A Tool, Not a Toy? The Secret to Blackberry's Surprising Turn Around

Is it time to add Blackberry to the ever lengthening list of technology products declared dead and buried that appear to have miraculously somehow revived?

Maybe. The company, long thought to be a punch line in the story that headlines Apple and Google is slowly and - to almost everyone's surprise, surely - rebuilding by focusing on one element of the vast smartphone market.

The key to this strategy is the business user and those who employ him or her. The company acknowledges it cannot compete with the iPhone or Android, especially when it comes to games and other forms of popular usage. But it recognized that among its business customers there remained a strong sense of brand loyalty and a belief that the product was as good or better at what it did than many of its more famous alternatives.

Segmenting the market, the brand realized that underpinning the nostalgia was a powerful reality: many customers regard the phone, especially one issued by an employer, as a tool. So rather than attempting to be something it was not, Blackberry built on the strength of that perception.

This is not to suggest that Apple, Google and Samsung do not see the threat and will not address it: the telecom market is nothing if not co-evolutionary - and resourceful. But it does imply that devices which had loyal followings might do well to identify the components of that identification in order to solidify a business. JL

Todd Wasserman reports in Mashable:

BlackBerry's strategy is to sidestep a battle with Apple and Google by acknowledging that business users might also own devices from the latter companies
For Järn Harry, his BlackBerry Z10 has one killer feature that iPhones just can't match: a blinking red light.
"I look at the iPhone, and I don't know if there's a message or not," Harry says. As the head of new business ventures for Comptel, a Helsinki-based software firm, Harry finds BlackBarry unmatched for running business apps. He is also a fan of BlackBerry 10's Hub, which centralizes his messages. Harry also owns an iPhone 6, which he likes, but hates the HTC One.
"For my use, it's perfect," he says of the Z10. "It's tailored for business use."

A year or so ago, BlackBerry was competing head to head with Apple and Google for the consumer market. Now, a humbled BlackBerry is focusing exclusively on business customers like Harry. Although critics see BlackBerry as a washed-up brand on its way to becoming the next Palm, the company has successfully completed the first stage of its turnaround plan. Proponents say that if BlackBerry continues to focus on hardcore business customers, it may defy the odds, and pull off a comeback.

Long way to go

Few brands have fallen as far and as fast as BlackBerry has. In 2009, BlackBerry held 47% of the U.S. smartphone market, according to the International Data Corporation. Now, however, the figure is below 1%, both domestically and globally. (Consumer Intelligence Research Partners pegs BlackBerry's U.S. market share at 0%.) Researcher YouGov found that BlackBerry's Buzz Score — the number of people who view the brand favorably versus unfavorably — has been roughly halved since 2012:

Image: YouGov

What happened? The iPhone of course. Apple's smartphone was released in 2007 and by mid-2010, had surpassed BlackBerry in worldwide market share. Soon, Google's Android platform overtook the entire category. By 2012, BlackBerry's market share was hovering around 4%.
In early 2013, the brand threw a Hail Mary, and bought a Super Bowl ad to promote the Z10, the brand's first touchscreen phone. Despite decent reviews, the Z10 didn't catch on. In fiscal 2014 (the company is now in fiscal 2015), BlackBerry's revenues fell 38%, and it reported a GAAP net loss of $5.9 billion. Looking back, Robert Glen, BlackBerry's senior director of global brand marketing, says targeting consumers was a mistake. "I think we tried to bite off too much," he says. "We tried to attack the full market, and a good military commander would say choose best area for competing, look for a beachhead."
The turnaround effort began when John Chen, who was known for transforming Sybase from a money-losing basket case to a $5.8 billion takeover target for SAP, became CEO last November.
On the marketing front, BlackBerry signaled its new direction when the company hired B2B ad agency gyro earlier this month, scuttling its former ad partner BBDO, which is known for its campaigns for Snickers, Visa and M&M's, among other consumer brands.
Mark Wilson, a veteran of Avaya, joined BlackBerry in January as its senior vice-president of marketing; he replaced former chief marketing officer Frank Boulben, who departed last fall.
BlackBerry's new vision was illustrated in its first new campaign with gyro, for the new Passport phone, which was directed at professionals in healthcare:

Resurrecting the BlackBerry brand is a marketing challenge, to say the least. The company's new approach is to go after business "power pros" in industries such as healthcare, government and insurance, who need a tool, not a toy. "I think it's established that BlackBerry is the most powerful tool," says gyro CEO Christoph Becker. BlackBerry is for "anyone with big decisions to make," he adds.
BlackBerry's strategy is to sidestep a battle with Apple and Google by acknowledging that business users might also own devices from the latter companies. "They have a personal life," Glen says. "They may have an iPhone for their iTunes." When it comes to work, though, such users would use a BlackBerry. Phones and Android phones "frankly distract you from business communication," he adds.
Glen's comments echo those of Chen, who wrote in a CNBC op-ed on Oct. 2 that "

We don't expect to sell a handset to everyone and don't expect to take down the consumers who love to play games on their iPhones

We don't expect to sell a handset to everyone and don't expect to take down the consumers who love to play games on their iPhones. But we do want to provide an experience that caters to the mobile professional –- anyone who relies on their device to do their jobs." Ramon Llamas, research manager for mobile phones and smartphones at IDC, says BlackBerry's new strategy is a "smart move." Despite its sullied consumer image, Llamas says BlackBerry still has brand equity with business customers in highly regulated industries such as banking, healthcare and insurance. When Llamas asks why these customers still use BlackBerry devices, they always talk about security. "It's still the gold standard for security — end of story," he says.
Lucky for BlackBerry, chief information officers still view iOS and Android devices with suspicion. Microsoft's Windows Phone would seem like a natural fit, but the company lost a lot of good will with the Windows 8 introduction, and has been too focused on consumers to make many inroads with business customers, Llamas says.

Don't call it a comeback

No one should expect a return of the BlackBerry brand of 2009, though.
After a period during which it was unclear whether BlackBerry would carry on or be sold off for parts, and the company announced it was laying off 40% of its workforce, things began to stabilize. Investors, always on the lookout for a turnaround story, have flocked to BlackBerry, sending its stock price up about 25% this year as of this writing. (It had risen as much as 50% in July.)
The new BlackBerry's biggest move so far has been the introduction of Passport, a 3.6-inch wide model with a square display. Mashable technology editor Pete Pachal called the phone "very strange," but praised it as a "powerful device."
The market appears to still be trying to make sense of the Passport. BlackBerry sold 200,000 Passports on its first day of sale on Sept. 26, and expects to sell 1.4 million BlackBerry 10 devices in the third quarter, most of which will be cheaper Z10 devices. For comparison's sake, Apple sold 35.2 million iPhones in its most-recent quarter.
"Either you love it or you don't like it," says Rick Jordan, director of mobility sales at Tenet Computer Group, a Toronto-based solution provider and longtime BlackBerry partner. "Once people get hands on it, and see actual display, they see it's really optimized for mobile experience."
"The haters are gonna hate," Llamas says of the Passport. "But they're hating it because it's not an iPhone or an Android."
The large screen may be a head scratcher for consumers who think the iPhone 6 Plus is already too big, but it makes sense for execs who want to view spreadsheets on their phones. Admittedly, that's a small market; no one expects the Passport to sell 10 million units.
Yet, as he did at Sybase, Chen is focusing on making BlackBerry profitable instead of looking for huge growth. So far, BlackBerry has worked hard to shore up its existing base. The company migrated 1 million customers to BlackBerry 10 during its most-recent quarter, and boasted 91 million users of its BlackBerry Messenger, which is up 6 million since March. "That’s not a meteoric growth rate, but it is a decent showing for the company’s messenger ambitions," TechCrunch wrote.
"

We are definitely in the first half of what I referred to the eight quarters recovery

We are definitely in the first half of what I referred to the eight quarters recovery," Chen said in September. Once BlackBerry really stabilizes, it could focus on courting the estimated 30% of consumers who see their phones as a tool, rather than an entertainment device. Expanding into China is also a possibility, though Chen admits he hasn't formulated a China strategy yet.
Of course, these efforts could all be derailed. For instance, Microsoft could begin to get more aggressive about wooing business customers for Windows Phone, or Apple's new partnership with IBM could successfully siphon BlackBerry's target business customers.
For his part, Tenet Computer Group's Jordan is cautiously optimistic about BlackBerry's chances. "In terms of the comeback story, they still have a ways to go," he says. "It's not going to happen overnight, but they're doing the right thing, slowly and steadily. Once that ship changes course and starts setting the right path, things will change."
Business customer Harry, meanwhile, is eager to get his hands on the Passport, which was in short supply in mid-October. "It looks like a very interesting piece of equipment," he says.