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BlackBerry’s $699 Android gambit is too much too late

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Of all the big companies that were selling mobile phones before the iPhone, every one has now either moved to making Android phones or left the market. BlackBerry was the last remaining holdout, but now it too has an Android handset in the offing, and if that goes sour, it too could be departing the hardware business altogether.

The first Android-powered BlackBerry, the $699 Priv, was enforced upon the company by the need for apps. "What I’m doing," said CEO John Chen at the Code Mobile conference this month, "is taking advantage of what the industry can offer, but not wandering off our core strength." BlackBerry security is at the heart of the Priv, and its slide-out QWERTY keyboard is a company hallmark, signaling the intent to appeal to business customers. Like the Passport before it, the Priv targets corporate clients and the BlackBerry faithful first, but it’s also courting high-end smartphone buyers. You don’t put a Quad HD curved display and 18-megapixel camera with phase-detect autofocus and OIS on a phone that’s just intended for filing expenses.

The Priv’s mission is an impossible one.

Whether you focus on its enterprise features or its consumer allure, it’s hard to find an audience that would be willing to pay the high price of BlackBerry’s new smartphone. Sure, there’s a high end to the smartphone market, and the Priv doesn’t cost any more than a Galaxy Note 5 with its own keyboard cover, but BlackBerry hasn’t been part of that conversation in years. The average selling price of a BlackBerry smartphone today is $240, so whatever handset business it still has is most definitely not in the premium segment. Perhaps half a decade ago, when everyone had to have two devices — a BlackBerry for work and an iPhone for leisure — this might have been an appealing proposition where the two converge into one. But that opportunity has already been captured by Apple, whose average selling price for the iPhone is well in excess of $600.

The Priv represents yesterday's ideas with today's specs

With the help of IBM, Apple’s now convincing big businesses to trust its iOS devices, making inroads into the enterprise market that BlackBerry hopes to secure. And while BlackBerry is treating Android as incidental to its purposes — just an adaptation of the route by which BlackBerry services reach users — being on the same platform as everyone else deprives the company’s devices from offering a unique combination of hardware and software. Android also places the Priv in direct competition with Samsung’s Knox security platform, which Chen has admitted is as secure as BlackBerry’s, and which already has the advantage of years of Android development under its belt (plus some of BlackBerry’s security technology).

John Chen hopes the premium-priced Priv will not only halt years of downward momentum in hardware revenues for BlackBerry, but reverse it. Having recorded only 800,000 smartphone sales in the last quarter, the BlackBerry chief has set a baseline of selling 5 million smartphones per year in order to keep the handset business sustainable, and the Priv is supposed to be a major driver in that.

BlackBerry needs this phone to sell in large volumes, but hasn't priced it accordingly

But what sets the BlackBerry Priv apart? As far as consumers are concerned, it will be all about that physical keyboard. Samsung already has a pair of Edge handsets with dual-curved screens like the Priv’s, and there are plenty of excellent Android cameraphones this year, each of them costing less than BlackBerry’s new $699 flagship. Are there really that many people willing to spend that much extra money for the thrills and joys of a physical keyboard?

The best case scenario for the Priv is that it ends up being BlackBerry’s version of a Chromebook Pixel or a Surface Book: an excellent device that sells in low volume and with a high profit margin. But neither Google nor Microsoft is relying on the sale of those computers to sustain its business. To them, the device is of instrumental rather than existential importance, whereas BlackBerry really needs this phone to sell well. There’s no halo effect from which BlackBerry can benefit with the Priv, because the company is now on Google’s platform, not its own, and it also doesn’t have any more affordable Android handsets to offer. The Priv will either sell itself or nothing at all.

Trusting BlackBerry with security is one thing, but what about Android updates?

If recent history is anything to go by, the Priv is unlikely to achieve even the more modest goal of being a niche success. It’s strictly a GSM phone, so it won’t work on Verizon, the network preferred by many of the businesses that the Priv is designed to appeal to. BlackBerry’s track record with developing and updating OS software also happens to be atrocious. The PlayBook tablet didn’t have a native email client for months, and promises about it receiving an update to BB10 OS were reneged upon. So BlackBerry, a company with no credibility among Android smartphone buyers, has shown itself to be both slow and unreliable — which is precisely the unhappy combination that makes people distrustful of current Android OEMs. The Priv doesn’t ship with the latest software on board, opting for the older Lollipop despite Android Marshmallow’s availability, which seems like a recipe for near-future heartache.

Ultimately, the most questionable aspects about the BlackBerry Priv relate to its maker rather than the product itself. It’s very likely that the Priv will be a well-constructed, durable machine with plenty of great hardware both inside and out. But will BlackBerry make the most of it? Will the company’s famous care and diligence about security extend to basic OS support as well?

It would be great to think that an old stalwart of the mobile industry could come crashing into the Android realm and disrupt the competition by setting an example to follow. But BlackBerry’s arrival comes too late. Its keyboard isn’t going to be the big differentiator that it once was, and its decision to court all and everyone has resulted in a price that will be difficult to stomach. The only smartphone more expensive than the BlackBerry Priv is the iPhone 6S Plus, and that’s bought on the strength of brand loyalty, a great track record, and the social cachet of owning the smartphone. BlackBerry’s last bet on the smartphone market could yet be an awesome device, but it doesn’t look likely to be an awesome success.