Earlier this week Forbes published a story based on an interview with John Chen from about a month ago.
The short version is this: Chen doesn’t think it’s all about volume. He gives the example of Porsche and Lamborghini in the automobile industry to illustrate that there are lots of successful niche players in various markets. BlackBerry will focus on markets that are regulated, and care a lot more about security than app availability. Chen pegs the regulated industries as accounting for about 30% of total telecom spending among enterprises. He admits they don’t have a lot of time and they need to avoid too many mistakes along their path to recovery.
My take: I get the automotive industry comparison, but if you look at most strong niche players in various industries you’ll find that they price their products or services higher than the volume players. In cloud computing you have Rackspace, who’s all about high quality service. They charge far more than Amazon. In computing we have premium gaming graphics cards sold in lower volumes but with much bigger price tags. Niches exist to serve the needs of an audience that isn’t well-served by a market (cheap) product.
BlackBerry needs to raise its prices for enterprise-class devices, and I think it should consider selling them directly rather than going through carrier channels all the time
BlackBerry needs to raise its prices for enterprise-class devices, and I think it should consider selling them directly rather than going through carrier channels all the time. In the automobile industry forget about Porsche and Lamborghini. Look at how Tesla has setup a global distribution channel on its own without any dealers. If BlackBerry is to be the premium device for enterprise customers, why not keep the high price tag and keep more of the profit by going direct?
What I’m unclear on is how the company plans to differentiate its consumer products (built by Foxconn) from its enterprise-class products. I’ve said this before and I’ll say it again: They might want to consider building consumer devices that are not BES compatible. This is the only way I can see the justification for selling both high-end enterprise devices and lower-end phones at the same time. If security is the extra feature people are paying for in the enterprise market, then you can’t put the same level of security in your ultra cheap hardware or you’re telling the market they get security for free. When you program the customer base to expect your best feature to come for free it’s not good for business.