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BlackBerry looks to the past to define its future

BlackBerry looks to the past to define its future


The company plans to bring back one of its popular phones from 2011 as it struggles to turn around

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Earlier today, BlackBerry released its fourth quarter earnings statement, reporting revenues of $976 million. That's down 64 percent from the $2.7 billion it reported a year ago, and it's the first time BlackBerry has had less than $1 billion in quarterly revenue since 2007. BlackBerry also reported a loss of $42 million this quarter, compared to the $94 million it earned during the holiday quarter last year. Of the 3.4 million smartphones shipped this quarter, about 2.3 million were running BlackBerry's older platform, not the BlackBerry 10 software introduced in 2013.

Despite the down numbers, BlackBerry CEO John Chen is still optimistic in the company's turnaround. Chen points to the reduced operating expenses, which are down 51 percent compared to last year, as the first sign that the company is getting back on track towards profitability. But Chen is looking at the past for BlackBerry's next move, instead of being the forward thinker the company so desperately needs.

This is the second earnings report for Chen as CEO, and it's apparent that he's a very different leader than Thorsten Heins or Jim Balsillie and Mike Lazaridis ever were. During a call for investors to discuss today's earnings report, Chen cracked jokes and was a bit more jovial than we've come to expect from BlackBerry's traditionally stodgy leadership. Still, Chen exhibits much of the same hubris that contributed to the downfall of his predecessors: his outrage over a promotion by T-Mobile and focus on stopping leakers of BlackBerry software seemed like little more than distractions for a CEO that has a long road ahead of him.

BlackBerry's Bold move: 90 Seconds on The Verge

BlackBerry will restart production on the Bold, first introduced in 2011

Last month, Chen announced that the company would introduce more smartphones with keyboards to appeal to its core audience, and today he revealed that the BlackBerry Bold, a smartphone first introduced in 2011, will be reentering production. The Bold runs BlackBerry 7 and is the quintessential BlackBerry smartphone — it has a great keyboard and strong messaging features, but is weak for browsing the web, using apps, or taking photos, things many people do with their smartphones today. Thanks to a new manufacturing partner, Chen says this run of the Bold will actually be sold at a profit, whereas it was a loss leader when it was initially brought to market. He didn't say where the Bold will be sold, but it's likely that BlackBerry will sell it in the same emerging markets that its been selling other BlackBerry 7 devices.

The reintroduction of the Bold is based purely on customer demand, claims Chen. "Our customers still love the BB OS device, particularly BB7 devices," he said. "We’ll continue to make these devices available and support the operating system as long as there is customer demand." Chen also told Reuters that the company will introduce high-end phones with keyboards over the next 18 months, and that it has at least three designs already in various stages of development. He says the BlackBerry Classic, née the Q20, is expected to be released in the fourth quarter of this year and that "early customer feedback on the Classic is extremely positive."

Immediate growth for the company is expected to come from software and services

The refocus on BlackBerry's core features — keyboards and messaging — may ignite cheers from its existing fan base, but it likely won't do much to grow the company. Chen's efforts at reducing expenses are important and vital in BlackBerry's road to a comeback, but it won't be able to grow as a company if it's not able to sell phones to new customers. Chen says that a lot of the immediate growth for the company will be from its software and services, such as BlackBerry Messenger and the QNX embedded software platform. BBM is up to 85 million users now, with availability on iOS and Android. It will come to Windows Phone and Nokia's X phones later this year, and Chen says the company is open to launching a desktop version of the software as well. Still, the growth for BBM has slowed dramatically — a month ago BlackBerry reported the same 85 million active user figure and it was already at 80 million in October.

Unsurprisingly, Chen is looking at the long game. He says the company is in the midst of an eight quarter turnaround plan that started last quarter, and it doesn't expect to attain profitability until 2016. BlackBerry still has $2.7 billion in the bank, but that's down $500 million from what it had just a quarter ago. Cutting expenses will help to stop the bleeding, but there's a good chance that BlackBerry will never again be the smartphone powerhouse that it once was. Whether or not it will be able to survive on its core customer base that hasn't fled for greener pastures and its software and services platform remains to be seen.