 "Sunil Lalvani, MD, BlackBerry India")
There is an air of anticipation at the BlackBerry Mumbai office, ahead of the launch of Z3, the latest handset. Not only does the launch break almost a year of lull, it could well mark the Canada-based company's second innings in smartphones. The one which can either remake or break the company.
Sunil Lalvani, managing director, BlackBerry India, says the country is central to the company's new global strategy, adopted last year. It will include the five-year strategic partnership with Foxconn for manufacturing of mobile handsets and a tie-up with Amazon for its app store.
"India is a strategic market for us, it is a volume-based market and bringing Foxconn to India makes sense. This will bring in efficiency in processes, and help us target emerging markets like Indonesia, India and others," says Lalvani. BlackBerry plans to launch the Z3 in seven countries. It started with Indonesia, where it still has a dominant market share.
The company started to lose market share in the fourth quarter of 2012 in India. Players like Samsung were bombarding the market with low-cost, entry-level smartphones and Apple's iPhone was triggering a new 'bring your device to work' culture.
Lalvani says that BlackBerry took all of last year to understand what users want in a phone. He is candid enough to accept that the company did not get its positioning right with the Q10 smartphones. "What didn't work for us in India was perhaps the pricing strategy. With low-cost smartphones from other players, the pricing of about Rs 40,000 was high. Then you become a niche player and lose out on the volumes game," he says.
The Z3, targeted at the mid-market, will cost Rs 15,990. At present, BlackBerry is not among the top five handset players. "So far what was missing from the company's range was a smartphone at a competitive price. With Z3, it looks like BlackBerry will bridge that gap. The new model sports a 5-inch screen, which has emerged as one of the preferred screen sizes," says Karan Thakkar, senior market analyst, client devices, IDC.
With Z3, the company is getting back to its erstwhile core target - professional users. "There is a fine line between a normal consumer and a professional. We analysed that users wanted a good battery life, a device that is responsive with the ability to multi-task seamlessly. We had to get the price right. Z3 is affordable for young professionals," Lalvani says.
Sumanto Mukherjee, general manager, research and consulting, CMR, feels that moving away from corporate sales did not work well for BlackBerry in markets like India. "It has realised this and has started to de-bundle software and services from hardware," he says.
Open to all
Even though Z3 might be BlackBerry's bid for volumes, it is clearly moving away from being a devices company to a software and services company. A look at its revenue segments tells the story. Since John Chen took the reins as CEO last year, he has gone back to what BlackBerry did best: Work with enterprises and focus on services and software. This has reduced dependence on hardware. Within a year, BlackBerry has reversed its revenue segmentation. Hardware contributes 39 per cent, down from 71 per cent, and services contribute 54 per cent, up from 26 per cent. The Foxconn deal was a key move.
Lalvani says that in-house designing, manufacturing and marketing for hardware had led to high overheads and took a long time to launch a product. Outsourcing manufacturing and designing to Taiwan-headquartered Foxconn has made it nimble-footed: The Z3 is being launched within six months of the tie-up.
BlackBerry also has struck a licensing deal with Amazon to make 240,000 apps available on the BlackBerry BB10 platform from autumn. "Feedback told us we lack applications. BlackBerry users can now access apps on Amazon. The app store, more importantly, frees up resources for us to focus on the enterprise segment," Lalvani says. BlackBerry has 140,000 apps in its own store.
BlackBerry Enterprise Services (BES) has continued to do well. Last year, it had installed over 33,000 of BES10 globally and 1,000 in India. "Since this is a big revenue generator, we need more resources," Lalvani says. By the end of this year, BlackBerry will roll out BES12, that can manage Android, iOS, BB10 and Windows platforms. It is monetising its other cross-platform feature, messenger service BBM. With 140 million downloads and 85 million active users, it now has stickers for consumers and BBM Channels for advertisers.
The recent numbers of the company have been encouraging, though revenue has fallen. One thing is for sure, those who wanted to write-off BlackBerry might have to wait a little longer.
