Once the maker of the phone of choice for business leaders and even President Barack Obama, BlackBerry (BB -3.14%) has lost nearly its entire user base. Though the company has been humbled and reduced to a shadow of its former glory, CEO John Chen refuses to admit failure.
So, instead of accepting that it no longer has a place in the consumer handset market, BlackBerry returned Wednesday with its first global release since the company's failed BlackBerry 10 introduction in early 2013. The new product, the Passport, has a 4.5-inch screen, which the company said in a blog post "offers a similar viewing space to a 5-inch phone." The device has a unique shape, which is actually similar to an actual passport, as well as the company's signature physical keyboard.
Blackberry, in the same July blog post, seemed optimistic that offering a different look would register with customers:
We've been living in a rectangular world for quite some time and know it's a great ergonomic design that drives content, media consumption and quick communications. However, the rectangle has become a de facto approach to smartphone design, perhaps limiting innovations.
That may be true, but consumers have moved on from BlackBerry, and a device that's good, even great, is still unlikely to win customers back.
BlackBerry's new Passport phone. Source: BlackBerry.
BlackBerry no longer has an audience
It's a lot easier to launch a new phone when a big portion of your audience is simply upgrading. Apple (AAPL 0.52%) has mastered that system, enticing a large percentage of its customers to purchase a new phone every year or two. BlackBerry will not have that luxury, as its share of the global smartphone market had slipped to around 0.5% in the second quarter of 2014, down from 13.6% in Q2 2011.
Google's (GOOG -1.96%) (GOOGL -1.97%) Android leads with 84.7% market share while Apple's iOS holds 11.7%. BlackBerry did gain a little ground compared to the first quarter of 2014, according to IDC, but remaining below 1% hardly suggests a comeback.
Its lower price is essentially meaningless
The Passport will cost $599 retail without a subsidy, less than comparable phones, including Apple's iPhone 6, which starts at $649.99, and Samsung's flagship Galaxy S5, which is priced similarly, though it varies from carrier to carrier.
Blackberry CEO John Chen seems to understand that charging the same price as his more-established competitors do would make it even less likely people will buy a Passport, but he seems to not realize that being slightly cheaper won't make a difference.
Chen told The Wall Street Journal that compared to similar smartphones the Passport should cost in the $700 range. "But I figure that to try to get the market interested, we're going to start a little lower than that."
The sentiment is correct, but the price is still way too high. Amazon has made its struggling Fire Phone free (albeit with a contract), and even at full retail, it still only costs $449. Fire Phone, which has a 4.7-inch screen, also comes with a free year of Amazon Prime, which is a $99 value. Yet despite Amazon having over 220 million active customers (people for whom it has credit cards on file), very few Fire Phones have been sold.
Blackberry has neither the huge customer base nor the many perks Amazon can offer. A slightly lower price, especially when most customers will either buy their phone with a subsidy or on an installment financing plan, is simply not enough. The $50 price break Passport buyers would get over purchasing an iPhone works out to $2.08 in savings each month on a typical two-year financing deal. That won't cause anyone to take the leap of faith required to buy a Blackberry.
Blackberry is on shaky ground
It's one thing to take a risk trying a Windows 8 phone, because you know with complete certainty that Microsoft (MSFT -2.45%) will be around to support it. You can also assume that since Microsoft spent $7.2 billion buying Nokia in order to bolster its mobile phone business, that slow sales right out of the gate won't cause the company to throw in the towel.
It's hard to have the same confidence in Blackberry. The company has largely moved away from making phones, and going more than a year between device releases led many to believe it would never make another phone. The Passport feels like a last chance, and the possibility that the device could be dropped -- something Blackberry has already done with its failed Playbook tablet line -- will likely scare people away.
This is an impossible battle
The Passport is a "good phone, but it will never really hit the mainstream as a premium offering," IDC Malaysia's Daniel Pang told The Wall Street Journal in an article published Monday. "Most consumers are too invested in other platforms" such as Android or iOS.
Unless BlackBerry can introduce a truly revolutionary product -- like a smartphone that's also a single-serve coffee maker, or a tablet which gives a mean foot massage -- no product it releases has a chance. If Blackberry had released the Passport in 2011, it would have been revolutionary and it might have stopped the company's slide. Now, while it's a nice phone by most accounts, the Passport is at best a variant on what's already out there from much more established companies.
Blackberry made a good phone, but it did it three years after it needed to in order to stay in the handset business.
