BlackBerry Launches Its Second Android Phone
July 26 2016 - 4:20PM
Dow Jones News
BlackBerry Ltd. unveiled a second Android-powered phone on
Tuesday, doubling down on efforts to revive its struggling handset
business even as its first bet on the popular operating system is
yet to pay off.
The new device, along with BlackBerry's broader handset effort,
face an uphill battle as the Canadian company's smartphone sales
have shrunk to a fraction of former levels amid competition from
rivals such as Apple Inc. and Samsung Electronics. Co.
That is pushing some analysts to call on BlackBerry to give up
on handsets, as the device maker accounts for less than 1% of
global smartphone market, and to focus only on higher-margin
mobile-security software and related services.
"Without significant scale it's very hard to make money on
Android," said Gus Papageorgiou, an analyst at Macquarie Group
Ltd.
For the quarter ended May 31, BlackBerry's handset business had
an operating loss of $21 million.
The once-dominant smartphone maker covets a profitable handset
business to augment sales of its growing, but still relatively
small, software and patent licensing division. Achieving
profitability would also afford BlackBerry more time to develop new
secure devices that connect consumer and industrial products to the
web.
BlackBerry's new phone, called DTEK50, will retail for $299, and
offers a 5.2-inch screen and all-touch keyboard. The company has
loaded it with proprietary encryption technology to protect photos,
contacts and other data against cyberattacks. The device includes
an alert system to tell users when social-media applications are
tracking their locations or accessing a phone's camera or
microphone. It also offers productivity tools such as the company's
unified inbox that compiles email, text and other messages in one
place.
"We built the phone to hit not only a price point that's good
for fleet deployments where companies are providing the devices,
but at a price point and with the feature set that makes it of
great interest to consumers," Alex Thurber, BlackBerry's senior
vice president for global device sales, said on a webcast. The
company also plans to launch another Android device shortly, this
time with a physical keyboard, Mr. Thurber said.
Smartphones powered by Alphabet Inc.'s Android operating system
control more than 80% of the global smartphone market.
BlackBerry needs a device hit as handset sales continue to fall
despite releasing a string of new smartphones, including three
powered by its BB10 operating system, since September 2014. It
launched the Priv, its first Android phone, in November. Overall,
BlackBerry sold 500,000 devices in its latest quarter, down from
2.1 million in the quarter ended Aug. 30, 2014.
Earlier this month, the company announced plans to stop making
its Classic smartphone, fueling speculation that it may abandon the
BB10 operating system. The company, however, says it is committed
to its proprietary system.
BlackBerry has said BB10-device sales were hurt by a lack of
social media and entertainment apps that are only available on
Apple's iPhones and Android-powered devices.
The Priv was meant to address that issue by combining
BlackBerry's encryption technology with access to the popular
Google Play app store.
BlackBerry hasn't disclosed Priv sales, but the number of phones
on which BlackBerry recognized revenue is down almost 17% since the
device's launch. Priv's initial hefty price tag of $699 in part
hampered demand and BlackBerry has said longer-than-expected
contract talks with U.S. carrier Verizon Wireless hindered
sales.
DTEK50 is priced at a steep discount to the Priv, underscoring
BlackBerry's attempt to appeal to a broader audience.
The market for midprice smartphones, however, is crowded with
offerings from firms such as Samsung and LG Electronics Inc. In
March, Apple also introduced a lower-priced iPhone.
Sales of the new BlackBerry device could also suffer because the
company hasn't announced any partnerships with major U.S. wireless
phone operators to distribute the device. That is a potential
setback as carrier support would offer an endorsement of the
product and greater availability. AT&T Inc. offered the Priv at
the time of that device's launch.
BlackBerry said it expects to begin delivering the new phone
during the week of Aug. 8, but will take preorders starting Tuesday
from customers in the U.S., Canada, the U.K. and several other
European countries. It also has deals with more than 40
distributors globally to help generate sales. In the U.S., the
company will initially distribute the phone through Amazon.com
Inc., and retailers Best Buy Co. and B&H Foto & Electronics
Corp.
Write to Ben Dummett at ben.dummett@wsj.com
(END) Dow Jones Newswires
July 26, 2016 16:05 ET (20:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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