Earlier this week it was announced that Blackberry would not be bought out by Fairfax Financial, the company would not be going private, and that CEO Thorsten Heins would step down. Fairfax and other investors will be offering up instead a $1 Billion bond to help float the company, as its cash reserves are starting to dwindle. John Chen is stepping up to the plate as interim CEO, receiving a $3 million salary and over $80 million in restricted stock. John Chen was responsible for fixing up Sybase, a corporate data solutions company.
At its core, Blackberry has been facing a crisis of identity. Like Microsoft, BB missed the boat on the consumer driven data services market. Our favorite little tic-tac keyboarded phones were corporate sweethearts, but BB was late in attempting to crack into the general consumer demographics where Android and iOS dominate. The new BB Z10 was a first step towards offering up corporate friendly mobility which would be pretty enough for consumers to enjoy.
Of course it was not successful.
Not through any fault of the phone itself, but the Z10 was something new. A new OS, a new ecosystem for apps, that made it an unknown. Consumers don’t like “new” and businesses don’t like “uncertainty”. It takes time to satisfy both. Time for “new” to become “common”, and time proving this ecosystem to businesses, that it is a reliable platform to conduct business on. I think Heins had the right idea, even though it meant upsetting the apple cart. Introduce a new BB to a new generation of smartphone consumer. Build a new fan base. Court new business solutions. A strategy like that wont impress in the short term, but it could have netted long term success.
The more I thought about it, the more positive I was on the idea of BB going private. Not being beholden to shareholders and stock prices. Maybe they could take some bigger risks, make more daring moves. I was hoping they could follow in Dell’s footsteps. Whether you liked the idea or not, we knew what BB was going to do, and we were starting to build a little trust. They had a course of action.
Now that trust has been rocked. Again.
John Chen’s success with Sybase is a hopeful note, but we don’t know what a Blackberry under his leadership will look like. He’s a software and services guy. BB is a services and hardware company. The company is discussing how the bond sale will work, and it does sound like a good deal for potential investors, but that’s treating an immediate symptom. The company isn’t discussing what they’ll do to cure the actual disease. They’ve been eerily quiet about new hardware, and their most recent services push was to deliver BB Messenger to iPhone and Android users. There are growing concerns that we might see a repeat of happened to HP under Léo Apotheker.
Now we just don’t know. Now we all “wait and see”. Blackberry wanted to showcase bold action. They’re going to turn the company around. In what be the ultimate irony, this move sets the trust meter back a peg. It’ll take time to rebuild some of those small gains the company had made.
That’s time this company really can’t afford.