Judging by its stock price, things appear on the up-and-up at Canadian tech turnaround story BlackBerry (Nasdaq: BBRY), and rightfully so to an extent.
Under the leadership of current CEO and turnaround artist extraordinaire John Chen, BlackBerry has largely shifted its business model from its former hardware-and-services model to almost exclusively relying on services to drive its future business results. Perhaps even more importantly for the company's short-term survival, Chen also took a hatchet to BlackBerry's expenses, and appears to have stabilized this once potentially fatal issue.
And on Wednesday, BlackBerry formally introduced its latest gambit in its on-going turnaround, the BlackBerry Passport smartphone. And although the Passport has certainly received its share of media attention in the run-up to its unveiling, is the Passport likely to make a dent in the marketplace? Let's take a look.
It's hip to be square
Without question, the most defining feature of the new BlackBerry Passport is its screen shape. BlackBerry has elected to depart from the traditional rectangular screen shape familiar to virtually every smartphone on the market, and instead has designed the Passport with a 4.5-inch square screen.
BlackBerry claims the device was inspired by the size of an actual passport, something it describes as "the universal symbol of mobility." And should come as no surprise, the Passport is geared entirely toward the working professional. BlackBerry believes that the wider screen size will better enable the enterprise users it prizes to view and create content in their busy, on-the-go lives. However, the Passport's unique form factor also probably serves another purpose, differentiating the new device from the nearly uniform body of rectangular smartphones on the market today.
Doubling down on software
The unique shape certainly isn't the only key aspect of BlackBerry's new smartphone. BlackBerry is using the Passport as an opportunity to roll out several new software features that it hopes will further its push deeper into software and services. The most important is the BlackBerry Blend.
Blend is BlackBerry's new productivity software that enables users to synchronize their productivity tools (messaging, email, files, etc.) across all classes of computing devices. The service will run on Microsoft Windows, Apple OSX and iOS platforms, and Google's Android mobile OS. The strategic idea here is quite simple, BlackBerry wants to create a unified service, powered by its secure server network, that professionals will actually want to use as they navigate their ever-busy lives. This would be a powerful milestone in BlackBerry's turnaround efforts.
Remember, BlackBerry has largely tied its future to software and services, which it hopes will provide a more sustainable and profitable business model in the future. The only problem is that it needs users in order to monetize them. That's where it appears Blend comes in. If the service was to gain mass adoption, then BlackBerry could continue to push other software services like its BBM messaging or its BES enterprise apps, which would meaningfully increase its overall revenue opportunity. It's a savvy way for BlackBerry to try to bring users into its software ecosystem.
Long odds for BlackBerry
BlackBerry certainly deserves ample credit for making a series of bold moves with the Passport and its accompanying software, and I applaud Chen and his management team for realizing that it will take big bets in order to revive BlackBerry. That being said, I'm still not sure I'm convinced the Passport will prove to be the silver bullet management is hoping for.
BlackBerry's Blend software is certainly a savvy attempt at winning over corporate users, although a cadre of similar cloud-based software services, like DropBox, provide similar functionality, albeit in a slightly less polished fashion. The point is that enterprise users attain more or less the same functionality from already-existing products. The downside is that in order for Blend to succeed, the BlackBerry Passport will need to become a massive winner, and I don't see that happening either.
I could be wrong here, but as we've seen with the host of recent BlackBerry hardware offerings, end-users (consumers) simply aren't that interested. This could be because Apple's iOS and Google's Android have created high enough switching costs with their respective content and app ecosystems that consumers have almost permanently "bought-in" to their current platform of choice. Another possibility could be that BlackBerry's comparatively paltry app ecosystem hasn't proven compelling enough to entice consumers away from Android and iOS, even as novel devices like the Passport generate substantial buzz. There's little way of knowing which is the case, but either way, the ultimate result will likely remain the same.
BlackBerry's making many of the right moves with both the Passport and its Blend software; they're fresh and unique, two key traits BlackBerry will need in spades to reinvigorate its tattered brand. However, even accounting for this, I still have a hard time seeing the Passport turning into the device that totally reverses BlackBerry's fortunes. BlackBerry reports earnings this Friday, and expect analysts to probe its executive team for more details on the Passport and other strategic moves.
Andrew Tonner owns shares of Apple. The Motley Fool recommends Apple, Google (A shares), and Google (C shares). The Motley Fool owns shares of Apple, Google (A shares), and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.