BlackBerry: Making a Big Bet on Physical Keyboards in Future Models

Less than two years ago, BlackBerry (NASDAQ: BBRY  ) unveiled its first smartphone without a physical keyboard, allegedly in an attempt to more effectively compete with Apple (NASDAQ: AAPL  ) . Today the company has a number of devices without keyboards. The move to touch keyboards hasn't helped the company pull itself up out of the doldrums. Since the first model was unveiled, shares have slid from levels above $12 to $8.50 at the time of this writing. Though BlackBerry has initiated a number of major changes in an attempt to get the ball rolling again, including a management shakeup, there has been no plan to prominently return to the physical keyboard until now. Will the strategy work?

BlackBerry's love for keyboards
"I personally love the keyboards," BlackBerry CEO John Chen told Bloomberg at the Las Vegas Consumer Electronics Show on Monday. Going forward, Chen said, BlackBerry's phones will "predominantly" have keyboards again. Notably, he emphasized that BlackBerry models won't "exclusively" feature physical keyboards.

The move goes contrary to Apple's iPhone, which has never sported a physical keyboard. Apple's iPhone revenue in its most recent quarter hit a record fourth-quarter high of $19.5 billion, easily trumping BlackBerry's total revenue in its most recent quarter of just $1.2 billion.

At the same time, BlackBerry is suing a company called Typo. Typo offers a physical keyboard that attaches to Apple's iPhone.

The move to a physical keyboard as a major focus for the company is part of BlackBerry's efforts to rekindle its relationship with corporate and government customers.

Will it work?
Though there are certainly fans of BlackBerry's keyboard, it's tough to get on board with BlackBerry's decision. Even if it helps BlackBerry build trust with physical keyboard enthusiasts, it proposes a natural counterargument: BlackBerry is looking backwards in an industry that typically looks forward. What about the younger generations, so used to iOS and Google Android touch keyboards? Is BlackBerry stubbornly trying to get the last puff on a used cigar as it struggles to innovate?

Apple saw tremendous success when it followed Steve Jobs' forward-looking visions. BlackBerry is focusing on a limited market of the past. Will physical keyboards ever be a major part of the future of smartphones? Probably not.

On the other hand, BlackBerry's stock certainly isn't priced for major success. So this might make sense. After all, BlackBerry trades at just one times book value and 0.5 times sales. Compare that to Apple's valuation of 3.9 times book value and three times sales. The stock certainly isn't priced for much.

At the end of the day, however, thinking backwards likely won't work in an industry that is always evolving and pushing the limits of what consumers are used to. Returning to the past is not innovation.

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  • Report this Comment On January 08, 2014, at 11:20 AM, cbglobal wrote:

    LOL, Big bet on their most popular model. What next?

    McDonalds makes big bet on fast food burger and fries.

    Ford makes bid bet on economy cars.

    Microsoft makes big bet on PC software.

    Exxon makes big bet on gasoline.

  • Report this Comment On January 08, 2014, at 11:24 AM, TMFDanielSparks wrote:

    @cbglobal

    big difference between your observations in those companies and BlackBerry's industry is that you outlined fundamental pillars that are the building blocks of those industries and physical keyboards are not a fundamental pillar to the smartphone industry. Even more, those industries have changed very slowly -- if at all. The smartphone industry, on the other hand, is evolving rapidly.

  • Report this Comment On January 08, 2014, at 11:39 AM, melegross wrote:

    Keyboards aren't going to help them. Their non keyboard models, including the much touted new BB10 model did poorly, the Q10, about which Heins had stated shortly before its arrival as having a lot of "pent up demand", was a total flop.

    So how Chen, who hasn't even used a Blackberry, talking about how much he likes the keyboard on his Sony-Erricsson phone, thinks that concentrating on mostly keyboarded models will help, is something I can't understand.

    I'm 64, and I find the iPhone keyboard so much easier than the much praised, for the time, of my Palm Treo 700p. So, while I think that older cell phone users MAY prefer a hardware keyboard, I really doubt it. Few people I know of my age who have a smartphone, have one with a hardware keyboard, and none say the miss one.

    As for my 22 year old daughter, she tells me that almost no one she knows (and that's a LOT of people) has a keyboarded phone.

    The future isn't keyboards, except for a few that just can't seem to learn anything new.

  • Report this Comment On January 08, 2014, at 11:44 AM, melegross wrote:

    cbglobal, the difference is that these companies are still successful at what they do. Blackberry has failed at what they do. If keyboards were so important to Blackberry users these days, then the Q10 should have been a runaway success, instead of the total failure that it is.

    Keyboard aren't the answer. They need a comparable user experience. Attempting to whine about how secure they are (according to a recent bit if info, they may be compromised by the NSA), and oh people want a keyboard, they should have come out with new phones that didn't have so many problems.

    Having Android apps work better on their BB10 phones won't help. If people want Android apps, they will simply buy an Android phone.

  • Report this Comment On January 08, 2014, at 12:21 PM, marv08 wrote:

    I correspond in 6 languages (each having its special characters and diacritical marks) and nothing has helped me more than software keyboards. On the iPhone or iPad (or other device without physical keys) another keyboard layout is only one keystroke away and the spell-checker is automatically respecting the current language selected. Perfect.

    Chen might have a point when it comes to emerging markets. I have seen people using a lot of devices with keyboards in e.g. India and Indonesia - they do a lot of texting and they, at large, stay within one language / character set. Samsung's and Nokia's Asha BB-clones (as well as the old Curves) are relatively popular there, but the Q10 and Q5 a simply not priced competitively. Building more affordable models with Foxconn might indeed help them to increase volume there, don't see much in terms of profits though. They are going against devices priced in the $40-90 range here and BB10 demands quite sophisticated hardware to run smoothly. Not saying it can't be done, but quite a bit skeptical.

  • Report this Comment On January 08, 2014, at 1:12 PM, cbglobal wrote:

    You guys cannot read. I never said the keyboard was popular; just that Blackberry "betting big" on what it does regularly anyway is kind of silly.

  • Report this Comment On January 08, 2014, at 1:14 PM, cbglobal wrote:

    That actually would be an interesting topic. How the current generation cannot read, and only project what they think on to others instead.

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