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Most people go to Las Vegas to gamble, party or see a show.
On a warm winter’s day in January 2014, Ron Louks journeyed there to gamble. But he wasn’t trying his luck at the tables. He was there, on one of his first days on the job as head of BlackBerry’s smartphone business, to bet on the company’s future.
After landing in the desert city at the start of the annual Consumer Electronics Show, Louks checked in with BlackBerry CEO John Chen and then set off for his first and most important appointment. Tellingly, it wasn’t with a wireless carrier or one of BlackBerry’s manufacturing partners. It was with Google.
“Android, in our mind, was a longtime coming,” Louks said in an interview last week.
Chen, a software industry veteran hired to help save the Canadian company in late 2013, had already been talking to Google about how BlackBerry could better work with Android, the world’s most popular operating system.
The next step was up to Louks, who previously worked at HTC and Sony Ericsson.
Nearly two years after that Vegas meetup, BlackBerry is getting ready to sell the $700 BlackBerry Priv , its first smartphone not powered by the company’s own mobile software. Chen and Louks hope that by tying their fortunes to Android, BlackBerry will do something it hasn’t been able to do in five years: win over customers who abandoned its once-almighty keyboard-based gadgets for Apple’s iPhone and Samsung’s Galaxy phones.
If the Priv is a flop, that will likely spell the end of the BlackBerry smartphone.
“If this doesn’t resonate with users, there’s not much else they can do,” said Chris Hazelton, an analyst at 451 Research.
Enlarge ImageBlackBerry’s head of devices, Ron Louks, teases a BlackBerry with a slide-out keyboard at Mobile World Congress in March 2015.
Sarah Tew/CNET
Chen has already set the stakes, saying, repeatedly, that he’ll dump the smartphone business if it doesn’t turn a profit. While BlackBerry doesn’t break out earnings from its devices business, the company lost more than $6 billion in the last two and a half years. To move into the black, BlackBerry will have to sell 5 million smartphones next year. That’s a tall order considering it sold just 800,000 last quarter, less than half as many it sold a year ago.
Consider also that BlackBerry-powered smartphones represent less than half a percent of a market that’s led by phones running on Android and on iOS, the software that powers Apple’s iPhone, according to research firm IDC. That’s a pitiful statistic given that BlackBerry controlled nearly a fifth of the market in 2009, just behind another now-fallen giant, Nokia.
Chen also said that 2016 is a make-or-break year for both the company and his leadership. “Otherwise, I have to think twice about what I do there,” he said at a mobile conference in October.
Here’s where things stand today: BlackBerry has been “engaged” with the top carriers around the world, all of which have agreed to help market the Priv, Louks said. In the US, AT&T will be the first carrier to sell it, and the Canadian carriers and UK’s Carphone Warehouse will offer it, too. The Priv launches Friday.
The thing is, we’ve heard this story before from BlackBerry. A few times. So far, none of those stories has ended well.
The elusive Ron Louks
On the second day of CES in 2014, Chen was holding court before reporters in a ballroom at the Monte Carlo Casino. Louks, whose hiring was announced the day before, was nowhere to be found.
He remained missing from view for the next 11 months. He was a no-show at the unveiling of the low-cost BlackBerry Z3 at Mobile World Congress in February 2014 and skipped a security summit five months later, where BlackBerry gave an early look at its BlackBerry Passport smartphone.
Enlarge ImageBlackBerry CEO John Chen at a press roundtable session at the Consumer Electronics Show in January 2014.
Roger Cheng/CNET
In September 2014, Louks got sick and skipped a New York presentation on the Passport.
I asked BlackBerry (half) jokingly if Louks actually existed and was still on the job. It turns out he was quietly making the case for building a BlackBerry using Android.
While Chen wanted a stronger relationship with Google — one of the services BlackBerry offers is managing email on mobile devices, including those powered by Android — Louks pushed things forward by asking to build an Android smartphone in early 2014.
Chen wasn’t sold on the idea. And he wasn’t alone. BlackBerry veterans are accustomed to using the company’s own software to ensure the most secure devices, and Android lacked a reputation for security.
“There’s normal tension when you change a strategic decision,” Louks said. “People are going to question it.”
It wasn’t until Louks convinced Chen he could build an Android smartphone with security embedded in the hardware that he got the green light.
For the first BlackBerry Android phone, Chen wanted something special.
Outing the slider
During BlackBerry’s press conference at the Mobile World Congress trade show in March 2015, Louks walked onto the small stage with purpose. He whipped out a mystery smartphone with a slide-out keyboard and a curved glass display that wrapped around the sides. Just as quickly, he stowed it away in his pockets.
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The “Slider,” as Chen called it, left an impression. A curved glass display was one of the marquee features of Samsung’s Galaxy S6 Edge , unveiled two days earlier. Samsung’s executives talked up the complicated process of building that wraparound display. Yet here was BlackBerry with the same feature.
Louks “understood the value in creating buzz,” said Scott Wenger, BlackBerry’s head of design. He joined the company in September 2014 after working with Louks at HTC and Sony Ericsson.
There was a reason for the don’t-blink-or-you’ll-miss-it cameo: The device was little more than a mockup, with a backlight used to simulate an active screen. If you looked closely, the BlackBerry 10 home screen was visible — no Android.
Work on the prototype began in earnest after BlackBerry launched the Passport, a squat-looking smartphone with a square screen, in September 2014. But executives eyed concepts like the curved display, which Samsung supplied, months before.
The problem is, the Galaxy S6 Edge and the larger S6 Edge+ are already in the market with their curved displays. Won’t the BlackBerry’s Priv lose a little of its chic?
“Initially, I felt the wind was taken out of the sails,” Louks conceded. But he thinks BlackBerry can piggyback on Samsung’s marketing and sell people on wanting a phone with a curved display.
Louks and Chen are also betting the slide-out keyboard and the focus on security turn some heads.
Reason for excitement
Most assumed the slider phone would run on the BlackBerry 10 software. It was, after all, how the company had always operated.
Over the summer, however, leaks and images about an Android-powered BlackBerry popped up with increasing frequency.
In September, BlackBerry confirmed it would sell an Android smartphone in the fourth quarter. The Priv, which takes its name from “privacy” and “privilege,” aims to address the top complaint of former and current BlackBerry users: the lack of apps.
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With Android, Priv users can tap into more than 1 million apps. As of last year, the BlackBerry World store offered 234,500 apps, although its phones can access Amazon’s Appstore with more than 330,000 programs.
“It’s the No. 1 issue across any device we release far and away,” Marty Beard, chief operating officer for BlackBerry, said in an interview last week.
The Priv was announced the same day in September that BlackBerry posted an adjusted loss and revenue that disappointed investors. Those investors are questioning the progress of Chen’s transformation of the business from a pure devices company into one that makes its money off software and services. Perhaps the Priv will give the company something to rally behind.
“This is the first thing that will get us cranking the other way,” said Greg Dunko, head of product development for BlackBerry.
The same story again?
BlackBerry’s last comeback effort was a disaster. Its BlackBerry Z10 smartphone launched with a marketing campaign that included a Super Bowl commercial and the support of multiple wireless carriers. The company ultimately had to take a charge of nearly $1 billion to account for unsold Z10 phones.
By embracing Android, BlackBerry has the potential to tap into a huge customer base. Yet many big-name companies, including HTC and Sony, are already struggling to make a dent in the Android smartphone market.
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Google didn’t respond to requests for comment.
“It’s a near insurmountable challenge to succeed where others have failed,” said Maribel Lopez, an analyst at Lopez Research, about BlackBerry’s consumer prospects. Still, BlackBerry may be able to carve a niche in the business world, a place where it once held so much sway.
Louks is prepared for the challenge. The whirlwind pace of getting the Priv ready for prime time has meant that in the past year, the longest stretch he’s spent at home has been two weeks. But to Louks and his team, the sacrifice has paid off, and he believes the Priv is that something special Chen wanted.
“It’s completely different,” Louks said.
We’ll see.
