Please ensure Javascript is enabled for purposes of website accessibility

BlackBerry Could Be About to Make a Radical Change

By Sam Mattera - Sep 1, 2015 at 8:00PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Adopting Google's Android operating system would represent a sharp departure from its longstanding strategy.

Google (GOOG 4.16%) (GOOGL 4.20%) could be about to gain another hardware partner -- perhaps the most unusual one yet.

Reports suggest that BlackBerry (BB 8.24%) is about to adopt Android, and could role out two phones powered by Google's mobile operating system this fall. It would represent a radical change for the Canadian handset maker, given that over the course of its history, it has stuck by its own, proprietary mobile operating systems. Its flagship phones, the BlackBerry Passport and BlackBerry Classic, are powered by its latest operating system, BB10.

Given the precarious state of BlackBerry's handset business, the downsides to Android adoption certainly seem limited. Android-powered phones could reignite demand for BlackBerry's hardware and benefit its service business.

Venice and a new Passport?
According to prolific leaker Evan Blass, BlackBerry will launch an Android-powered slider (code named Venice) in November. In the U.S., it will be offered on all four major carriers, and allegedly sport relatively high-end specs, including a Snapdragon 808 processor and 18 megapixel rear camera. Those who do not care for the slider form factor may have the opportunity to purchase an Android-powered variation of the BlackBerry Passport.

The BlackBerry Passport running BB10

Both phones could enter a crowded Android handset market, going head to head with a growing number of impressive (and increasingly cheap) Android flagships. That may be why BlackBerry has taken so long to adopt Google's operating system -- with intense competition, it's difficult to stand out and even harder to generate a profit. BlackBerry will have some advantage in the form of its trademark keyboard. Once, Android phones with hardware keyboards were not uncommon, but almost all have fallen by wayside. Assuming that there are still consumers left that desire a physical keyboard, BlackBerry will have face (almost) no competition courting them.

The risk to BlackBerry is that it drives away whatever customer base its BB10 still had. In a statement to CNBC, a BlackBerry spokeswoman reiterated the company's commitment to its BB10 operating system. Even if BlackBerry continues to make BB10-powered handsets alongside its Android devices, its customers could shift over to Google's ecosystem and, in the long-run, move to other Android vendors. But BlackBerry isn't selling many handsets anyway -- last quarter it sold just 1.1 million.

A way to drive its services
Instead, BlackBerry is increasingly a software and services business. Once its software was largely tied to its own hardware, but over the last few years, BlackBerry has brought its services to other platforms. BES12, its enterprise mobility management solution, gives IT departments the ability to manage all sorts of mobile devices -- not just BlackBerry handsets, but iPhone, Android, and Windows Phone as well.

BlackBerry brought BBM, its messaging service, to iOS and Android in 2013. And it's bought or created a wide variety of platform-agnostic mobile apps including WorkLife (its BYOD solution) and WatchDox (its secure file management service).

Google's Android is open source, and while Google requires its partners to preinstall certain apps and preserve particular services, BlackBerry could deliver a slightly modified version of Android that emphasizes its own services. Ideally, BlackBerry could sell an Android-powered phone to a consumer at a profit and add a new BBM user in the process.

Of course, it's possible that its new phones could be ignored entirely. There is no shortage of capable Android handsets, and the disappearance of hardware keyboards suggests that demand for such devices is, at most, modest. Still, it's one of the more intriguing developments in the handset market, and if they sell well, could provide some nice upside for BlackBerry shareholders.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Alphabet Inc. Stock Quote
Alphabet Inc.
$2,246.33 (4.20%) $90.48
BlackBerry Stock Quote
$6.57 (8.24%) $0.50
Alphabet Inc. Stock Quote
Alphabet Inc.
$2,255.98 (4.16%) $90.06

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.