives in corporate America. It would be foolish and foolhardy to underestimate John Chen."
08/06/14 1:25 PM PT
BlackBerry -- the "sick man of mobile" -- is poised for better times.
That was the sentiment expressed by CEO John Chen in an internal memo distributed to BlackBerry employees last week.
BlackBerry has completed its restructuring and the workforce reductions that started three years ago have been completed, Chen wrote in the memo, which was leaked to Reuters.
Better yet, barring any unexpected downturns in the market, BlackBerry would be adding workers in several areas, including product development, sales and customer service.
Chen expressed confidence that the company would meet its goal of becoming cash-flow positive by March 2015, the end of its current fiscal year.
Over the last three years, BlackBerry has taken a hatchet to its workforce, reducing it from a high of 17,500 in 2011 to around 7,000 today. Those layoffs will free up resources that will enable the company to make strategic acquisitions that will fuel future revenue growth, Chen wrote.
BlackBerry made such an acquisition last week. It purchased Secusmart, a privately held German firm that focuses on voice and data encryption.
BlackBerry's security is considered the gold standard in the mobile industry, and the Secusmart buy appears to be a sign that it intends to maintain its leadership.
Chen's memo warned employees that BlackBerry's return to success was still fragile, and they needed to remain focused on the rollout of the company's new software and hardware products.
Despite Chen's guarded optimism, the bottom line is people still aren't buying BlackBerry phones.
"Right now, customers who call us are not buying BlackBerrys," Ken Dulaney, vice president for mobile computing at Gartner, told the E-Commerce Times.
"If BlackBerry wants to be a hardware manufacturer as it was in the past, it will have to sell millions and millions of phones to consumers," he said. "If it plans to get rid of the hardware business and be a software company, it will be a smaller company. That could be successful."
Never King Again
Under Chen, BlackBerry has migrated away from its hardware roots.
"BlackBerry has become more of a software and services company versus a hardware company," Patrick Moorhead, founder and principal analyst with Moor Insights and Strategy, told the E-Commerce Times.
"I think they see hardware as a necessary evil now, given their colossal failures," he said, "which is ironic given their heritage."
While BlackBerry has backed off its grand designs to be a major mobile player in the consumer market and instead is concentrating on the corporate and government sector, its major competitor hasn't changed.
"BlackBerry's primary competitor is, ironically, still Apple -- as they were in the consumer world," Moorhead said. "Apple has beefed up its security to the point where many government agencies trust the iOS platform, particularly when paired with a secure [mobile device management system]."
Chen's redirection of BlackBerry's resources promises to be a mixed bag for the company.
"BlackBerry will never be what they once were," said former Forrester analyst Charles Golvin, who recently founded Abelian Research.
"Their goals -- in contrast to their decisions in the past -- are relatively modest, but they're also more achievable," he told the E-Commerce Times.
"The past two leadership regimes lacked a grip on reality -- the reality of their market position and capabilities," Moorhead said.
"They tried to do it all," he continued, "which spread the company so thin that it couldn't win at anything. Chen has focused the company in an area that they have a fighting chance to be successful in."
If anyone can make BlackBerry a winner in the enterprise mobile market, it's Chen and COO Marty Beard, said Trip Chowdhry, managing director of equity research at Global Equities Research.
"These two executives pioneered enterprise mobility," he told the E-Commerce Times.
"BlackBerry's recovery will be slow and gradual, but you can no longer ignore BlackBerry," Chowdhry said.
"I have followed John Chen for 18 years," he added. "He is one of the most sophisticated executives in corporate America. It would be foolish and foolhardy to underestimate John Chen."