BlackBerry Can See The Light At The End Of The Tunnel

It’s not often that a company announces it has lost £2.7 billion in a single quarter and its share price actually goes up, but that’s exactly what happened when BlackBerry posted worse than expected results last week.

On the face of it, it might seem as though investors in the struggling Canadian manufacturer are queuing around the corner to throw their money away, but their increased confidence in the company reflects the fact that for the first time in a long time, it has something resembling a feasible roadmap to recovery.

BlackBerry has told everyone who will listen that it is returning to its roots by effectively abandoning the consumer market and targeting the enterprise, spewing out figures that suggest BlackBerry Enterprise Service 10 (BES10) and BlackBerry Messenger is in more demand faster than alcohol from inebriated revellers on Christmas Eve.

BlackBerry direction

But for the first time, investors have seen evidence that BlackBerry is working towards becoming a smaller, more focussed company. Much of the £2.7 billion loss can be attributed to a write-down of assets, so it’s not as bad as it sounds, while the ongoing restructuring of the company is bound to incur some costs – employee layoffs are but one example.

BlackBerry sold just 1.9 million handsets in the most recent quarter, down from 3.7 million in the same quarter last year. To add insult to injury, most of these were running the aging BlackBerry 7 OS. Any hope that BlackBerry 10 is capable of launching a recovery has long been extinguished.

Hardware will become increasingly irrelevant to BlackBerry as time goes on. Revenues slumped from £979 million in Q2 to £734 million, and half of this was generated from services. But as BlackBerry moves towards a service-oriented structure, it shouldn’t ignore the fact that there is still an increasingly niche market for its smartphones.

We’re not talking about touchscreen devices here. There’s a reason the Q10 was better received than the Z10, itself a perfectly fine smartphone, and that’s the presence of a physical keyboard. Some people simply prefer keys, and it is probably one of the reasons its BlackBerry 7 handsets are doing better than those with BlackBerry 10.

Handset revival

So the news that BlackBerry had also agreed a deal with Foxconn to jointly manufacture handsets catering for this demand is also positive. BlackBerry handsets are still coveted as a status symbol by many people in emerging markets and this could be a lucrative market to hold onto in the near future as smartphone penetration increases.

Likewise, BlackBerry die-hards (yes there are still some out there), will be hoping these devices reach developed markets so they can continue to use their smartphone of choice.

Finally, the recent appointment of John Chen is appearing to inspire confidence. Thorsten Heins’ has been named in a number of ‘worst CEOs of 2013’ lists and it is difficult to argue with his inclusion.

Although the delayed release of BlackBerry 10 wasn’t entirely his fault, his persistence with the platform and misguided belief it could restore market share when it should have been released years earlier, exacerbated the situation at the company by delaying the strategy BlackBerry is currently pursuing.

BlackBerry is still in trouble. Its haemorrhaging money and numerous vultures are circling around its mobile device management (MDM) market share, but the continued relative success of BES 10 and the renewed popularity of BBM, along with some important management changes, suggests that there is but a hint of light at the end of the tunnel.

BlackBerry has had a bumpy year! Try our 2013 BlackBerry quiz!