“Everybody was staying ‘Why should I stay with you? Why shouldn’t I leave right away?’ He answered the tough questions one by one” – Willie Jow, Sybase executive and friend of John Chen, newly-installed chairman and interim chief executive at BlackBerry.
In the immediate aftermath of the announcement that John Chen – the man who turned around Sybase from an operating loss of $98 million when he took over as CEO in 1998 to a company he sold to SAP for $5.8 billion in 2010 – had become chairman and interim chief executive at BlackBerry, most people were keen to know the answer to one question: What was he going to do with the handset business?
Many people have come to believe that the handset business is in terminal decline at BlackBerry in the face of a ferocious onslaught from Apple’s iPhone and Android smartphones. Windows phones are also starting to hurt it in the corporate market. Most analysts have suggested the best outcome would be for the company to be split up and sold off.
Chen, however, has other ideas. In a brief phone interview with Reuters he was very quick to rule out disposing of the handset business. “I know we have enough ingredients to build a long-term sustainable business,” he said. “I have done this before and seen the same movie before.”
He revealed he was preparing to meet with government customers and those in the financial and telecommunications sectors in North America and Europe to “stabilise” existing relationships.
Judging by those comments, it seems that Chen’s immediate focus is on enterprise which, given his background (and BlackBerry’s) makes perfect sense, especially as the company hasn’t exactly set the consumer markets alight (BBM aside).
It’s very easy to imagine that the questions being put to Chen by those customers will be very similar to the ones put to him when he was at Sybase. Why should they stay with BlackBerry? Why shouldn’t they leave right away? Well, the easy answer to both questions is probably that enterprises don’t just switch platforms overnight and they will need to be convinced to opt for iPhones, Android smartphones or Windows Phones. Some already have been persuaded to leave but there are plenty of others who might be willing to be convinced to stay.
Going soft
Still, what vision, exactly, will Chen be able to provide that will sway those customers in Blackberry’s favour? A number of people think he should accentuate the possibilities from a software point of view, especially if it can be provided on a cross-platform basis, and they argue the hardware is pretty much a write-off. However, the problem with the idea of going with a wholly software-based approach is that while it might make sense in isolation, it doesn’t necessarily make sense for BlackBerry.
Such an approach would be counter-intuitive at a time when all the other players in the market have a strategy that combines the handset and software. Sometimes, acting counter-intuitively can be a potential advantage, but Chen obviously doesn’t see it that way. Not yet, at any rate.
According to reports, Chen has intimated it could take six quarters to turn the company around. On one level, that’s a long time, particularly in the home and personal market where new phones and operating system updates occur on a regular basis. But for BlackBerry the most important thing is how it plays at the enterprise level, where those time scales might not be appear quite so drastic.
Enterprise customers will look to Chen for reassurance, keeping the hardware business is part of that. They don’t want the reassurance you might offer someone sitting by the bedside of a coma patient but the reassurance that accompanies visible signs of recovery. It’s up to Chen to persuade them that Blackberry is heading out of intensive care towards the general ward rather than waiting for the life support to be switched off and taken to the morgue.
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