BlackBerry

BlackBerry CEO John Chen: Do we need to be in the device business?

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When Fairfax CEO Prem Watsa met with Chen early last October at a luxury resort in Napa Valley to discuss the opportunity of running BlackBerry, “John said,

‘I don’t need a job.’ But…he [also] said, ‘This is an icon in the business and it really needs to survive. It doesn’t need to die,’” says Watsa. “And that’s what intrigued him.”

Like many former BlackBerry users, Chen converted to an Apple iPhone years ago, switching back when he joined BlackBerry. It took him a while to get used to the BlackBerry 10 operating system, but now,

“I never use the iPhone any more,” he says. “The iPhone now feels like a toy. I don’t think you’ll find [I’m] the only person saying it.’”

BlackBerry, he says, had a chronic problem with overpromising and underdelivering. There were quality issues and, internally, a lack of the sort of accountability and co-ordination required to make bold fixes. Deadlines would come and go without consequences.

“I realize that the company has some credibility gaps,” he says. Wireless carriers told him, “‘We’d love to help you out, but there are some things that you have to get done right,’” Chen says. “They always complain about us being late or, somehow, somewhere in the middle of this, redefining what the features are.”

Under Thorsten Heins’s, BlackBerry caved to pressure from carriers and reduced BlackBerry service fees, promising investors it would replace the lost revenue with new offerings for customers. Service revenue fell sharply and is now deteriorating by about 15% from quarter to quarter, which Chen figures will continue for at least another two quarters.

The move to change the service-fee formula bewilders Chen—he likens it to someone quitting his job hoping a better one will come along, then wondering why he can’t afford rent.

“I would never have done that,” he says. “The disruption of the service-access fees was a mistake.”

Overall, Chen wants BlackBerry to transform itself from being a “mobile technology company” that pushes handset sales to “a mobile solution company” that takes a broader approach to serving the mobile computing needs of its customers. Remaining in the handset business is important—for now, at least.

“I think devices are still one component of the solution,” Chen says. “The question is, Do we need to be in the device business? That remains to be seen.”

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