BlackBerry CEO: We'll Always Be a Phone Company, Sort of

  • BlackBerry could integrate software with Apple, Windows phones
  • Smartphones still account for 40 percent of company's revenue

BlackBerry Ltd. Chief Executive Officer John Chen is sure the software and handset company will always be in the phone business, even if it means working together with other manufacturers like Samsung Electronics Co. or Apple Inc.

Chen is planning to end losses at the device unit in the next two quarters as the company expands sales of its Priv, the first model to run on Android’s operating system. If that works out, BlackBerry will unveil new smartphones of its own. If it doesn’t, its productivity apps and data-protecting software could still show up on devices made by other companies, Chen said during a meeting with reporters on Friday.

“When I tell people ‘If we don’t make money I’m going to get out of the handset business,’ I mean the hardware. We have tons of software,” he said. “That could absolutely run on not only Android phones but Apple phones or Windows phones.” BlackBerry’s messaging application is already available on Apple and Android devices.

Hooked Users

BlackBerry hooked the world on mobile e-mail in the early 2000s, ushering in the era of smartphones. But it failed to keep up with the shift to full-screen devices and rich libraries of applications. In the past quarter it sold 700,000 devices, the lowest number since at least 2007. Last month, the company ditched its own operating system for the Priv and sold it loaded with Android, giving BlackBerry users the chance to use many of Google’s hundreds of thousands of apps for the first time.

Chen said his preference is to remain an original manufacturer but sees good opportunities to license BlackBerry’s technology to other phone makers or layer in its software with their hardware.

An Android phone with a middle-of-the-range price is the most likely device BlackBerry could debut next, Chen said. The Priv’s $699 U.S. price puts it in league with high-end Android phones like Samsung’s Galaxy S6.

“It is a little high, but it is very expensive to build,” Chen said. “It’s not like stamping out cupcakes.”

Software Growth

Smartphones still account for 40 percent of BlackBerry’s revenue but the company’s growth is coming entirely from software products, which help businesses and government track their employees’ mobile devices and secure their data. Software revenue grew almost 200 percent to $161.5 million this quarter compared with the same period last year, putting the company on track to hit its goal of $500 million in full-year software revenue by March 2016, Bloomberg Intelligence analyst John Butler said in a phone interview.

BlackBerry’s shares surged 11 percent to $8.67 at 3:32 p.m. in New York.

For next year, Chen wants to grow the software business further by at least 14 percent -- the speed at which the enterprise mobile management market is growing, he said.

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