BlackBerry Ltd Needs to Do THIS
BlackBerry Ltd (NASDAQ:BBRY) is likely one step away from scrapping its smartphone unit—at least that’s probably what CEO John Chen has to do to jumpstart BBRY stock.
The problem for BlackBerry is that the majority of later-stage millennials probably don’t remember the BlackBerry phone was once referred to as the “CrackBerry” due to its addictive nature. But that’s in the past. Mention BlackBerry now and you’ll likely get a yawn.
Back in 1999, when BlackBerry (then known as Research in Motion) launched its first mobile phone with its amazing e-mail feature, Cher was at the top of the music charts with “Believe.” Fast-forward 17 years and the song is a distant memory and it looks like the BlackBerry may soon join it.
Don’t get me wrong; I think Chen has done a great job with the company’s enterprise software unit and the Internet of Things. However, he should really look at trashing the smartphone unit and focusing on building the software segment. This strategy, I feel, is the only way BBRY can survive and be around in another decade as a potentially thriving technology company.
On his part, Chen doesn’t seem like he wants to let go of this once-iconic smartphone but like a child becoming an adult, you need to eventually let go of your old toys.
How many more quarters or years Chen will maintain the BlackBerry device despite obviously declining sales and a market share of less than a percent is unknown. What is known is that he needs to dump the phone.
The reality is that the smartphone business has become extremely competitive worldwide in both developed and emerging markets. It’s going to take a lot of work and innovation to get the BlackBerry to move in such a saturated market.
Time for Chen to Move On
Smartphones are becoming cheaper despite being loaded with numerous advanced features. Consumers are becoming more hesitant in wanting to shell out $700.00 for a smartphone while they can pay $200.00 for a pretty decent Chinese-made one.
Apple Inc. (NASDAQ:AAPL) is feeling the crunch as sales of its sought-after “iPhone” are stalling. The company is still selling hundreds of millions of iPhones each year, but I believe the margins will inevitably be squeezed as the competition heats up.
BlackBerry should not be partaking in this competitive market and sending more of its much-needed cash to the incinerator.
It’s time to let go, Mr. Chen.
There’s also the fact that even after adopting the hugely popular “Android” operating system for its “Priv” phone, the bloodletting doesn’t seem to be stopping.
In the company’s fiscal fourth quarter (ended in March), BBRY sold approximately 660,000 smartphones versus 1.325 million in the comparative quarter in 2015. In 2014, BlackBerry sold approximately 14 million phones. Clearly the trend is negative and if you believe in patterns, you have to believe Chen has to discontinue its smartphone unit.
Even payment solutions company PayPal decided to dump the BlackBerry.
The bottom line is that John Chen needs to focus on being a major mobile software applications developer for the Internet of Things.
Cher has retired; the BlackBerry must follow.
It’s only under this option that BlackBerry can become relevant again.