BlackBerry's (BBRY +1.84%) Passport, the company's new flagship device, launches in the U.S. this week for $599 without a contract.
The Passport certainly stands out from the crowd -- the phone features a 4.5-inch, 1,440 x 1,440 pixel square touchscreen and a QWERTY keyboard below the screen. The device has a quad-core 2.26 Ghz Krait 400 processor, 3GB of RAM, 32GB of internal storage, a microSD slot for 64GB of additional storage, a 13-megapixel rear camera, and a 2-megapixel front camera. It also runs the company's latest operating system, BlackBerry 10.3.
The BlackBerry Passport. Source: BlackBerry.
Simply put, BlackBerry has returned to its flagship design instead of imitating Apple's (AAPL 0.04%) iPhone or Google (GOOG +0.04%) (GOOGL 0.04%) Android devices, as it previously attempted with maligned phones like the Z10.
While the BlackBerry Passport certainly won't be mistaken for any other smartphone, I seriously doubt that it will gain much market share in today's crowded mobile market. BlackBerry only controls 0.5% of the smartphone market today, according to research firm IDC.
Why BlackBerry believes in the Passport
BlackBerry CEO John Chen told The Wall Street Journal that several key features will help the Passport stand out in the enterprise market -- its large square screen, its lower price than comparable phones, a 36-hour battery life, a large antenna for better reception, and the OS' reputation for cybersecurity and personal identity protection.
Some of those strengths are certainly noteworthy. The big square screen and physical keyboard make it easier to type emails and messages, which would be ideal for iPhone and Android users who despise touch keyboards and narrow screens. While exact battery life comparisons vary, the Passport's 3,450 mAh battery is certainly bigger than the iPhone 6's 1,810 battery and the iPhone 6 Plus' 2,915 mAh battery -- making it the ideal device for mobile workers who require a long-lasting smartphone. Cybersecurity is also a key issue with enterprise customers, since the number of data breaches has soared over the past few years.
BlackBerry has also compensated for its lack of apps by adding Android compatibility to BlackBerry 10. BlackBerry also inked a partnership with Amazon (AMZN 1.40%) in June to add over 240,000 Android apps from Amazon's Appstore to BB10 devices. Cross-platform compatibility isn't perfect, but having access to 1.4 million Android apps definitely puts BlackBerry in a better position than Microsoft's (MSFT +1.69%) Windows Phone, which has around 300,000 apps.
Why investors shouldn't believe in the Passport
Unfortunately, that doesn't mean BlackBerry's investors should believe that the Passport will be a game-changer.
The Passport's price is its first problem. At $599, it's moderately cheaper than the $649 iPhone 6, $749 iPhone 6 Plus, and Samsung's (NASDAQOTH: SSNLF) Galaxy S5, which initially cost around $650. However, it costs much more than newer high-end Android devices.
For example, Oppo's OnePlus One, which costs $379 unlocked, features a 5.5-inch 1080p screen, a quad-core 2.5 Ghz Krait 400 processor, 3GB of RAM, a 13-megapixel rear camera, a 5-megapixel front camera -- all superior or equivalent specs compared to the Passport. The OnePlus only loses to the Passport in two categories -- a slightly smaller battery (3,100 mAh) and half the internal memory at 16GB (although a 64GB version only costs $80 more).
Oppo isn't the only new company selling high-end phones at thin margins -- Xiaomi recently dethroned Samsung as the top smartphone maker in China with the same strategy.
Oppo's OnePlus One. Source: Oppo.
BlackBerry bulls will claim that although devices like the OnePlus One offer consumers more bang for their buck, Android can never be a secure enterprise platform. While that was arguably true in the past, Google is integrating Samsung's security platform, Knox, into Android L (5.0). John Chen mocked the partnership, warning companies to not be "dazzled by those who can talk the security talk", but there's evidence that Knox is gaining traction as an viable alternative to BlackBerry.
The U.S. Department of Defense, for example, is testing 100,000 new devices in its DOD Mobility Implementation Plan. 80% are BlackBerries, but the remainder includes iOS and Knox devices. Knox only runs on a handful of Samsung devices, but when it hits all Android L devices, BlackBerry Passport could lose its edge in cybersecurity.
Meanwhile, relaxed BYOD (bring your own device) rules at companies have also helped Apple and Google push BlackBerry out of the workplace. Ironically, BlackBerry is encouraging this behavior with BES (BlackBerry Enterprise Service), its "unified dashboard" for tracking employees' BlackBerry, Android, and iOS devices.
A Foolish final word
It's hard to see a happy ending for the BlackBerry Passport. The device is priced poorly against newcomers in the Android market and ill-equipped to deal with the threats of iOS, Android L, and relaxed BYOD rules in enterprise. In conclusion, this awkward departure from Chen's three previously stated goals for BlackBerry -- monetizing BBM, expanding BES, and launching lower-end devices for emerging markets -- will likely be as big a flop as its BB10 devices last year.
