- BlackBerry launched its first Android-based phone with embedded security features.
- Priv allows BlackBerry to monetize its security expertise in light of the increased privacy and security awareness.
- Emphasizing security as its added-value among the many Android phones could be the trigger for a sales boom.
It has been a rough year for BlackBerry (NASDAQ:BBRY): worldwide shipments for BlackBerry OS phones declined to only 0.3% of the market. It reported lower than expected earnings results, and BlackBerry stock was down by 30% from $12.6 to $8.08. In recent years, BlackBerry became a stock investors love to hate with declining sales, an unpopular operating system, and no clear path for growth. Analysts downgraded BlackBerry stock rating and lowered its price target, seeking a new business initiative to bring this former smartphone leader back up.
In recent years, BlackBerry tried some options to revive its sales: it launched phones with a touchscreen keyboard, canceled them and returned to a physical keyboard, changed its operating system entirely to compete with iOS and Android, and is now releasing a new Android phone. At first glance, it’s another move towards the ultimate sink of the former Canadian giant. However, this drastic change might be just what the company needed to get it out of its ugly situation.
As shown in Chart below, Android is the most used operating system and has a wide eco-system that includes smartphones, tablets, smart-TVs, smartwatches, smart-headsets, PCs, etc. As BlackBerry OS is currently the smallest operating system among the big-4 (Android, iOS, Windows, and BlackBerry), it cannot monetize its biggest competitive advantage – secured devices and protected communication. For years, that was BlackBerry’s best sales pitch; however, with the rise of the iPhones and Android phones, consumers are looking for more than just secured devices. Moreover, there were adequate security solutions for iOS and Android that made this BlackBerry argument useless.
BlackBerry had to find a solution that could allow it to monetize its security capabilities while penetrating the big ecosystems of Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT) or Alphabet Inc-C (NASDAQ:GOOG) Android. Last week, BlackBerry launched its Android-based Priv phone that triggered a 5% hike in stock price after the announcement. BlackBerry Priv allows the company to monetize its highly advanced security, integrated into all layers of software, by offering it to a massive audience of consumers who prefer Android on their phones.
By launching a new Android-based phone, BlackBerry is not only offering superior security compared to other security solutions but it offers it in the familiar environment of Android that most smartphone users already prefer. This is a shift for BlackBerry from offering a hardware solution supported by a dedicated operating system to a hardware solution supported by a unique Android version that leverages its security capabilities to provide a focused privacy phone.
At a time when most phones offer similar display quality, camera capabilities, and connectivity features, device manufacturers look for their added value to attract more customers. With the recent awareness for cyber security after the many security breaches for databases and phones, BlackBerry’s choice to use their security expertise as their added-value in the crowded Android market seems spot-on. In the short term, it seems like the right decision at the right time; however, BlackBerry needs to prove to investors that this is not a one-time hit. Releasing an Android roadmap could achieve that.