BlackBerry CEO’s Effort to Revive Company Starts to Pay Off

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Shortly after his appointment as BlackBerry Ltd.’s new CEO in November of last year, John Chen began making the rounds. At the time, the company was in a state of virtual freefall, its future a matter of debate. As a result, consumers and enterprise customers were bailing.

Looking to stop the bleeding, Mr. Chen targeted BlackBerry’s most lucrative and strategically important demographic – the big corporate customers.

“I personally spoke to a lot of people and have met a lot of customers, some very big names,” Mr. Chen said during an earnings call on Thursday. “When we have a chance to lay out our plan and visions, the majority of the time we get them to support us.

“What I have found is people who would like to stay with Blackberry, who were concerned a little while back, and I need to try to regain that confidence.”

This week, BlackBerry surprised many investors and analysts by posting better-than-expected results for its fiscal first quarter. Even though the company still lost money on an adjusted basis, the loss was far less severe than most analysts expected, and gross margins much higher. The smartphone maker’s shares jumped more than 10 per cent on the news.

For years, BlackBerry couldn’t quite figure out how to treat the vastly different worlds of consumer and enterprise mobility. Even as companies such as Apple and Samsung were creating the devices that eventually came to dominate the industry, BlackBerry executives hardly even recognized that a consumer smartphone market existed. When the Canadian tech giant finally got around to targeting consumers, it tried to build all-in-one solutions such as the PlayBook tablet, designed to appeal to both enterprise and everyday retail customers. For the most part, the strategy flopped.

In early 2012, Thorsten Heins replaced Jim Balsillie and Mike Lazaridis as CEO – part of a plan to change BlackBerry’s sagging fortunes. However the company continued to lose money and market share, and in less than two years, Mr. Heins also stepped down. His replacement, Mr. Chen, is now under even more pressure to accomplish the turnaround his predecessors could not.

“I think if BlackBerry was a little more humble, they would do a lot better,” said Joe Compeau, an expert in information systems at the Ivey School of Business, adding that the company’s strong suit has never really included more consumer-oriented areas such as apps, but rather data and network management.

“That’s where they get their relevance.”

So far in Mr. Chen’s tenure as CEO, that message seems to be resonating. The old company line of focusing equal time and effort on consumers and enterprise customers is all but gone. Instead, Mr. Chen has turned his company’s attention squarely on retaining and winning over corporate clients, while simultaneously signing myriad deals and licensing agreements that effectively outsource much of the heavy lifting in the consumer smartphone market over to third parties.

It is, in many ways, a radical departure for a company that used to do almost everything in-house. It’s too soon to tell whether the new strategy will put BlackBerry on a path back to its glory days, but in the short term, at least, the early signs are that it’s working.

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SOURCE: OMAR EL AKKAD  
The Globe and Mail

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