Thu, Feb 27, 2014 - Page 15 News List

BlackBerry plans to go back to basics

TAIWAN LINK:Hon Hai/Foxconn chairman Terry Gou appeared with BlackBerry CEO John Chen at the Mobil World Congress in Barcelona, highlighting the firms’ ties

Reuters, BARCELONA, Spain and TORONTO

BlackBerry chief executive John Chen.

Photo: Bloomberg

BlackBerry Ltd unveiled a new, cheaper touchscreen smartphone and a “classic” model with a keyboard on Tuesday, as it tries to stem losses and win back once-devoted security-conscious business and government users.

The news, coupled with details about the company’s strategy, helped send shares in BlackBerry surging more than 9 percent on Tuesday.

The lower-end Z3 smartphone, priced at under US$200, is being built under a partnership deal with FIH Mobile (富智康), the Hong Kong-listed unit of Taiwanese electronics company Hon Hai Precision Industry Co Ltd (鴻海精密).

Code named Jakarta, the device will go on sale in April in Indonesia, where BlackBerry’s BBM messaging service is proving very popular, company chief executive John Chen said.

“It’s a 3G phone, and we have a plan to expand the phone to different parts of Southeast Asia after Indonesia,” he said at the annual Mobile World Congress trade fair in Barcelona.

“We have a plan to go global with an LTE [high speed 4G] version of it sometime in the future,” he said.

BlackBerry, once a must-have device for every business executive and government official because of its pioneering secure e-mail service, has hemorrhaged market share to Apple Inc’s iPhone and rival devices running on Google Inc’s Android software.

Opening its admired BBM messaging service to other operating systems — with Microsoft Corp’s Windows Phone being the latest addition — has further hit BlackBerry sales, particularly in emerging markets.

Research group IDC put BlackBerry’s share of the smartphone market in the fourth quarter of last year at just 0.6 percent, down 77 percent from a year ago.

Chen appeared on stage with Hon Hai chairman Terry Gou (郭台銘), reflecting a burgeoning relationship that is set to deepen as the Taiwanese company manufactures the new, high-end “classic” BlackBerry.

Chen’s strategy is to focus more on its profitable services segment that helps its large government and corporate clients manage and secure mobile devices on their internal networks.

Admitting the company had spread itself “a little too thin,” he said it would focus on the 30 percent of the enterprise market where the strength of BlackBerry’s operating system in terms of security played best — regulated industries like banking and telecommunications, and government.

Although the announcements helped boost BlackBerry shares about 10 percent to US$10.78 on the NASDAQ in mid-afternoon on Tuesday, some analysts remain skeptical about whether the company can turn around in its fortunes.

“In our view, BlackBerry has yet to prove that it can stabilize its subscriber base and cost structure, before establishing a baseline profit level and new path to growth,” GMP Securities analyst Deepak Kaushal said in a research note.

BlackBerry signed a five-year deal last year with Foxconn, in which it would no longer pay upfront for parts used in its devices. Instead, Hon Hai will take a share of profits on each device in return for taking on inventory management.

The partnership also gives Foxconn a step up in the value chain — a chance to not just assemble smartphones, but help to develop and design them as well.

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