Published in Mobiles

Blackberry hopes licencing can save its bacon

by on24 June 2016


Other companies will want our tech

Blackberry is hoping to pull its nadgers out of the fire by licencing its mobile software to other outfits.

However BlackBerry CEO John Chen had to admit that there has been zero revenue from the endeavour, which he started off last month.

Chen said he's been in discussions with some phone manufacturers and set-top box operators who have expressed interest and "anything was possible."

He added he's not opposed to licensing BlackBerry's security software either if the right deal comes along. He expects BlackBerry to break even or record a slight profit in its new mobility solutions segment, which includes device and software licensing sales, during the third quarter that in November.

Making the segment profitable this fiscal year is one of the company's top goals, Chen said.

It's too soon to project how much revenue the software-licensing venture can garner, Chen said, so to achieve the goal by the end of November, BlackBerry will have to ensure its devices are on track for profitability as well.

The company's newest phone, the Android-powered Priv, has moved slower than hoped. In fact it moved slower than a student who had been up all night playing counterstrike.

During BlackBerry's first quarter — the second full quarter to include Priv sales — the smartphone segment generated US$152 million of revenue and had a US$21-million operating loss. Chen promised that loss would be significantly smaller in the next quarter.

The company sold roughly 500,000 devices at an average price of $290 each, he said, which is about 100,000 smartphones fewer than the previous quarter and about 200,000 fewer than two quarters earlier. BlackBerry previously said the company needs to sell about three million phones at an average of $300 each to break even, though Chen indicated that may change as the software licensing business starts to contribute to revenue.

Chen said the Priv has proved unaffordable to most people, except for top-level executives.

The company plans to release two mid-range, Android-powered phones before its current fiscal year ends Feb. 28, 2017, he said. More information on the devices is expected next month, but Chen said one will only have a touch screen rather than BlackBerry's traditional keyboard.

The company is trying to reach the market in more innovative ways. It's currently hosting a pop-up shop in New York City, and Chen said he'd consider more of them around the world if the trial is successful.

"I really, really believe that we could make money ... out of our device business," he said during a conference call with analysts Thursday morning.

Chen previously indicated the company will stop making smartphones if the device business remains unprofitable. While he said he doesn't believe that will be necessary, the software licensing plan could help make the transition smoother if the time comes.

BlackBerry  reported a $670 million net loss in the first quarter of its 2017 financial year, but said its recovery plan for the year remains on track.

Revenue was below analyst estimates at $400 million under generally accepted accounting principles, or US$424 million with certain adjustments.

Last modified on 24 June 2016
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