Source: BlackBerry.
Although BlackBerry (BB -2.61%) is still in the phone business, it's becoming increasingly apparent new CEO John Chen is looking at other avenues to grow the company. And that makes sense: After essentially creating the smartphone format with its line of email-capable devices, the company fell behind operating systems like Apple's (AAPL 0.22%) iOS and Alphabet's (GOOG -4.00%) (GOOGL -4.14%) Android, which concentrated on improving their ecosystems, where BlackBerry continued to focus on minutiae-like keyboards.
As a result, the company saw its market share and valuations drop. At one time, BlackBerry had a 20% market share of smartphones and boasted a per-share price above $130. Now the company's share of market languishes below 1% with a stock price stuck near $7 per share. As an even more ominous sign for Crackberry fans, Chen referred to first-quarter results as "having good achievements" although smartphone-related revenue cratered a massive 31%, as Chen focused on software and technology licensing.
However, if there's one silver lining for Blackberry phone fans in a sea of storm clouds it would be the new BlackBerry Priv. Unlike the company's other phones, which use the much-maligned BlackBerry 10 operating system, for the Priv it decided to partner with the smartphone-OS leader, Android, in hopes to nullify its OS shortcomings. However, if early reports are indicative of the unit's value proposition, there's one big problem with the Priv.
BlackBerry Priv, why are you more expensive than an iPhone?
As far as competitive positioning goes, it seems BlackBerry wants to go high-end to compete with Apple's iPhone and Samsung's Galaxy line. According to Cult of Android, Carphone Warehouse, a British reseller, is starting to take preorders for BlackBerry's Priv at a cost of $76 per month for a two-year contract -- compare that to a 64GB iPhone 6s Plus, which can be purchased for $68 per month, and the Galaxy S6's monthly price of $48.
And while the device certainly looks impressive, smartphone shoppers need more than good looks to make a buying decision. For Apple, of course, the iPhone line is not only cheaper but also is more inoculated through ecosystem incompatibility, making it hard to imagine BlackBerry stealing market share. For Samsung and other high-end Android vendors like LG and Motorola, the ecosystem is less of an issue, but the overall price remains a barrier to stealing market share and will probably prevent BlackBerry's Priv from being a wide-scale success the company has so desperately desired.
Still, a great decision from BlackBerry
So, while this may not be the hit BlackBerry fans envisioned, it doesn't mean BlackBerry made a bad decision to partner with Alphabet for its operating system. By nullifying its operating-system shortcomings, BlackBerry can compete directly on device features and brand affinity -- the problem for BlackBerry, however, is the aforementioned differentiators don't justify a phone model priced above Apple and Samsung's top-of-the-line units.
In the end, I don't expect the Priv, at the reported price point, to be a game-changer for the company. Instead, what I think the Priv signifies is a step in the right direction. In the end, I think BlackBerry has the potential to grow market share in the midrange with a security-focused Android-based unit, but the company probably won't make a huge splash in the high-end smartphone markets.
