Blackberry’s John Chen Spoke about the Performance of Priv

The smartphone maker announced its fourth quarter financial results yesterday according to which The Priv did not get the attention we thought it did.

We had initially hoped that Blackberry Ltd.’s android powered smartphone, Priv would prove to be a turning point for the Canada based smartphone maker. However, according to the recent fourth quarter fiscal year financial results, it can be observed that the product did not get as much as attention as we had hoped it would.

The CEO John Chen had previously stated in an interview with CNBC, that in case the company fails to progress in the hardware business; it might exit the smartphone market and be a software-only firm. In addition to that he also said (at the launch of Priv last year) that the company needed at least a year to make the specific smartphone profitable. Despite the dip in its stock and revenue, he is expecting that the product could reap profits in the near future.

As per the fourth quarter earnings report, the Canada-based company incurred a loss due to which a dip of 5% was seen in BBRY stock. From initial revenue of $660 million from a year earlier, the revenue fell down to $464 million. Furthermore, the analysts had predicted that the organization might post earnings of $563.2 million; instead it made a loss of $238 million in comparison to a year ago, the loss was at $28 million.

In an interview with Bloomberg, the CEO justified why the android based smartphone failed to get the attention everyone thought it would. He explained that due to a delay in the network contract agreements the Priv’s distribution network suffered and took a hit. Furthermore, it has been made quite evident that the high-end smartphone market has officially hit a saturation point since the Priv was targeted as one of the high-end smartphones it took a hit in that department as well. He added that the price of the device might have to be taken into consideration again and a change might be seen some time next week.

John further told Bloomberg that the company is also working on mid-range category smartphone now as well which means that in the near future we will be seeing some new Blackberry mid-range phones. However at a lower average selling price (ASP) the company will need to smell a number of units in the market to breakeven as this product is mainly for the mass market. In addition to that, he did emphasize of the fact that whoever bought The Priv, loved it. He believes that mid-range phones might prove to be an excuse to sell BBRY’s high-end phones as well.

He also talked about some of the drawbacks in the device which include upgrading the operating system on a regular basis. Rumors have surfaced that android’s latest Marshmallow 6.0 will soon hit the Priv as well. He is quite certain that the smartphone will prove to be an excellent device in the smartphone market; and with its expansion plans to enter Japan and Mexico will only increase the company’s market share in the industry. Even though he mentioned that in case the hardware business does not perform well, they will exit it however it seems as though he has no such intentions of doing so.

Furthermore, there have been rumors of two new android smartphones to hit the market soon that have been codenamed ‘Rome’ and ‘Hamburg’. However, it should be mentioned that the company’s fate completely depends on the product’s pricing, average selling price and marketing along with other factors.

Analysts Are Pessimistic About Blackberry Ltd's Future

Blackberry Ltd, has been trying to get back in the smartphone game for a while now and has miserably failed to do so however the future does not seem entirely bad for the tech company.

According to analysts, the success of the new Blackberry Ltd seems highly unlikely. Despite of the fact that it has been labeled as the most “android secure” phone and practically is able to manage and access Android app’s entire ecosystem, analysts did initially believe that it would turn out to be big in the market.

The sole purpose for this negative remark is because Apple, Inc.’s success in the market; as reported by Tim Cook, Silicon Valley giant’s CEO, in the fourth quarter of the current fiscal year over 30% of android users switched to iPhones. The next big company in the smartphone business is Samsung so at this point Blackberry Ltd does not even come close to being successful.

Despite all this, the reviews of the novel secured android based smartphone are quite impressive. Retailers of the device are usually sold out but the exact number of devices sold by the tech company has not been disclosed as yet. According to John Chen, the CEO of the tech company said in an interview to CNBC that the multinational company has been doing reasonably well for a financial perspective. He added that the current focus of the company is growth; they will be expanding their business. Even though they currently have high fixed costs, he stated that profitability of the new device is likely to come by 2016.

The company is expecting that the profitability will come from its handset division but the analysts remain pessimistic about it. However, there still seems to some hope for the company because of the Internet of Things (IoT). Analysts are optimistic of the fact that IoT might be what brings the former glory of the business. Since IoT will be a market worth $1.7 trillion by the year 2020, Blackberry might be able to gain some profits through it. More than 50 billion devices might be connected to IoT by 2020 which will be equivalent to over seven devices connected to one person all over the world.

The plans of the company currently are to provide security to the IoT market in the future. According to popular belief however the most profit the company is such as to generate would be through its blackberry software development. The company even launched a QNX operating system in the year 2010 which is currently being used in Ford cars that connected the vehicle to the internet. As per the recommendation, investors should start investing in the company and slowly start purchasing the shares. The company has the potential to succeed in the future but merely owing to the Internet of Things.