BlackBerry gave up on the fight for ASEAN’s smartphone consumers. Its next chapter will take to more westerly shores.
By Joelyn Chan
Competition in the global smartphone market is cutthroat. To win consumers, the victor must have manufacturing dexterity, a hefty marketing budget and an appealing assortment of products. The leading players are Apple and Samsung, with market shares of 27% and 24% respectively.
In 2018, more than 50% of global smartphone users were from the Asia Pacific region. By 2021, the number of smartphone users in the Asia Pacific will have increased from 1.6 billion today to 2.1 billion. Despite the region’s potential for growth, BlackBerry is leaving the region out of its expansion plans.
In 2016, BlackBerry announced it would cease smartphone production. It decided to shift its focus to software and enterprise IT and security services instead. For the second quarter in a row, BlackBerry recorded no revenue from handset sales.
A greater emphasis on North America is driving BlackBerry’s financial success
In Fiscal Year (FY) 2019, the company recorded US$904 million in revenue. The Asia Pacific region contributed 8.4%, while North America generated 66% of the revenue. Back in 2014, the Asia Pacific contributed 16.2% of BlackBerry’s revenue.
The retreat from the Asia Pacific market is explicable accompanied a shift in BlackBerry’s strategic focus. The firm’s main revenue generator is software and services, not handsets. The firm offers end-to-end security solutions and ransomware recovery solutions on its content collaboration platform. It is a market leader in enterprise mobility management (EMM). For example, BlackBerry Spark is the only Enterprise of Things (EoT) platform created for ultra-secure hyperconnectivity.
Being more technologically advanced, North America currently has a larger internet of things (IoT) market. The North American IoT market is expected to hit US$540 billion by 2022, compared to the Asia Pacific’s US$98 billion.
BlackBerry has also secured government contracts in the West. All seven of the G7 and 15 of the G20 governments are BlackBerry Secure customers. In the Asia Pacific region, efforts are still concentrated around technological availability. Awareness and demand for IoT security are weaker.
BlackBerry retreated from the smartphone race but remained on the periphery
Apple first unveiled its iPhone in January 2007. Within 5 years, Apple had established dominance in the smartphone market. It surpassed its competitors in terms of quantity sold and revenue. By 2016, BlackBerry was struggling to keep up. It captured less than 1% of the global smartphone market share in the fourth quarter of 2016.
BlackBerry’s decision to exit the smartphone market allowed the firm to commit more resources to carving out its brand as a security solutions provider. CEO John Chen steered the company towards sustained revenue in EMM space.
Despite channelling its efforts into the software and EMM market, BlackBerry has not entirely abandoned the smartphone market. Instead, it has implemented a licensing strategy. The licensing partners produce smartphones, which run on BlackBerry Secure Android software.
In February 2017, TCL launched BlackBerry KeyOne. The device has BlackBerry’s iconic physical keyboard, but it operates on the Android operating system. Although 2018’s sales have been disappointing, the licensing strategy allows BlackBerry to retain some presence in the smartphone market without developing hardware.
Ralph Pini, Chief Operating Officer and General Manager of Mobility Solutions at BlackBerry, is confident of the partnership. He said, “With our unparalleled expertise in mobile security and software and TCL Communication’s vast global reach and consumer access, we are confident that BlackBerry-branded products developed and distributed by TCL Communication will address the needs of BlackBerry users and expand the availability of BlackBerry Secure products throughout the world.”
By outsourcing, BlackBerry can focus on solidifying its software leadership. The company has once again carved a niche for itself in the security space. CEO John Chen expects year-over-year growth in every quarter next year.
BlackBerry has embarked on a new chapter – a chapter that disregards the Asia Pacific. Until the Asia Pacific’s EoT market reaches a size comparable to North America’s, BlackBerry and the Asia Pacific are on separate paths.