Bloomberg Businessweek magazine’s cover showed a range of archeological objects: a flint arrowhead, a skull and a BlackBerry handset. The label? “Relic.”
On Friday, BlackBerry’s interim chief executive John Chen (程守宗) outlined a new strategy for the Canadian company in which he acknowledged that making smartphones was a thing of the past. Instead, the company will focus on intangible services such as offering cybersecurity for businesses and not making physical handsets.
Making smartphones has not been a good business for anyone who is not Apple and Samsung recently, as they have squeezed the profits out of the rest of the industry. BlackBerry has been crushed.
On Friday it announced a loss of US$4.4 billion on revenues of just US$1.2 billion; only a tax rebate of US$624 million saved its net figures from being worse.
Those three months to the end of last month marked a turning point: For the first time, BlackBerry now gets more money — 53 percent of revenues — from selling “services” such as sending data including e-mail and Web pages, than it does from selling handsets, which generated 40 percent. Software made up the other 7 percent.
However, that has come as the company’s revenues have shrunk to levels smaller than at any time since May 2007, and the number of smartphones shipped, 1.9 million, is the smallest since December 2006. BlackBerry, whose founders laughed at the iPhone’s lack of a keyboard, is out of the smartphone race. In future, Hon Hai (鴻海), also known as Foxconn (富士康) in China and which makes the iPhone, will co-design and manufacture BlackBerrys too, and hold the stock. BlackBerry will effectively become a reseller of its own smartphones.
“The smartphone business is brutal,” says Kevin Restivo, global smartphone analyst at the research company IDC. “It’s one where the big players — Samsung, Apple, and a few Chinese companies — are going to have success, and the others are scratching for crumbs.”
Societe Generale analyst Andy Perkins told reporters: “At some point it becomes uneconomic to make handsets in such small quantities.”
Chen is a turnaround artist. He was brought in to the software company Sybase, where he executed a successful reorganization. Since taking over 45 days ago (following the ejection by the board of former chief executive Thorsten Heins) he has overseen a number of departures of existing senior executives and hired some former colleagues. The obvious conclusion is that he is reshaping BlackBerry as a services and software company.
Unlike other struggling smartphone makers, BlackBerry can fall back on tens of millions of customers in large businesses, who rely on the security of its products. Chan said that 80 percent of users were business customers. That could be anywhere up to 50 million users worldwide, offering a substantial base for rebuilding any corporation, even the struggling BlackBerry.
However, the data also confirmed that BB10, the operating system launched in January by Heins, has been a flop. Since March, BlackBerry’s customers have bought a total of around 17 million phones, but only 5.6 million have been BB10 devices.
Consumers have been turned off because the BB10 functions differently from the old BB7 model, while businesses have backed away because BB10 devices cannot be hooked up to the older BlackBerry Enterprise Server (BES) systems that so many big customers use.
BlackBerry-using businesses have taken one of two paths: either sourcing old BB7 handsets to keep their existing users happy, or abandoning BlackBerry altogether.
Chen has an answer to both. For consumers, BlackBerry will try to somehow make money from the millions of people who have downloaded the BBM messaging software and installed it on iPhones and Android smartphones.
“Revenues might come from a per-user per-month model, or rolling out advertising,” he said on Friday. “We’re a long way from knowing how to do it.”
For businesses, he will offer “mobile device management” software that will be able to control not just BlackBerrys, but also iPhones and Android phones.
However, there are plenty of rivals there, and it’s not a big business — worth only about US$560 million this year globally for all vendors, and growing at 12 percent annually, according to ABI Research.
Even if a reshaped BlackBerry captures more than half of that, it would still look tiny compared to what it was.
SECOND-RATE: Models distilled from US products do not perform the same as the original and undo measures that ensure the systems are neutral, the US’ cable said The US Department of State has ordered a global push to bring attention to what it said are widespread efforts by Chinese companies, including artificial intelligence (AI) start-up DeepSeek (深度求索), to steal intellectual property from US AI labs, according to a diplomatic cable. The cable, dated Friday and sent to diplomatic and consular posts around the world, instructs diplomatic staff to speak to their foreign counterparts about “concerns over adversaries’ extraction and distillation of US AI models.” Distillation is the process of training smaller AI models using output from larger, more expensive ones to lower the costs of training a powerful new
Micron Technology Inc is a driving force pushing the US Congress to pass legislation that would put new export restrictions on equipment its Chinese competitors use to make their chips, according to people familiar with the matter. A US House of Representatives panel yesterday was to vote on the “MATCH Act,” a bill designed to close gaps in restrictions on chipmaking equipment. It would also pressure foreign companies that sell equipment to Chinese chipmaking facilities to align with export curbs on US companies like Lam Research Corp and Applied Materials Inc. The bill targets facilities operated by China’s ChangXin Memory Technologies Inc
Singapore-based ride-hailing and delivery giant Grab Holdings’ planned acquisition of Foodpanda’s Taiwan operations has yet to enter the formal review stage, as regulators await supplementary documents, the Fair Trade Commission (FTC) said yesterday. Acting FTC Chairman Chen Chih-min (陳志民) told the legislature’s Economics Committee that although Grab submitted its application on March 27, the case has not been officially accepted because required materials remain incomplete. Once the filing is finalized, the FTC would launch a formal probe into the deal, focusing on issues such as cross-shareholding and potential restrictions on market competition, Chen told lawmakers. Grab last month announced that it would acquire
The artificial intelligence (AI) boom has triggered a seismic reshuffling of global equity markets, with Taiwan and South Korea muscling past European nations one by one. With its stock market now valued at nearly US$4.3 trillion, Taiwan surpassed the UK, Europe’s biggest market, earlier this month, data compiled by Bloomberg showed. South Korea is about US$140 billion away from doing the same. The tech-heavy Asian markets have shot past Germany and France in the past seven months. The shift is largely down to massive gains in shares of three companies that provide essential hardware for AI: Taiwan Semiconductor Manufacturing Co (TSMC, 台積電),
RSS