Is BlackBerry’s decision to phase out the Classic another blow to its hardware division?

A week after it was revealed that the U.S. Senate, one of BlackBerry Ltd.’s largest remaining enterprise customers, would no longer be issuing BlackBerry smartphones to its staff, the Waterloo, Ont.-based mobile software maker – and occasional handset manufacturer – has announced that it will no longer be producing its iconic BlackBerry Classic.

In a July 5 blog post, BlackBerry COO Ralph Pini emphasized the decision as an opportunity for the company to develop “new and better experiences” that would align with what he said were “three critical elements” to the success of BlackBerry’s device business: additional choices for consumers, an emphasis on security, and building on what he called BlackBerry’s “pedigree”.

“For many years, [the] Classic… has been an incredible workhorse device for customers, exceeding all expectations,” Pini wrote. “But, [it] has long surpassed the average lifespan for a smartphone in today’s market. We are ready for this change so we can give our customers something better.”

Gartner analyst Tuong Nguyen was less than surprised by the announcement, noting that BlackBerry’s share of the global smartphone market has been steadily decreasing since its high of 10.9 per cent in 2011, to five per cent in 2012, to 1.9 per cent in 2013, and most recently, to 0.2 per cent in the first quarter of 2016.

“They’ve struggled for awhile, so this announcement isn’t bucking any trends,” he said. “Not to say there aren’t opportunities, because obviously that 0.2 per cent comes from somewhere, but I don’t think it’s necessarily from consumers… and I don’t think hardware is necessarily the solution moving forward.”

The numbers aren’t much better in BlackBerry’s homeland, where the company’s share of smartphone shipments has fallen from around 10 per cent in 2013 to around three per cent last year, International Data Corporation (IDC) Canada analyst Krista Collins said.

Even BlackBerry has been distancing itself from its handsets, Collins pointed out, with CEO John Chen recently promising shareholders that if the company’s upcoming Android-powered smartphones don’t perform well, it will exit the market. Meanwhile, BlackBerry’s software sales have risen to a high enough extent that Chen expects the company to return to profitability by the end of the year.

“BlackBerry isn’t just a phone company,” Collins said. “They’re in the enterprise mobile management space, they’ve built a crisis communication platform… the company has a number of assets that can be very advantageous to them.”

Both Collins and Nguyen emphasized how difficult it will be for BlackBerry to compete in the modern smartphone market, which has been saturated for some time and is restricting even Apple’s efforts to grow its business.

“Everyone who wants a smartphone probably has one,” Nguyen said. “And so moving forward, it isn’t just the device, it’s what you can help users do with it.”

Fortunately for BlackBerry, the company already appears to be learning that lesson, as illustrated by the shift from its native iOS to Android for its next generation of handsets, starting with the Priv, Collins said – and in that light, abandoning the BlackBerry OS-powered Classic was the next logical move.

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Jim Love, Chief Content Officer, IT World Canada

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Eric Emin Wood
Eric Emin Wood
Former editor of turned consultant with public relations firm Porter Novelli. When not writing for the tech industry enjoys photography, movies, travelling, the Oxford comma, and will talk your ear off about animation if you give him an opening.

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