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The BlackBerry Priv could change everything for the embattled smartphone manufacturer.
The Priv, which the Canadian company confirmed Friday will come out in the fourth quarter, is the first of its products to run on Google’s Android mobile software. The device marks a radical departure from BlackBerry’s history of selling products using its own homegrown software.
But hardcore BlackBerry fans should look at the Priv with trepidation. The Android device isn’t meant to complement the company’s existing line of smartphones; it’s intended to kill it. After years of battling Android, the world’s most popular operating system for smartphones and tablets, BlackBerry is laying the foundation to jettison its own BlackBerry 10 software, also known as BB10.
“This move to Android is another signal that the company is stepping away from once holy ground,” said Chris Hazelton, an analyst at 451 Research.
The move would mark a radical new chapter for a company that once dominated the white-collar world with smartphones packing its trademark physical keyboards. Since the rise of Apple’s iPhone and devices running Google’s Android operating system, BlackBerry has fought a losing battle to avoid irrelevancy. In the second quarter, smartphones running its software accounted for 0.3 percent of the market, according to IDC. Android’s market share: 83 percent.
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BlackBerry disclosed in its fiscal second-quarter report, which it released Friday, that it sold 800,000 devices in the period, or a third of its total from a year ago.
“Blackberry has finally recognized that they simply do not have a sufficient number of customers to make it worthwhile for developers to build apps for them,” said Roger Entner, an analyst at Recon Analytics.
When CEO John Chen was asked on an analyst conference call Friday whether he would “throw in the towel” on BlackBerry phones running on the company’s software, he didn’t dismiss the idea. “That’s a good question,” he said.
The only thing holding back from a complete switch is the base of government and regulated business clients that insist on sticking with BlackBerry. But Chen hopes that an Android phone infused with BlackBerry security software will convince them to switch.
“If our plan of doing the BlackBerry Android implementation works well and the security is accepted, of course we could replace or merge” the BlackBerry software side of the business, Chen said.
Chen highlighted other benefits to a move to Android. Building an Android smartphone is cheaper because the industry infrastructure for such a device is already in place, meaning his company could focus on the security and business aspects of the device. He added that BlackBerry is working with Google on the project.
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In a sea of companies making bland, me-too Android smartphone, BlackBerry actually has a credible way of standing out from the crowd. While it’s unlikely to create a world-beating product like the iPhone 6S or even a Samsung Galaxy S6, the combination of its security software and the familiar Android operating system could be attractive to a more business-oriented segment of the market.
“Of the device vendors, they have the best technology to differentiate on Android,” Hazelton said.
That’s not to say BlackBerry is doing away with BB10 right away. Chen said in a commentary piece that ran on CNBC.com that he would continue to support the software. “Fans of BlackBerry’s workhorse BlackBerry 10 smartphones can continue to depend on us, and we appreciate their commitment,” he said.
But BlackBerry has no plans to release another BB10 smartphone this year, and Chen isn’t a stranger to radical change. The CEO, who joined BlackBerry in November 2013, embarked on a mission to transform the company so it was more reliant on software and services for revenue. He maintained that he would stick with the phone business as long as it remained profitable.
But BlackBerry’s smartphones, including the Classic, the squat Passport and all-touchscreen Leap, have failed to make an impression in the market. Chen admitted on the call that he was disappointed in the phone sales.
Chen hopes the adoption of Android will boost sales. “It’s the answer for former BlackBerry users who miss the physical keyboard but love their apps,” he said.
The Priv, which takes its name from the words “privacy” and “privilege,” is “the most secure Android device in the market,” he added.
It also may represent the last chance for BlackBerry when it comes to the smartphone business.
“If the foray into building fortified Android smartphones is not an immediate success,” said Avi Greengart, who covers consumer products at Current Analysis, “it is hard to see the company continuing to invest in building phones at all.”
