Privacy, Security, Qwerty

Is BlackBerry’s First Android Phone More Than a Niche?

BlackBerry_Priv_lLast Friday, BlackBerry launched Priv, its first Android-based smartphone. The device stands out against a generally homogenised portfolio of touch devices competing at operator shops — qwerty sliders have become a rarity among flagship smartphones, and BlackBerry has received special attention for its unique design. Vertical qwerty sliders aren’t new, but became uncommon as users acclimatized to virtual keyboards and voice input.

BlackBerry addressed the limitations of its narrow ecosystem and the limited developer support plaguing its earlier devices by choosing Google’s mobile platform for its latest smartphone, giving Priv users access to the vast library of Android apps.

Priv’s design is sleek, and its profile is remarkably slender given that the phone contains a sliding qwerty keyboard. Out of the box, Priv runs a BlackBerry customized version of Android 5.1.1 Lollipop on top of a Snapdragon 808 processor. It has a 5.4-inch display, an 18-megapixel main camera with image stabilization, flash and autofocus and a two-megapixel front-facing camera. Priv contains a 3410 mAh battery and supports wireless charging.

However, the focus of Priv isn’t consumer features — the device is about security. From boot-up to ongoing updates, Priv aims to bring a more secure Android experience to market. It provides checks for tampering and has hardware encryption not found in standard smartphones.

Priv costs $700 unlocked, putting it in an ambiguous position. The device bridges BlackBerry’s venerable qwerty and security roots with today’s leading mobile platform, a combination that it would seem should result in a winning smartphone given BlackBerry’s legacy enterprise fan base and Android’s broad support. BlackBerry’s CEO, John Chen, stated that Priv’s higher margins mean that sales of 5 million would allow it to break even. Yet Priv alone may not drive enough volume to secure the company’s hardware future. BlackBerry will need to expand its portfolio, entering highly competitive lower price bands to gain scale.

The larger challenge for BlackBerry’s hardware business is time gone by. We believe that many of the original BlackBerry devotees have since grown comfortable with today’s full-touch devices and soft keyboards. This evolved user behaviour has made qwerty a niche, and only the most faithful BlackBerry users are likely to switch to Priv (though BlackBerry is targeting corporate IT buyers rather than individual bring-your-own-device users).

We’re somewhat sceptical that security and privacy are sufficient to attract a significant new batch of users, but we believe that many enterprises currently see Android as vulnerable. Making a secure Android device could help BlackBerry to temper enterprise concerns with the platform at a time when Apple has been gaining a strong foothold. It could also give BlackBerry some of the tools required to provide a secure software environment for access to its services even if delivered on an Android device from another manufacturer. However, careful consideration would be needed so as not to overlap its goals with those of critical partner Google and the Android for Work initiative.

Priv’s launch isn’t make-or-break for BlackBerry, but we expect the device’s volumes to determine the company’s future strategy — disappointing sales are likely to lead to the end of BlackBerry’s hardware business. In this case, BlackBerry would focus on software and services, providing the security layers to customers. Mr Chen has made little secret of this, and the recent acquisition of Good Technology for the largest fee in the firm’s history indicates that software and services are key to the future heart of the business, irrespective of whether it continues to make devices.

The smartphone industry is notable for its changes. Companies like Ericsson and Nokia have shifted out of the business, and we expect more companies to follow. BlackBerry could be one of these, but has the opportunity to use its strengths as a trusted supplier of secure solutions.

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