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BlackBerry had a pretty crappy year

2016 was the year the smartphone pioneer finally decided to stop making phones

BlackBerry had a pretty crappy year

BlackBerry has had a wonky year.

Things were looking merry and bright for the Canadian company during the holiday season of 2015. Their end of year numbers were less terrible than expected — a net loss of only $89 million. They had just released the Priv smartphone, the first BlackBerry device which supported Android OS, and Telus, Rogers and Bell all carried the phone in stores; later to be launched in more than 20 countries.

BlackBerry’s QNX division, creators of automotive software controlling everything from advanced driver assistance technology to back-seat entertainment systems, claimed we’d be driven around by autonomous vehicles by 2017. CEO John Chen and shareholders smiled tentatively.

Then in the spring, there was a great brouhaha surrounding the FBI’s wish to gain access to the iPhone of Syed Rizwan Farook, perpetrator of the San Bernardino shooting that killed 14 people and injured 22 others. The FBI dropped their demands to Apple when they were shockingly able to hack the phone independently, leaving Apple with no legal recourse to figure out where the security weakness was.

It was widely anticipated that BlackBerry’s already excellent reputation on device security stood to gain from the FBI’s successful iPhone hack.

All this positive speculation apparently did nothing for BlackBerry’s stock price. Having started the year at $12.75 per share, the stock slumped all spring, never breaking above the $10 mark until late July.

The pressure on the stock was likely caused by fourth quarter numbers that revealed BlackBerry had in fact, only sold 600,000 phones, including sales of the brand new Priv. Within that same time frame Apple beat that number in iPhone sales per day.

Chen, at this point, was still adamant BlackBerry would not be exiting the hardware business, but this news created a tidal wave of analysts throwing up their hands in frustration, wondering why the company couldn’t just admit it should focus exclusively on software.

In April, VICE News reported exclusively that the RCMP had been in possession of the global encryption key for BlackBerry devices since 2010. That same month, John Chen stated that BlackBerry’s ultimate priority when asked to choose between privacy and national security would be the latter (in stark contrast to Apple’s firm conviction of maintaining privacy for their customers no matter the circumstances). The very existence of such a built-in decryption code bore strong implications for BlackBerry’s priorities regarding customer privacy.

In June it was clear. The software side of BlackBerry was generating more money than BlackBerry handsets.  Analysts were again baffled as to why Chen was still unwilling to shift the company away from the losing business of handsets. In July, BlackBerry released their second Android phone, the DTEK50. The difference? It was half the price. Blaming the laughably low sales of the Priv largely on its luxe price of around $900, the new mobile option was priced closer to $400.

These bold statements and sudden moves bring to mind a company treading water while trying to eat a slice of pecan pie: No one knows what their strategy is, but it sure is fun to watch.

When Fall 2016 arrived, BlackBerry finally bit the bullet announcing an end to the domestic manufacturing of all handsets — their new strategy would see all hardware development outsourced to countries like Indonesia, where in fact, BlackBerries are still quite a hit.  

This long-awaited shift led the company to finally project breaking even. No longer mincing words, Chen finally stated in December that they are indeed, a pure software company. 2016’s third quarter earnings posted a very modest gain, rather than the minor loss analysts anticipated.

So where to go from here? The company appears to be pushing their less familiar subsections to the media surface — talking up the QNX operating system, with a new deal signed with Ford Motors in October. Chen said this month that a planned $100-million investment in their autonomous-vehicle ventures, over the next few years, should result in the hiring of 60 software engineers and some sort of revenue generated in 2018.

But one thing is clear — 2016 was the year BlackBerry’s failure to take risks and adapt to a fast-changing market finally came to a head. Its departure from the smartphone space, although a shame for a Canadian brand that essentially created the smartphone, might perhaps give it the opportunity to completely reinvent itself.

 

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