If the BlackBerry Priv doesn’t pan out, you may not see any more BlackBerry smartphones.
Most people go to Las Vegas to gamble, party or see a show.
On a warm winter’s day in January 2014, Ron Louks journeyed to Vegas to gamble. But he wasn’t there to try his luck at the tables. He was there, on one of his first days on the job as head of BlackBerry’s smartphone business, to bet on the company’s future.
After landing in the desert city at the start of the annual Consumer Electronics show, Louks checked in with BlackBerry CEO John Chen and then set off for his first and most important appointment. Tellingly, it wasn’t with a wireless carrier or one of BlackBerry’s manufacturing partners. It was with Google.
“Android, in our mind, was a long time coming,” Louks said in an interview last week.
Chen, a software industry veteran hired to help save the Canadian company in late 2013, had already been talking to Google about how BlackBerry could better work with its Android mobile software. The next step was up to Louks, who previously worked at HTC and Sony Ericsson.
Nearly two years after that Vegas meetup with Google, BlackBerry is getting ready to sell the BlackBerry Priv, a smartphone that for the first time isn’t powered by the company’s own mobile software. Chen and Louks hope that by tying their fortunes to Android, the world’s most popular operating system, BlackBerry will do something it hasn’t been able to in five years: Win over customers who abandoned its brand and its once almighty keyboard-driven gadgets for Apple’s iPhone and Samsung Galaxy phones.
If the $700 Priv flops, that will likely spell the end of the BlackBerry smartphone.
“If this doesn’t resonate with users, there’s not much else they can do,” said Chris Hazelton, an analyst at 451 Research.
BlackBerry’s head of devices, Ron Louks, teases a BlackBerry with a slide-out keyboard at Mobile World Congress in March 2015.
Chen has already set the stakes. He’s said, repeatedly, that he’ll dump the smartphone business if it doesn’t turn a profit. While it doesn’t break out earnings from its devices business, BlackBerry has lost more than $6 billion in the last two and a half years. To move into the black, the company must sell 5 million smartphones next year. That’s a tall order considering it sold just 800,000 last quarter, less than half as much as it sold a year ago.
BlackBerry-powered smartphones represent less than half a percent of a market that’s led by phones running on Android and iOS, the software that powers Apple’s iPhone, according to research firm IDC. That’s a pitiful statistic given that BlackBerry controlled nearly a fifth of the market in 2009, just behind another now-fallen giant, Nokia.
Chen also said that 2016 is a make-or-break year for both the company and his leadership. “Otherwise, I have to think twice about what I do there,” he said at a mobile conference in October.
As for Louks, he said that BlackBerry has been “engaged” with the top carriers around the world, all of which have agreed to help market the Priv. In the US, AT&T will be the first carrier to sell the Priv. The Canadian carriers and UK’s Carphone Warehouse will also offer it. The Priv launches on Friday.
The thing is, we’ve heard this story before from BlackBerry. A few times. And so far, none of those stories have ended well.
The elusive Ron Louks
On the second day of CES in 2014, Chen was holding court before reporters in a ballroom at the Monte Carlo Casino. Louks, whose hiring was announced the day before, was nowhere to be found.
He remained missing from view for the next 11 months. He was a no-show at the unveiling of the low-cost BlackBerry Z3 at Mobile World Congress in February 2014 and skipped a security summit five months later, where Blackberry gave an early look at its BlackBerry Passport smartphone.
BlackBerry CEO John Chen at a press roundtable session at the Consumer Electronics Show in January 2014.
During a briefing with reporters and bloggers for the Passport in New York in September 2014, Louks got sick and skipped the presentation.
I asked Blackberry (half) jokingly if Louks actually existed and was still on the job.
It turns out he was quietly making the case for building a BlackBerry using Android.
While Chen wanted a stronger relationship with Google — one of the services BlackBerry offers is managing emails on mobile devices, including those powered by Android — Louks pushed things forward by asking to build an Android smartphone in early 2014.
Chen wasn’t sold on the idea . And he wasn’t alone. BlackBerry veterans are accustomed to using BlackBerry’s own software to ensure the most secure devices, and Android lacked a reputation for security.
“There’s normal tension when you change a strategic decision,” Louks said. “People are going to question it.”
It wasn’t until Louks convinced Chen he could build a secure Android smartphone, with security embedded in the hardware like its processor, that he got the green light.
For the first BlackBerry Android phone, Chen wanted something special.
Outing the slider
During BlackBerry’s press conference at the Mobile World Congress trade show in March 2015, Louks walked onto the small stage with purpose. He whipped out a mystery smartphone with a slide-out keyboard and a curved glass display that wrapped around the sides. Just as quickly, he stowed it away in his pockets.
The “Slider,” as Chen called it, left an impression. A curved glass display was one of the marquee features of Samsung’s Galaxy S6 Edge, unveiled two days earlier. Samsung’s executives talked up the complicated process of building that wraparound display. Yet here was BlackBerry with the same feature.
“[Louks] understood the value in creating buzz,” said Scott Wenger, BlackBerry’s head of design. He joined in September 2014 after working with Louks at HTC and Sony Ericsson.
There was a reason for the don’t-blink-or-you’ll-miss-it cameo: The device was little more than a mockup, with a backlight used to simulate an active screen. If you looked at it too closely, the BlackBerry 10 home screen was visible, but Android was nowhere to be found.
The prototype was the product of work that began in earnest after BlackBerry had launched the Passport, a squat-looking smartphone with a square screen that came out in September 2014. The Passport was in development before Louks came aboard. But concepts like the curved display, which Samsung supplied, were looked at months before.
The problem is that Galaxy S6 Edge and its larger sibling, the S6 Edge+ are already in the market with their curved displays. Doesn’t the BlackBerry’s Priv lose a little of its chic?
“Initially, I felt the wind was taken out of sails,” Louks conceded. But he thinks BlackBerry can piggyback on Samsung’s marketing for a phone with a curved display.
Louks and Chen are also betting the slide-out keyboard and the focus on security can turn some heads.
Reason for excitement
Most assumed the slider phone unveiled at MWC would run on the BlackBerry 10 software. It was, after all, how the company had always operated.
But over the summer, leaks and images about an Android-powered BlackBerry popped up with increasing frequency.
In September, BlackBerry confirmed it would sell an Android smartphone in the fourth quarter. The Priv, which takes its name from “privacy” and “privilege,” aims to address the top complaint of former and current BlackBerry users: the lack of apps.
This content is rated TV-MA, and is for viewers 18 years or older. Are you of age?
Sorry, you are not old enough to view this content.
With Android, Priv users can now tap into more than 1 million apps. As of last year, the BlackBerry World store offered 234,500 apps, although its phones can access Amazon’s Appstore with more than 330,000 programs.
“It’s the No. 1 issue across any device we release far and away,” Marty Beard, chief operating officer for BlackBerry, said in an interview last week. “That’s always been there staring at us.”
The Priv was announced the same day in September that BlackBerry posted an adjusted loss and revenue that disappointed investors. Those investors are questioning the progress of Chen’s transformation of the business from a pure devices company into one that makes its money off software and services.
The Priv, however, may just give the company something to rally behind. “This is the first thing that will get us cranking the other way,” said Greg Dunko, head of product development for BlackBerry.
The same story again?
Whether the Priv is a success remains to be seen. BlackBerry’s last comeback effort was a disaster. Its BlackBerry Z10 smartphone launched with a marketing campaign that included a Super Bowl commercial and the support of multiple wireless carriers. But the company ultimately had to take a charge of nearly $1 billion to account for unsold Z10 phones.
By embracing Android, BlackBerry has the potential to tap into a huge customer base. But there are many big-name companies, including HTC and Sony, already struggling to make a dent in the Android smartphone market.
Google did not respond to emails seeking comment.
“It’s a near insurmountable challenge to succeed where others have failed,” said Maribel Lopez, an analyst at Lopez Research, about BlackBerry’s consumer prospects. But BlackBerry may be able to carve a niche in the business world, a place where it once held so much sway.
It’s a challenge Louks is prepared to take on. The whirlwind pace of getting the Priv ready for prime time has meant that in the past year the longest stretch he’s spent at home has been two weeks. But to Louks and his team, the sacrifice has paid off, and he believes the Priv is that something special Chen wanted.
“It’s completely different,” Louks said.