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We are a very secure, entrenched business: BlackBerry's CEO

Friday, 3 August 2012 - 6:32pm IST | Agency: Daily Telegraph
With a new phone on the way, reports of BlackBerry's decline are greatly exaggerated, CEO Thorsten Heins tells Matt Warman.

With a new phone on the way, reports of BlackBerry's decline are greatly exaggerated, CEO Thorsten Heins tells Matt Warman.

The man in charge of BlackBerry is currently visiting London at the invitation of David Cameron, and he likes what he's seeing. So far, in the company of the Prime Minister, Thorsten Heins has watched the Olympics opening ceremony and visited the British Business Embassy Summits that the Government hopes will encourage the world to start companies in London. There, he claims: "Guess what - most of the guys were on a BlackBerry, typing. Working." Surely that's not bad for a company that one analyst recently suggested was "in a death spiral"?

German-born Heins joined BlackBerry in 2007, and took over from co-founders Mike Lazaridis and Jim Balsillie in January. In doing so, he chose the chalice that many believe to be the most poisoned there is in the mobile industry. While Nokia has at least made a decision to get into bed with Microsoft and produced a well-reviewed range of phones, BlackBerry is mired in its own transition from one generation of its own operating system to another.

Heins is bullish - as all BlackBerry executives continue to be in public - and keen to back up his argument with statistics. "If you look at the platform, it's still growing. If you look at the devices, we've got a single phone that's sold 45 million units."

There are, however, less attractive numbers he doesn't bring up: Research in Motion, BlackBerry's parent company, sells less than one eighth of the total phones that run on Google's operating system, Android. It's slimming its workforce to just 11,000, compared with 20,000 just a few years ago. Shares once traded at more than $140; now they are $7.25. On the firm's Wikipedia page, there's an entire section entitled "Decline" that ends as though an author has paused rather than finished.

Given that the company still has more than 80 million subscribers, that seems harsh. And the flagship service, BlackBerry Messenger (BBM) can't be both the tool of choice for London's rioters last year - as many claim - and also an ancient irrelevance. Heins claims simply that "our platform isn't burning", alluding to a memo that Stephen Elop, the incoming chief executive at Nokia, wrote to staff there, warning them that they were "standing on a burning platform". Heins adds: "I've been kind of surprised by the credit that Windows Phone already gets." He points at meagre sales and asks "What are the proof points for its 'success'?"

Either way, there's certainly the whiff of smoke at BlackBerry. Its new phones will be out in January, Heins promises, having been recently pushed back from the end of this year. This means Research in Motion will be unveiling older devices when every enthusiast knows that newer ones are imminent. One commentator said it will be "like launching fireworks underwater".

"We know that BlackBerry OS7 [BB7] was a great platform - but it would not carry us to where we wanted to be tomorrow, with the full mobile computing experience," says Heins. "We don't have the resources like a Microsoft; we have to place one bet and make it right; we don't want to go for an intermediate step. BB10 comes out in the first quarter and I think a lot of people are going to be surprised. It's working and running right now," says Heins as he points to his own phone. "It has never reset on me. The teams are working day and night, at the weekends - it's a once-in-a-decade change that will see us through the next 10 years."

In the meantime, Heins emphasises, BlackBerry is "a very secure, entrenched stable business". He says that, even as major companies such as The New York Times stop supporting their BlackBerry apps, Research in Motion is working closely with many companies for apps on BB10. "Most of the media is very black and white - they look at every little thing that could be bad and put it on to our shoulders," says Heins. "Let's be honest - we don't like it. This is something we have to get through and convince the critics and the market that BB10 is going to cut it. BB7 is still a competitive product; we are not in a trough."

Wouldn't it have been easier to simply adopt Android or Windows Phone, and already have a product on the shelves? "We took the conscious decision not to go with Android. If you look at other suppliers' ability to differentiate, there's very little wiggle room. We looked at it seriously - but, if you understand what the promise of BlackBerry is to its user base, it's all about getting stuff done. Games, media, we have to be good at them, but we also have to support those guys who are ahead of the game, with very little time to consume and enjoy content. We have to build on that basis. If we want to serve that segment, we can't do it on a me-too approach."

He points to the developing world - "every cab in Jakarta has a BBM pin on the door" - and concedes that Research in Motion lost market share in more developed markets because it missed superfast 4G connections, as well as the "bring your own device" trend, where users opt to use their own phone for work functions.

BlackBerry now needs, simply, phones in more people's pockets. For years the keyboard was the device's unique selling point, but now it has lost that appeal in the face of Apple and Samsung's popular touchscreen rivals. "There's never an eternal proposition - there's a very stable, slowly growing base of physical keyboard users. At the moment it's prudent to offer both keyboard and touchscreen. If people love a physical keypad I will not talk them out of it, but it's one element of the larger experience."

Indeed, Research in Motion will launch BB10 with two devices that are crucial to its survival, and only one will have a keyboard. The more expensive will be a touchscreen device. Heins is aware that he must get cheaper devices out there. "We don't have the economy of scale to compete against the guys who crank out 60 handsets a year. We have to differentiate and have a focused platform. To deliver BB10, we may need to look at licensing it to someone who can do this at a way better cost proposition than us. We're investigating different options."

That raises the prospect of a BlackBerry phone that is made by, say, Samsung or Sony. "Either it's a BlackBerry or it's something else being built on the BlackBerry platform. Either we do it ourselves or we do it with a partner. But we will not abandon the subscriber base."

And perhaps that is RIM's paradox - 80 million subscribers, many of them relatively low-budget new users, and a desire to make a premium flagship product that lives up to its past glories. Heins says, as new users in the developing world buy BlackBerries, they will grow into profitable, loyal customers. That's a bet now born of necessity.

 


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