Last October, BlackBerry Ltd. (BBRY) CEO John Chen said the company would exit the hardware market if it wasn’t profitable in a year. With that deadline looming, speculation is rising that BlackBerry could said goodbye to the hardware business forever.
That was the assessment of Seeking Alpha, which pointed to two data points. First there is the pricing of BlackBerry’s DTEK 50 Android-based phone, which rolled out in August. The phone was initially selling on Amazon.com for $335 but has recently been cut to $299. While handset makers are known to reduce their prices, it comes just a few weeks after the launch.
The second piece of evidence: BlackBerry is discounting all of its handset accessories on its website. Customers will save up to 40% on accessories, including ones for the new DTEK 50. The promotion ends Sept. 27, a day before the company reports second-quarter results. Those two combined were enough for Seeking Alpha to conclude BlackBerry may make an announcement in conjunction with its earnings report.
The Priv Takes a Dive
Exiting the hardware market wouldn’t be too surprising given the missteps BlackBerry had with the Priv. The Priv was supposed to mark BlackBerry’s reentrance into mobile phones but the price was too high for most buyers. Even a price cut did little to drive demand. For the first quarter, BlackBerry said it shipped 500,000 handsets, continuing a precipitous decline in shipments. CEO Chen said the Priv was too pricey for its first launch and would instead focus on the middle tier of the market. (See also: BlackBerry Rethinks Smartphones as Priv Sales Flop.)
Its first try was the DTEK50. BlackBerry is trying to stand out from the pack by cramming a lot of security features into the new Android device. It also comes with a more palatable $300 price tag. But BlackBerry hasn’t said how the DTEK50 has performed since its launch. (See, also: Behind BlackBerry’s 70% Decline in 10 Years.)
While it’s not clear what BlackBerry will do with the hardware business, one thing is for sure: Software is becoming a much more important component of the company’s business. In its first quarter software and services came in at $166 million, up 21% from $137 million in the year-ago first quarter. Software and services accounted for 39% of the revenue in the quarter.
[Source:-Investopedia]
