BlackBerry Ltd Tries to Step Up Its Device Comeback With "Classic"

By Markets Fool.com

BlackBerry has stabilized its business under CEO John Chen, and it seems possible that his measured, but aggressive leadership could bring the company something that once seemed impossible -- a comeback in the smartphone market.

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Once a leader in the smartphone race, Blackberry's fall has been spectacular. The company, which still held 9.6% of the global smartphone market in the third quarter of 2011, dropped to 0.5% in the same period of 2014, according to IDC. In three years, the one-time favorite device of business people and leaders, including President Barack Obama, went from rivaling Apple's 13.8% market share to being a rounding error away from complete oblivion.

In an astoundingly short time, Blackberry went from being a status symbol to being a sign that you were behind the times. But, with the late-September release of the uniquely shaped Passport and the recent announcement of a new phone, the Classic, an update on its once-popular form factor, the company may be poised to become a player in devices again.

Blackberry may never hit the heights it once reached, but the fact that it might be able to rebuild an audience for its smartphones and remain a player -- albeit a niche one -- is a testament to Chen's leadership.

What is the Classic?
While the Passport attempted to win audience by offering a device that looks different from others on the market, the Classic is an effort to woo back lapsed Blackberry fans. Basically, the device is an update on the company's traditional phone, albeit with a faster browser, a bigger screen, and longer battery life.

"We listened closely to our customers' feedback to ensure we are delivering the technologies to power them through their day -- and that feedback led directly to the development of BlackBerry Classic," Chen said in a press release. "BlackBerry Classic is the powerful communications tool that many BlackBerry Bold and Curve users have been waiting for. It's the secure device that feels familiar in their hands, with the added performance and agility they need to be competitive in today's busy world."

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The Classic is a Blackberry for the company's most die-hard fans -- the ones who held onto outdated models longer than they should have, and the ones who lament that top-end smartphones no longer have physical keyboards.

Classic may continue on the momentum built by heavy (by recent Blackberry standards) demand for Passport, and it should answer the questions about whether enough Blackberry loyalists remain who are willing to return to the fold, or if the company simply waited too long.

The BlackBerry Classic looks like one of the company's phones from back when they were popular. Source: BlackBerry.

Reasons for optimism
Despite its huge dip in market share, devices remain important to BlackBerry, as the company derived 46% of it third-quarter revenue from hardware sales (and the company was cash-flow-positive for the quarter). Chen has also shown that he is committed to staying in the hardware business.

BlackBerry has not broken out sales for Passport, but the new phone was given an aggressive launch, with the company offering incentives that basically allowed customers to swap an iPhone 6 for a Passport. The new BlackBerry also topped Amazon's "Unlocked Cell Phone" sales list during parts of the Thanksgiving week shopping period, though it has since fallen down the list.

The Passport smartphone also gets a five-star rating from 540 reviews on Amazon.com, something no other phone on the list (as of Dec. 22, 2014) received.

Reasons for pessimism
While there are some signs the Passport is selling, BlackBerry only sold 1.9 million smartphones to end users in the third quarter, which is actually down from 2.4 million in the second quarter. It's too early to tell if Passport is a hit since it was only on sale for about a month in the third quarter, but its early returns suggest its no iPhone 6. The Passport -- and the Classic -- are also hurt by the fact that they are getting no support from any of the major carriers.

AT&T is supposed to be the flagship partner for Passport, but the company is not yet selling it on its website or in its stores. Both AT&T and Verizon do support BlackBerry use on their networks, but Sprint and T-Mobile do not. For Classic to lead a brand revival Blackberry will have to make partnerships to give it retail exposure from the major carriers.

It's a start
While Passport may only be a hit if you add an awful lot of qualifications, it did generate a lot of buzz and got the once-formidable BlackBerry user base to at least remember that the company still exists. Classic, however, will determine whether BlackBerry still has a place as a maker of high-end handsets. It's an improved take on what used to be very popular, and its success or failure could prove unequivocally if the interest generated by Passport shows an untapped market or a nostalgia rush.

The article BlackBerry Ltd Tries to Step Up Its Device Comeback With "Classic" originally appeared on Fool.com.

Daniel Kline owns shares of Apple. He used a BlackBerry for a long time and is tempted to go back.The Motley Fool recommends Amazon.com, Apple, and Verizon Communications, Inc.. The Motley Fool owns shares of Amazon.com and Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.