BB CEO admits firm could stop making handsets if it doesn’t sell five million devices a year, amidst launch of first Android handset
John Chen has admitted he could axe BlackBerry’s handset division if it doesn’t start turning a profit within the next year and a half.
Speaking at the Code/Mobile conference, the BlackBerry CEO said the troubled manufacturer would consider exiting the device-making business if there was no value to it.
BlackBerry has just unveiled its first Android handset, the BlackBerry Priv, after reporting losses of $66 million for its last quarter.
Chen said the “business case” would determine whether BlackBerry continued to build and sell handsets.
“I’m in the handset business because I believe there’s value added and a market that is underserved,” he said
“Sometime next year we have to make our device business profitable, otherwise I have to rethink what I do there.”
According to reports in The Verge, Chen said BlackBerry needs to sell five million handsets to make its business profitable. During its latest quarter, it saw revenue generated on just 800,000 devices.
BlackBerry’s handset business has been in freefall for the last few years. Its Q2 handset sales were down 1.3 million from 2.1 million the year before, and 3.7 million in Q2 2013.
Market research figures from YouGov, given exclusively to Mobile News, showed how the manufacturer has been “haemorrhaging customers” in the UK during the past five years, with market share plummeting from 21 per cent in 2010 to just two per cent today.
“At present the brand’s situation is dire and getting worse.” YouGov director of digital media and technology Russell Feldman told Mobile News. “BlackBerry has lost a lot of customers to rival manufacturers.”
According to YouGov, 45 per cent of former BlackBerry users had moved to Android, with 33 per cent moving to iOS.
Feldman argued that BlackBerry’s move into Android could help it appeal to those customers who had left to go to Google’s rival operating system.
Software and apps was the number one reason that BlackBerry users moved was the number of apps (41 per cent) and type of apps (40 per cent) available on rival operating systems.
Feldmand said: “An Android BlackBerry could increase the chance of at least some of these consumers considering returning to the brand again. Nine in ten Android users expect to get an Android-based handset in the future.
“Amongst those that expect an Android brand in the future, half of them are mid-range and low-end handset customers which could be an ideal start for BlackBerry to bear fruit.
“In a market awash with choices between very similar products consumers remember solid traits such as reliability and quality and it is the memory that BlackBerry will have to evoke with its first Android device.
“If it can offer up a more flexible user experience in terms of browsing and apps BlackBerry’s Android could, just could, stand a chance of picking up lapsed customers that have shifted to smartphone manufacturers with a smaller market footprint. However, nostalgia will only get it so far. It will also need a good phone.”
BlackBerry said the Priv will be released before the end of the year.