BlackBerry Launches Its Second Android-Powered Phone
July 26 2016 - 11:29AM
Dow Jones News
By Ben Dummett
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 has
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 its
handsets, which account for less than 1% of the global smartphone
market, 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 device, called DTEK50, will retail for $299,
and offers a 5.2-inch screen and all-touch keyboard. The company
has loaded the phone 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.
"DTEK50 merges unique security and connectivity features...with
the rich Android ecosystem," Ralph Pini, head of BlackBerry's
device business, said in a statement. The company is also expected
to launch another Android device, this one with a physical
keyboard, in its current fiscal year.
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 the company releasing a string of new smartphones,
including three powered by its BB10 operating system, since
September 2014. It launched the Priv, its first-ever 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
BlackBerry 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 a deal 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 11:14 ET (15:14 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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