Tango and Cash

Last week, following our CES interview with BlackBerry CEO John Chen, I joined Rene Ritchie for a Vector podcast to talk about What's going to Happen to BlackBerry.

What transpired was "90 minutes of podcast magic", as we dove through various topics, picking up the conversation from our last Vector podcast on What Happened to BlackBerry.

I highly suggest listening to the show, but if you're more the scan and read type, we took the liberty of having the podcast transcribed. What follows is 15,000 words of raw BlackBerry talk. I did some minor edits here and there just to clean up bad transcriptions and cut out some of the non-value added banter. Happy reading!!

FULL TRANSCRIPT

Rene: Welcome Kevin Michaluk, founder of CrackBerry.com. When last we spoke, Thorsten Heins was CEO of BlackBerry. I think it was fresh news as we were recording, that they had announced that they were going to entertain offers for a sale.

Kevin: That's right. It was an interesting time. I was actually on a beach in Italy in the summer when they made their announcement regarding seeking strategic alternatives. It took me by surprise, because before that, 2013 appeared to be going pretty smoothly from a BlackBerry fan perspective. Not super smooth - but we got our new phones, and at least some people were buying them. We saw a lot of action on the CrackBerry website. And the initial reviews were better than I expected. They were almost harsher, in some cases, from the hardcore BlackBerry fans than external tech publications. When BB10 launched, it was not as feature-rich on the power-user features that heavy legacy communicators expected, but it was good.

There was still a lot more that we wanted, but 2013 was at least the year when the new phones came. We didn't really know the results for the company yet, though, how many people were buying BB10 phones. When that strategic alternative announcement came out that they were essentially going to put the company up for sale, or at least seek strategic offers, that was the sign that things were not going as well planned.

Then, more recently, you had Fairfax Financial, I think it was in November, make a play, saying, "We're going to put $4.7 billion up for grabs, basically, to buy BlackBerry and take them private."

Rene Ritchie: Just to back up a little bit on how we got there, I have a BlackBerry Z10. I've used your Q10. I've tried the Z30. I've tried most of their devices. They were really in a weird place. One of my friends, a long-time big enterprise guy, he had a BlackBerry 9900 for a long time. They gave him a Q10, and he was utterly lost.

Some people were using iPhones and Android phones. They wanted to get them back on BlackBerry, so they had to provide an experience that was commensurate with a modern smartphone. That seems really hard to both bring your millions of established enterprise customers forward but also give enough to bring back the people who might have left. It seems almost like an impossible task.

Kevin: Absolutely and I think they actually made some of the wrong decisions. When it comes to the visuals of BlackBerry 10, at a glance when you look at static images, static photos of the OS on the devices, there's a similarity. It looks like a BlackBerry. It almost looks a little dated in some respects, where they stayed with more heavily designed icons, that kind of thing. But it looks like a BlackBerry.

But then, for the people who have been BlackBerry users for years, when they pick up this thing and they're moving from a Bold 9900 which was BlackBerry 7 to say the Q10, you turn on the display and it looks similar. And then all of a sudden you're in this gesture filled experience which they're not used to.

A lot of things changed except the visuals. I almost think if BlackBerry made a bigger visual change to the OS, at a glance, more people would be expecting bigger changes in the experience and be ready to adapt to them. But because your legacy users see it and are expecting similarities, all the differences in terms of the UI and all the gestures, they almost complicate the experience more than if they changed up things -- the visuals and user experience -- a lot.

I think for a lot of the users who came over from Android or iOS who are used to touch screen environments, they actually took to BB10 a lot easier. A lot of those hardcore people who left and came back, they love the new experience. But for the legacy BlackBerry users, it didn't grab them and a lot were frustrated.

It's something we heard about the Q10, where a lot of people got it and they've wanted to switch back to their Bold 9900s because for a communication device that was good enough. And they're not getting enough benefit out of the BB10 experience to make it worth that sort of adjustment period.

Rene: So just for people who might not be familiar, the Z10 is basically your full screen touch device, similar to an iPhone or most Android phones. The Q10 is the keyboard device similar to a traditional BlackBerry. And the Z30 is more like an Android device. It's even bigger. I forget the size. Is it five inches?

Kevin: Right. That's a five inch display on the Z30 and the Z10 is 4.2 inches.

Rene: You mentioned the sales and the sales were interesting to me because when we first started hearing about the BlackBerry 10 launch I watched all your interviews, read all your interviews with (CEO) Thorsten Heins. I listened to you talking with Frank...Is it Frank Boulben?

Kevin: Frank Boulben. The Chief Marketing Officer.

Rene: Frank Boulben, from France. C'est magnifique. They talked about having carrier buy-in, carrier support that they were going to have partners that would help them here. That, at least to me, never seemed to materialize. Maybe that's part of what we saw reflected in the sales.

Kevin: Absolutely. It varied a little bit by region and country. I spoke to them, both Frank and Thorsten, before last year's general meeting of shareholders, still in 2012, soon after Frank came on board, before BB10 launched - we had an interview with them.

They were very, very bullish on where the carrier support was. They jumped on the BlackBerry airplane, the senior management team, the head sales guys, and they did their world tour of pitching BB10 to carriers around the globe. From their perspective, it went really well.

Based on what they told me, how they said it, I really believed it. I'm sure they believed it too. I talked to a lot of analysts and guys like that also. One thing I did hear afterwards was it was a little bit the carriers were talking out both sides. BlackBerry's senior guys come into those meetings. They pitch BB10. The carriers are loving it. They give very positive feedback, but then, behind closed doors afterwards, what are they (the carriers) really saying?

It was a case where maybe senior management had a more bullish feeling than what the carriers truly thought, even in those earlier days, prior to launch. Ultimately, that's what transpired, especially in the US, where BlackBerry 10 just never really got a lot of love.

Some of the stores and some of the key markets put some effort into it. We did see that when I was in New York for the launch of the Z10. Other carriers just didn't try at all. Even in that case, as you went through different markets in the States, to different cities and smaller towns, you pretty much had to ask for BlackBerry. You couldn't find it promoted on store shelves.

Rene: What was crazy to me is initially, Rogers, a Canadian carrier, said they wouldn't even carry the Z30.

Kevin: Exactly. We had to revolt on them. Rogers, love them or hate them, they've always been very supportive of BlackBerry over the years. That was one of the first carriers, if not the first carrier, in the world to support them, or at least in Canada.

We were all shocked by that. Since I'm a Rogers customer and I pay them lots and lots and lots of money every month, I was absolutely like, "This has to change now. Come on, guys." Even if it's like order it online or by request, you have to carry the damn phone.

Third party developers and accessory companies have as much power in the platform race as carriers do

Rene: It's interesting to me. We've had this discussion before. There's this feeling that I get when I talk to BlackBerry and BlackBerry enthusiasts and when I talk to Microsoft and Windows Phone enthusiasts that there has to be a number three. There's iOS and Android. Carriers are going to demand a third option. Maybe customers will demand that too.

Increasingly, it seems like Android is that option. You have the Samsung stuff, the iOS stuff, and then you have maybe Motorola or maybe HTC. In Verizon's case, they have their own Droid line. They seem OK with positioning. Because Android is open, they can do whatever they want with it. They seem to think that that level of control is maybe easier than dealing with a BlackBerry or a Microsoft.

Kevin: I used to agree with that argument that "There has to be three. There has to be three. The carriers want three." My realization now is that it's not actually the carriers who are making that determination that two is OK.

It's starting to happen in terms of the support from third-parties, not just app developers, but more so the guys in the connected accessory space. We're starting to get into this post-smartphone era. The phones are all pretty darn good these days, from a specs perspective.

Rene: I could live on any one of them.

Kevin: You could live on any one of them. I've done it. I've been using them all the past couple years to get familiar. I can get by just fine pretty much on any platform. There might be specific things that bug me and Band-Aid fixes or workarounds that are required, but for the most part, I'm pretty good.

The exception becomes when I want things like connected accessories. I want my Fitbit, my FuelBand, my Withings scale. I want my Hue lights. I want all this cool new stuff that's starting to come out. It very much seems to support just iOS and Android, iOS and Android.

It used to be that it was more iOS first and Android second. Now, after CES 2014, I'm starting to feel like Android's almost the guaranteed one because from an API standpoint of what they can do with it, they can do more on Android than iOS may allow. But everybody makes a full effort on iOS just because there's so many darned devices in use and we know those customers tend to spend money too.

You don't see those third party companies making connected gadgets for Windows Phone or BlackBerry. Honestly, they're in the same business like we are as publishers where it's really hard to support multiple platforms. I think I probably said this on our last podcast together, but if you just think about supporting mobile versus supporting let's say the Web. You can build a single website that works for the Internet, if you pay attention to standards.

You're likely going to complain about Internet Explorer not being good enough, but for the most part Chrome, Safari, Firefox, Opera, whatever you want to use, it's going to support your website. If you just say the statement that, "Hey, I want to have a great app or mobile connected accessory and make it available to as many mobile device owners as possible.," oh my gosh! Where there's four mobile platforms that you have to support, that's a lot of work.

It's actually easier for those people building and supporting apps and gadgets if there's not four mobile ecosystems or three ecosystems, but there's just two. It would be even easier for them if there was just one, but I don't think anybody wants to live in a world owned by only one mobile platform. As Rene Ritchie says often is, "Competition is a good thing for all of us."

I think that's part of the thing, coming back to carriers wanting three mobile platforms. Maybe some do, maybe some don't, but for the most part it seems like people could end up being happiest with two because it will give them the broadest access to all the cool stuff that's happening in the connected Internet of things world we're living in now.

Rene: I think as I watch the app situation play out, they were always very confident in getting apps, and they had this dual strategy of native BB10 apps and also the Android player. Maybe I'm wrong, it seemed to me like the more current version of the Android player, I think it was Gingerbread to start and they were going to go to...I forget if it was Jelly Bean or not, but that seemed to take a long time.

Then getting the actual Android apps ported over to BlackBerry, not every developer just rushed to get. You know the important ones, the Instagrams, the Vines, whatever people were, whatever the hot apps were, they didn't seem to be getting there fast enough or at all.

Kevin: Yeah. That was another thing too. At the Blackberry 10 launch in January they got up on stage and they had a lot of commitments -- let's say from companies to bring their apps over to BB10 -- sooner, rather than later. I think those commitments were pretty loose. We're talking a signature on a piece of paper, saying "Yeah, maybe I'm thinking about bringing my app to BB10."

That's enough for Blackberry to legally get on stage and not be called liars of it. Good on BlackBerry for at least doing that, because you have to. You've got to push, you've got to work with what you have and what you can do.

You can't get on stage and say, "We're going to be lacking a bunch of stuff." I think everybody probably dotted the I's and crossed the T's there properly. But I think ultimately once it's launched and maybe the sales aren't there, a lot of those commitments from app developers became, "Ehhh, maybe not." Then it became more of the job of the CrackBerry community and the hardcore members out there to just find what they wanted and bring it on board to the platform by whatever means necessary.

Right now you're seeing Blackberry go to the next level where now they've updated the runtime to Jelly Bean on 10.2, and what they're doing is going to allow the direct installation of APK files on 10.2.1 which is the newest update that's already available in leaked form through our forums, but should maybe as early as this month, start to roll out on carriers.

That update allows for the direct installation of Android apps onto Blackberry 10 phones. Coming back to this discussion of two platforms supported by carriers and it coming down to maybe a two-platform world while Windows Phone obviously wants to push it three.

I think you're going to see Blackberry continue to push BB10 apps, but latch on to Android to supply that full buffet of apps so people aren't left out. It's something I want to see. I would also love to see Google services somehow get supported by Blackberry in a means that's legal, whatever it takes for them to make an agreement like that happen.

I think actually a lot of people out there we've seen in the comments and in the forums saying, and even on actually Android Central's comments I've read it, where if they could get "an Android phone with Blackberry security with it", and that sort of layer of BlackBerry services added to all the Google services, that could be a really compelling device.

Rene: Yeah, that's interesting, because on iOS now there's Google, Microsoft, and BlackBerry all making apps for the iPhone, but Apple doesn't make apps for anybody. Google so far has been hesitant to make apps for Windows Phone. I don't know how many they're making for BlackBerry but I don't believe it's many if at all. It seems like before where they wanted to reach every eyeball, now it's maybe more tactical.

Kevin: Yeah, I think so. I think everybody's strategies are slowly or quickly changing in this mobile space. Everybody is protecting their own interests when they think they can protect them, and they're of a size and level of success where that's the strategy to follow. Then you have somebody like BlackBerry who's saying, "OK, we need to change."

BlackBerry enjoyed years of being a single-solution provider. A vertically integrated service where if you wanted to use Blackberry servers in enterprise it meant you had to use their phones, if you wanted to enjoy the benefits of BBM or BlackBerry Messenger as it used to be called, then you also had to have a BlackBerry phone. Now they're tilting. They're going horizontal to say, "OK. The BlackBerry experience is something that can be enjoyed and brought to all the platforms of users."

Which they have to do. You can be an Android user and a BlackBerry user. You can be an iPhone user and a BlackBerry user. That's the message straight out of the new CEO John Chen's mouth, which I'm sure we'll talk about later on.

On the rollout of BBM to iOS and Android

Rene: Yes. There's a couple other things I want to get to before we get to that. One is BBM for all. I was with you at BlackBerry Live when they announced that. For years, people have been wondering if they'd do that. Microsoft took Exchange cross-platform. Google had hangouts and whatever, Google Talk and things like that on other platforms. BlackBerry had always kept it to themselves.

Then finally we get BBM for everyone. But the launch, I think it's fair to say it was troubled. It went out on Android, it started going out on iOS, then it stopped. We had to wait an additional period of time for it. It wasn't the ideal launch I think they were hoping for. The response was fantastic. Hundreds of thousands, wait, tens of thousands of people signed up immediately. Maybe a million people immediately, but it seemed more problematic than it had to be.

Kevin: Yeah. It wasn't as smooth as could be. But I don't think it really hurt them because again, at that point when they put it up online they were allowing people to sign up, and then they were releasing access sort of in waves.

Rene: It was a waiting line.

Kevin: The thing is though, despite the launch troubles they were still hitting just their hardcore audience, so I don't think they lost anything on mainstream success. Those people are a huge start and that gives you a big base to work off of, so you don't want to tick them off. I think yes, it could have been a lot smoother.

Ultimately, everybody who wanted it those first couple days got it with not too much headache. There was a little bit of psychological...Like "Let me in. Let me in." That isn't a bad thing. 

Once it got out, it still picked up fairly quick. The first users were really those former BlackBerry users who'd gone to Android or iOS who wanted BBM again. As soon as they could get it, they got it. From there, that audience pushed a bit of growth, up to the tune of 40 million people now on the iOS and Android version.

Not too bad. No matter what, they were going to get that initial, good surge of users, well past the 20 million point, just from former BlackBerry users. What really matters to me more is getting over that start, how is it continuing to grow now?

I read one stat that said in the months where BlackBerry added 40 million people, WhatsApp still added another 100 million people.

Rene: Or Line in Asia, something like that.

Kevin: Somebody like that was still outgrowing on the upside over the same period of time. They've got work to do on that front. Now, it's out there at least, and it's going to get more feature-rich. What they did launch on iOS and Android was not the same experience yet that BlackBerry users are enjoying, where there's also video and voice calling built in. There's BBM Channels, which is launching. There are 250,000 channels right now.

Rene: Including yours. I was wondering was...We talked about this previously too... if they'd hired, for example, an all-star iOS developer or gotten...I've spoken to the BBM team several times. I interviewed them again at CES, fantastic team.

I just wonder if they had actually gone out and spent a little bit of money on a first-rate, all-star iOS developer or iOS consulting firm and maybe the same thing for Android, if it would have gone even smoother for them and maybe gotten the people who weren't hardcore BBM users but were hardcore iOS users as well.

Kevin: I don't disagree with you. We spoke about this. This is part of BlackBerry's legacy thinking that they are slowly changing. I'm going to take a minute here to explain what I mean. It's an important learning for the company, and it makes a lot of sense.

BlackBerry, for over a decade, every single decision that was made within that company was made around one guiding premise. How does this help us sell more phones? Every decision they made would always come back to that. How does that help us sell more phones? How does this help us sell more phones? That made a lot of sense when BlackBerry was in the phone business and they're riding that rocket ship of sales all the way up to the moon.

With something like BBM, where they're going onto other platforms, they made that decision to make BBM for iOS and BBM for Android still look like BlackBerry 10, which makes sense and it doesn't.

It's very much fitting that legacy thinking of "We're going to give them BBM, but really, we want to sell more BB10 phones. Why don't we make it look like BB10? Hopefully, people love it, and then they want to go ditch their iPhone or Android phone and get a BB10 phone."

At least that's my take-away from that decision that they're still saying that we need to get across what BlackBerry 10 is in the app experience. I don't think that way of thinking totally makes sense when you're really embracing this horizontal strategy of being a service provider and taking an experience to all the platforms.

Really, what they should say is "BBM is a great messaging platform. We want to build the absolute darn best BBM experience on iOS." That doesn't mean ignoring all the things that are native to the iOS experience and bringing over a BB10 UI and being very sticky about maintaining that.

There's probably a happy medium, where you pull over the best bits of BB10 and translate them into an iOS experience, but really with that goal of building the best BBM for iOS, not just the best working experience of BB10 BBM on iOS. There are a lot of letters in there, but that did make sense. I promise.

Rene: Absolutely. If you look at Google's apps for iOS, they're not exactly like the Android apps. They're not exactly like Apple apps. They're their own unique thing. They look very good, and they work very well.

Kevin: Exactly.

On Alicia Keys, Formula 1, and BlackBerry 10 Launch marketing dollars

Rene: Where BlackBerry did choose to spend money, and this is the last thing I want to touch on before we move up to the acquisition stuff, is on things like Alicia Keys, on Formula 1, on stuff that arguably got them some mainstream buzz. I'm not sure it got them exactly what they wanted or the attention that they wanted. I'm not sure it converted into sales is the best way to put it.

Kevin: That's fair. They put a lot of money into traditional marketing and things that don't drive to direct conversion. 

BlackBerry, with the BB10 launch, did a lot of brand-building type stuff, a lot of in-your-face type of stuff, whether it was the BB10 Experience vans, or you walk through an airport and you see tons of advertising. There was a lot of it, but it wasn't driving you into the store right then to make a purchase.

It gave BlackBerry 10 awareness, but BlackBerry always has pretty good awareness. Maybe it wasn't doing enough to just sell the benefits and the features and really get people out there to buy. It wasn't necessarily as targeted as it could have been.

One of the areas, looking back, where they could have done better with that spending would be to really target the existing user base. That's one of the things. Even leading up to the launch of BB10, one of the guys from the company gave me a briefing about the positioning of BlackBerry 10. He no longer works there which is one of the reasons why I'm OK talking about it now.. nobody to yell at me!

[laughter]

Kevin: It was interesting. This is going back to the first time I saw BB10, before it was demoed at BlackBerry World, a couple years ago, before it was on a Z10. It was just the very basics of the experience.

They walked through who they were targeting. He was very candid to say, "We're not going to out-iOS iOS with this. We're not going to beat Android overnight with this. That would be silly. What we need to do is go after the one in five.

"We want to go after that power user. We want to go after the one in five people." That's where, you'll remember, they talked about "BlackBerry people," at that announcement. It was a term that I wasn't really a fan of. It's like "We're going after the BlackBerry people."

What it was is the people who really value communication and productivity. They want a very fast experience. If it looks good, great. If it has everything, great. Overall, they appreciate that efficiency and productivity, and it's something that place a lot of value on. That's what they were targeting with it.

Ultimately, the type of money they spent marketing was not targeted at that anymore. When I'm talking about this briefing I had, that's even before the new CMO came on board. It was that early in that process.

Somewhere along the line, they switched to a marketing strategy that felt like they were trying to keep up with the Samsungs of the world, in terms of getting a lot of more mainstream, big advertising spend (think Superbowl commercial). They just didn't have the conversion that they needed off of it. At that point, you run out of money. You can only spend so much.

Maybe if they would have just said, "Look. What we need to do in 2013 is upgrade 20 million users of BB7 phones to BB10 phones and not even sell one iOS or Android customer to convert back or somebody who's never owned a BlackBerry before," and put all their marketing effort into upgrading the user base, they'd be much further ahead than what happened by trying to do a marketing launch that was trying to win everybody over again with a product that was still geared not at everybody. It was geared maybe at the four out of five, the marketing strategy, instead of the one out of five. Does that make sense?

Rene: That makes absolute sense. Even stuff like the F1 sponsorship...You've mentioned this before. BlackBerry is a still very well-known brand. It has huge value. Putting it on F1 positions it with premium audiences.

BlackBerry has a history of this. I remember when BlackBerry had this thing with Bono where they were going to let U2 into their labs to make their own devices, which is something that makes anyone who's familiar with the consumer electronics industry cringe.

Now Alicia Keys. It's not that they're sponsoring her concert or that she's promoting them. It's that she's Chief Creative Officer. You'll never see Samsung say, "Jay-Z's going to be our Chief Creative Officer." It seems like that sort of thing is more of a distraction. That is not, maybe, marketing dollars well spent.

Kevin: It raised a lot of eyebrows. It especially, in retrospect, felt frivolous given the downsizing of the company. You have a lot of people who've been working their butts off to bring BB10 to market, and they've been loyal to the company, etc.. Then you start downsizing. In the meantime, whatever Alicia Keys is getting paid, she's getting paid. It was probably more than most of us will ever make.

Rene: Make Jony Ive your Chief Creative Officer. Make Matias Duarte your Chief Creative Officer. Make Joe Belfiore your Chief Creative Officer. None of those people are singers.

Kevin: Exactly. Part of that's sponsorship. They were sponsoring her concert tour. If you went to one of the shows, you'd see a BlackBerry phone in it.

Rene: I went to one. I saw BlackBerry branding everywhere.

Kevin: It was a silly thing, maybe, to do the Chief Creative Officer thing, in retrospect. She's no longer with the company, or her term comes to an end this month.

Rene: It's always so funny. It's not just BlackBerry. It's happened to Samsung. It's happened to Windows too, where you hire a celebrity endorser, and they end up tweeting or Facebooking from your competitor's phone almost immediately.

Kevin: Poorly done. That's just embarrassing for everybody. It's more embarrassing for her than for BlackBerry, to be honest. Like you said, it's almost expected it's going to happen, but it's a little embarrassing.

Fairfax invests a billion dollars and BlackBerry gets a new CEO

Rene: That brings us back up to Fairfax. You had gotten off a plane. We'd done the podcast. Then, it seemed like in short order, everything started to change. I don't know if you want to go right to Thorsten Heins being replaced. It seems like from that moment on, the acquisition or what was going to happen to BlackBerry became the story.

Kevin: Like I said, when the first thing in the summer was announced about strategic alternatives, that's when things started to slide downhill. Essentially, they put a for-sale sign on the company.

When you do that, the message spreads. That's a message they need to tell their investors, but the media is going to pick up on it. People are going to pick up on it, and people talk to people. Some get the story very right, and others get it wrong.

You can't really blame somebody who might have been thinking, "I'm going to buy a BlackBerry," to start thinking, "Do I really want to buy a BlackBerry if the company is for sale? I'm going to sign a contract for two years or three years or spend $700 buying it outright?"

Rene: It kills your momentum.

Kevin: You lose momentum. More than momentum, you almost stop your revenue engine dead. For anybody who's making an informed purchase decision, where you're doing a little research, thinking about what you want to buy, if you do that research in this sort of climate, you've got to really want to buy that BlackBerry if you're picking one up.

An average person who did that research would probably make another choice, even if they were initially thinking, "Maybe I'll try out the BB10 phones." If you're just doing impulse purchases or zero-dollar phones, that's a different story, and that story we've seen get played out. This last quarter, it turned out BlackBerry sold more BB7 devices than BB10 devices.

In general, having the for-sale sign up on the company really hurt it. When Fairfax came out initially and said $4.7 billion to buy the company I think that really was the plan.

Now ultimately what happened when their 30 day vetting period was over was to come back to the table with a new offer, or not even a new offer. Just a done deal and in the meantime nobody else came up and said, well, we're going to offer $5 billion or anything else. Fairfax was the player. I think others took a sniff, but Fairfax was the deal.

Rene: Big Mike got his name in the papers.

Kevin: Yeah, a bunch of people got their name in the papers. Rene and Kevin could have made an offer and gotten in the papers.

Rene: We should have. We missed our chance.

Kevin: We absolutely should have. But when Fairfax came back in, they said, "OK, we're going to give you a billion dollars," between Prem Watsa and his consortium. And that was their offer and then basically as part of that deal Thorsten Heins was out and in was John Chen as the new chairman and CEO, or at the time, interim CEO of BlackBerry.

That was an interesting move, right? Again, it caught us by surprise. Again, I was out of town. This time I was in Paris because my fiancée is there doing an MBA and I was helping her get settled in.

I get the word that BlackBerry has a new CEO. We all go crazy. I was fortunate to get a first interview with him less than 24 hours after he took the job. So what is my understanding from why they switched plans from paying 4.7 billion and going private and instead spending the billion and make this change?

The impression I have and the understanding and this is something I do believe, is simply time. The damage of having the "For sale" sign up on the business is really, really bad. Because again, even in enterprise sales, government, etc, these people don't buy... They buy with like a five year mind set at minimum and they don't want to commit to something that's going to get them fired from their jobs. Right?

Rene: No, they're going to start like demanding code in escrow and money put aside and it's going to be very complicated.

Kevin: Yeah. They need to be assured that the companies they're investing in on enterprise, government, all that, they're going to be around. And this was starting to, I think, take a toll on those relationships. Even though those are a lot of companies that love BlackBerry, have worked with them for years and they know BlackBerry, you start to get a bit of fear.

Essentially this strategy of investing a billion dollars and then putting in the new CEO, it allowed them to take the "For sale" sign off the business as quick as possible because if they wanted to follow through with that $4.7 billion offer, you would probably have been looking at another five or six months before everything actually closed. Because things just don't happen that fast in that sort of a situation.

If that was the case, the damage that would have been done to BlackBerry going another five or six months before the deal went through with this sort of weirdness happening, then you'd be in a really bad space, much worse off than they arguably all ready were. So very quickly Thorsten Heins was out and John Chen was in and it's been an exciting 68 days since then. Give or take a few.

Rene: They're all saying anticipation is worse than the event itself and I think that's exactly the point you're speaking to. But in hindsight Thorsten Heins, when he became CEO, you got an interview with him very quickly. You were there for a lot of their events. Do you think that...was the CEO change needed at the same time to signal a change in direction? And maybe reassure people that things would be different?

Or do you think they needed somebody from outside BlackBerry because Heins had been a COO before he was CEO? What factors do you think went into them changing CEOs again?

Kevin: Sure. I have a couple of things in there to address. One is when Thorsten came on, he didn't really set the business strategy. He came in to execute on Mike and Jim's vision or at least Mike's vision... Mike Lazaridis, the former co-CEO and founder of Research in Motion/BlackBerry. The BB10 play was him. That was under his reign buying QNX, buying all the patchwork companies needed to piece it together into BB10. That was still under his responsibility.

When Thorsten came in, he really had no choice at that point but to see it through. BB7 is at the end of its life cycle. They needed their new platform to get to market. And all he could really do was do everything he could to make sure that happened efficiently, and then also fix the corporate structure.

I think Thorsten actually got a lot done and he doesn't get a lot of credit for all the change, for maybe some of the things he did, because it wasn't outward facing. His biggest things he accomplished were actually internal. The culture at BlackBerry under Mike and Jim, I don't think it compares to what it is now. I've heard nothing but good things about the positive changes that Heins made.

Even things like doing regular town hall meetings, globally with the company, getting all the 18,000 people on the phone at the same time to be able to talk to them, explain what's happening, just more things to kind of unite BlackBerry as a family. I think that all happened. And that is incredible when you think about the pressure they were under and the way they're getting beat up in the press.

There was a better culture when things are going bad at BlackBerry, than during the glory days when they were number one. And I think that says a lot. He also changed up the way a lot of the teams worked, a lot more smaller teams tackling projects. He really fixed up the internal corporate structure, and that's something I've heard a lot of positive things about.

But then on the product strategy and bringing BlackBerry to market, Heins didn't really have the ability to influence it more than getting it shipped. But his hires were the COO, his hires were the CMO. BB10 didn't sell enough. They overbuilt inventory. They did a billion dollar write down of inventory.

At that point, as much as I like Thorsten, think he's a great guy, he's been awesome to us in his tenure there, I don't know if there was anything that could happen but a change. Simply because it's his people, it didn't go to plan, as according to plan, you're responsible to shareholders and everybody else...

Rene: The buck stopped with him.

Kevin: It had to, yeah, make the change there, and he hadn't yet at least pivoted on strategy. The one pivot on strategy that I think he really did was actually BBM going cross platform. What's interesting is I had an interview with him, again I think that same time a year before. I asked him when is BBM going cross platform? "It's not, Kevin. That ship has sailed." I've never taken him to be a guy who lied to me, right?

I think at that time, he was really telling me the truth. But ultimately they pivoted on that. And then I'm like, "Well, if you guys would have done it back in '09 when we were telling you to do it I think it would be a very different place in the cross platform messaging game," but they never did.

I don't think it's too little too late, I think there's still a lot that's happening, and BlackBerry has a big enough base of users in BBM that they can continue to build on it and grow and hopefully become profitable, just looking at that as a standalone business within the BlackBerry portfolio.

Rene: And just for people who aren't familiar with it, BBM is now, like it's not a separate company, but it's being run almost as its own team. BBM was at New Media Expo. Not BlackBerry but BBM was there.

Kevin: Yeah, and I think that's something we'll talk about in a little bit here. BlackBerry's new strategy and the changes John Chen has made in the last 60 days. Going back to that first interview we had with him, within a day of him becoming CEO. He seemed really good, seemed really smart.

He was the CEO of Sybase. Helped to turn that company around over, I think, what was it, like an eight year period, grew it substantially, ended up selling it to SAP. From there he's been involved in different things, he's on, I think, the board of directors of Disney. Very much, I would say, an American CEO. 

It's one of those things I think a lot of people said even when Thorsten came in, that it would have been good for BlackBerry to bring in an American to the table. That's very much what John Chen brings. He's very much coming out of a US type of environment.

John Chen and BlackBerry's new strategy

Rene: Should we read anything to him being an enterprise CEO and not a consumer electronic CEO?

Kevin: I think so. He's been very vocal about that. In that first interview he acknowledged...He said, "Look, I'm not going to commit to anything right now. That would be crazy. I'm not going to leave anything off the table. Maybe we'll do this, maybe we'll do that. Maybe you could see BlackBerry go Android. Maybe you won't."

He basically said I'm going to do whatever it takes to make BlackBerry a successful company, but at that point he was also interim CEO. From my perspective, I was like, "OK, it sounds good." We looked at what his compensation package looked like. It was very much a...it's a good payday over a five year period.

But I couldn't help at that point think well, "Prem Watsa's coming in with a billion dollars. Is he here just to get a quick return on Prem Watsa's billion? Do what he has to do to downsize, sell off the bits and pieces" and that kind of thing, especially with the term interim, like when you see that it's like maybe he's coming in to chop it up, even though he said the opposite. That he wants to see this thing through.

Over the last two months now we've seen that that definitely appears to be the case. He wants to see it through. Before Christmas they had their latest earnings report. They made some big announcements during that.

First thing first, in those first 60 days he wasted no time cleaning house, gone is the chief marketing officer that Thorsten hired. Gone is the COO. Gone is actually the CFO even. I think the only one left from the C level team is Steve Zipperstein, who's the legal officer for BlackBerry who came over from Verizon, actually, or was formerly at Verizon. So I think Zipperstein is still there.

Otherwise, very quickly Chen cleaned house. Not a lot happened. He did his initial rounds of interviews. He was pretty good. I think he actually got a very good response. The stock stayed pretty low, because it's been fairly depressed at that six dollar level and around there.

Coming into the earnings report, that was Chen's first big test. We didn't have a feeling that things would go swimmingly well on the numbers front. As we said, that revenue engine has been stalled.

But actually he managed to get the stock up I think almost 20 percent. Based on almost nothing but his, I think, charisma. And I like to take credit because I gave a CNBC interview that day setting him up as "John, the real deal Chen," and immediately after that the price went up.

Rene: If only you got commission.

Kevin: Yeah, exactly. I'd love it. But he did a couple things that day. One thing he did is he said, "You know what? We're going to restructure the way you think about BlackBerry. And most people when they think and hear BlackBerry, they think and hear BlackBerry phones."

Rene: 9900.

Kevin: They think, "That's it. They picture a phone with a keyboard and that's what BlackBerry is." I'm the same way. I'm sure you're the same way. Like that's how we've thought for years. That's like I said, every decision at BlackBerry was made around how do we sell more of these phones that have keyboards? It would make sense that that's the message that's been reinforced for many, many years.

But he said, "You know what? The truth is BlackBerry is not just the handset sales. Yes, we're not getting the handset sales we want. BB10 hasn't been as successful as we want. But we have $3 billion in the bank, maybe $4 billion after they get some tax money back."

He's got a strategy and he's like, "We have enough money in the bank to execute on my strategy. I'm confident in that." But he said, "You've got to start thinking about BlackBerry differently. Here's what we are now." He said, "We are BlackBerry, a portfolio of businesses. Yes, we have handsets as one of our businesses. We also have messaging as one of our businesses, AKA BBM. We also have enterprise services as one of our businesses. And we also have QNX automotive embedded systems as one of our businesses."

And each of these businesses is in a different state of play. So let's say BBM for example, it's an investment right now. This is like a startup company. It's no different than WhatsApp trying to grow. Or, LINE trying to grow or Vine trying to grow. They're treating it as a startup within the company. That's in an investment stage. It's losing money, but they would be stupid to just, say well it's losing money. Let's take an axe to it and cut it off because that would be very shortsighted. 

Then there is enterprise. Which BES is very much still a profitable business. BlackBerry is still number one globally in MDM services.

Rene: That's BlackBerry Enterprise Server and Mobile Device Management.

Kevin: They're still number one in that globally. They operate in more regions than anybody with more devices being supported than anybody. However, a lot of that is still BB7 BES servers on the old handsets, and those BB7 servers don't support Android. They don't support iOS.

BlackBerry's still profitable, they're still number one. But Chen knows they're going to really have to invest in that to make sure that the new BES10 offerings and the new cloud BES that's being launched will support everything. They need to protect the investment of enterprises and governments. So that means supporting BlackBerry and iPhone and Android, and even announced in our interview last week, they're going to support Windows Phone also with their BES services.

They want to go beyond MDM. The thing that came out in our interview last week that wasn't really known previously, is he wants to get out of this notion of just being MDM. Because the competitors that are rising, whether it's Good or MobileIron or what's another big one? AirWatch, I think, is another big one.

They're very much competing head to head on MDM with BlackBerry as it's been today and been the past few years in enterprise. And they're doing a very good job of it on iOS and Android. And in some ways they're better than BES, in some ways they're not.

You have these companies that are very aggressively going after the space. To be honest, a lot of those companies have, the new competition in MDM, has former BlackBerry employees either helping build the tech or helping sell it. But it's very much an MDM play.

What Chen says is like look, we're going to take BES and we're going to build this thing out to be a real enterprise mobility service suite that goes beyond just managing your phones and provision but goes the whole gamut of certifications and managing apps and all that kind of stuff for enterprise in that space. To him, that business is still the number one, it's still profitable, but it's also in an investment stage where he's going to throw the money at it needed to compete against those competitors.

Number three is handset sales. Everybody understands phone sales. Clearly they need to make money on phone sales. They cannot lose money on phone sales. That's something that's been happening for the last little while for BlackBerry. It's very expensive to become a phone maker. That's why there's only a handful of them in the world, who do it properly. You're talking design. You're talking the whole gamut of marketing and...

Rene: A vertically integrated handset maker is so rare.

Kevin: Exactly. You have to acquire all the tech, all the components and everything, and it's hard. As you get more volume you can do more, but to just do it is tough.

Rene: Yeah, it's basically BlackBerry and Apple who do the whole widget.

Kevin: Exactly, and that's one of the things that's been killing BlackBerry's profitability, because when you talk about BlackBerry as one thing, a phone company, and you look at the numbers, it's like, "OK, yeah, the handsets are losing." Chen very quickly after being CEO here has kind of taken that off the table as being a risk.

He did a deal, also announced during that last earnings report, with Foxconn. To say, "OK, Foxconn, you're now doing our phone manufacturing." Now, that story was not totally fully told at the time, because it felt like that's it, all manufacturing forever and ever is going to Foxconn.

Rene: But people I think also assume that because like Apple gets things manufactured at Foxconn. Google gets all their manufacturing outsourced. It's not unheard of.

Kevin: Oh, it's definitely not unheard of, but this was a decision now where...what's happening is, part of this is BlackBerry's offsetting the risk of handsets. Because again, BlackBerry had a billion dollar write down of Z10 inventory, the way it was done to date.

With the Foxconn deal, Foxconn's going to hold all the inventory risk. You won't be blaming a CEO for a billion dollars...a COO, I should say, for a billion dollars of inventory write down in the future, because Foxconn's going to hold that inventory. If they make too many phones and they don't sell them, Foxconn's just going to eat that.

Rene: Yeah, it's not on BlackBerry's books. It's a more of a Tim Cook, almost Dell style inventory management.

Kevin: Exactly. I'm sure there's going to be a lot of communication there. They're going to work as partners. But for John Chen, he's like, "OK, I'm not going to lose money on phones going forward."

Now with Foxconn, that's a little bit more of an emerging market play, it seems like now that we've learned since then. It's not necessarily the company that's going to be making flagship BlackBerry phones. It does still sound like there will be those flagship phones in the future for us to enjoy.

But they're going to be doing the volume, lower cost handsets in the markets where BlackBerry is still in play. It's still very much high in the purchase decision as an option. It's still getting beat up. Like a couple years ago I could say, "Oh, Indonesia's number one." They just love BlackBerrys and nothing else. BlackBerry's been dropping there too a bit. You see low cost Android. You see some start...

Rene: Low cost Nokia.

Kevin: Yeah, and there's some startup manufacturers that are selling, I forget the name off the top of my head. I was talking to good old Simon and Mary who...they're amazing tech journalists. I saw them at CES last week and they were talking about this. I can't remember the darn name. But in India and Indonesia, you have this like local startup manufacturer making cheap phones. Android phones, and they're doing a killing with them right now.

But Foxconn will be that kind of play and in different markets you're going to see BlackBerry start to work with maybe different companies or have different strategies, but again, coming back to the four businesses handsets has been addressed right away, at least in the near term, with this Foxconn deal. It's going to help stop the losses on that division.

The last thing is QNX, QNX and embedded systems. Very much QNX is in automotive now. They have, I forget, 40 plus big deals in automotive. Where their software is being licensed. They have a lot of use in other industries. It's a profitable business.

If you think about it, it's also been not pushed from a BlackBerry standpoint the last couple years because a lot of that team from Ottawa was building the heck out of BB10 with BlackBerry's core team in Waterloo and elsewhere.

I think Chen...John made it clear that he sees a future in this machine to machine computing, and QNX is absolutely a player in that space and I think with more investment can do well there. Profitable but can become maybe a very big business with the right amount of love and attention given to it.

This is Chen's new vision which really, it's the same BlackBerry that was there the day before he announced that change. But it really changes the story for the company and even guys like me, because for a while there in 2012 if somebody said, "Oh, Kevin, BlackBerry's dead. Why don't you get over it and move on?" I could say, "Look, BB10's coming. It's going to change things around for the company. BlackBerry will be back in the game."

In 2013 for a while, that was working. Everybody was very, very happy yet again for the state of BlackBerry. We had our new phones, sentiment went positive, and then the last few months with all the business changes then it's gone negative again.

Now we know, the phones have not been selling to a huge extent, not even a huge part of the existing user base has been upgraded to BB10. They're selling more BB7 phones than BB10, which is just kind of, "Ouch. That hurts." All that hard work and you're outselling on your older platform.

For me to play that Blackberry champion role was even more difficult because there's not a lot of good things, ammunition I have to defend it when you talk about Blackberry as a handset company. But now all of a sudden, it's like, "Oh!" I have a really good story to tell that's more than a story. I think it's the way it is, it's the truth.

But when you do look at Blackberry as this portfolio of businesses and you start to say, "OK." When somebody says to me, "Oh, Kevin, grow up. Blackberry's dead, they're over." It's like, "Woah, woah. What are you talking about? Handset sales? Sure. Handset sales aren't going to well." But, yadda, yadda, yadda, I have a lot of other things to talk about it. And there's a lot of hope there.

Now, none of it's a slam dunk. John Chen has been very clear to say, "Look, we know this isn't going to be easy, with our eyes wide open. This is not going to be easy." All four of those business units I just talked about, none of them are slam dunks.

In enterprise, the competition is coming fast and furious. They still have to battle the sentiment that's the negative against them, and they have to change the marketing message, because they were so good at marketing Blackberry for years that people still think it's a Blackberry only thing when you buy a Blackberry. That's one of his biggest challenges, and this was a challenge for Thorsten Heins also, is to get people to realize that they're going from vertical to horizontal.

In these other businesses, BBM, lots of competition. Automotive, you're talking about the Android automotive alliance, or whatever it's called has just been formed and automotive makers are looking at that, which I'm sure has the eyes of QNX open and everybody's eyes to see what's going to happen down the line there.

None of it is easy, and obviously handsets are extremely competitive, but I think they're going to take this approach and they're going to try to build out the optimal strategy for each of those businesses in the portfolio. They're not going to apply it globally.

When we look at the BB10 launch, that was still a very global strategy. Let's get BB10 to market. Let's market the heck of it. For the most part, the marketing was consistent throughout markets or geographies.

Yes, they had the Q5 as a low-cost handset and that kind of thing, but it's very much a global strategy. Now, Chen's being very clear to say, "Look, in 2014, what does the average BlackBerry customer in the US look like?" They're going to be going after governments and enterprise.

Rene, you said it earlier in this podcast. Where's the carrier support? Well, it's not there right now in the US. That's clear. How do you still sell BlackBerry in the US? You sell the server first, and you sell it to enterprise.

Rene: You chose a different customer.

Kevin: A different customer, you sell BlackBerry into enterprise and government. You sell the best solution. You sell it saying, "Look, we're going to support your iOS, your Android, your Windows Phone, and everything else."

Maybe the BlackBerry 10 handsets will come on the back of that. We know they have inventory. They can probably give a pretty good price on some handsets if people pick them up while they're picking up the servers. You bypass relying on your carrier there. Things will still get, I'm sure, carrier certified in that, but it's just not going to be something they're going to push, because they don't have the ammunition to push in the store right now to consumers.

Rene: There's a couple of things there. BlackBerry doesn't have a traditional line of business to pull money from, like Apple had the Mac before they started selling the iPhone. Samsung is a ginormous company. They could pour billions into their marketing. Microsoft has Windows and Office to subsidize Windows Phone. Motorola loses tons of money, but Google makes so much money off advertising, it doesn't matter.

Some people will criticize the four models as being unfocused. You can take Apple and at the end of the day say their money comes from hardware margins. Google's money comes from advertising. Microsoft's money comes from software sales." It just feels like that's one of the biggest challenges for BlackBerry. They don't have this huge pod of money to keep pulling from.

Kevin: Sure. I actually asked John Chen about that. I wrote in my follow-up piece to the interview we had last week at CES to say, "If the BB10 launch was like a sniper rifle firing a bullet, John Chen, it feels more like he's got an Uzi and he's just going to spray everything with a machine gun-like approach."

He addressed that. He said, "No, it's still bigger. It's one strategy, but this is how we're going to get there. We need to look at exactly what you said. We don't have unlimited funds. We don't have the same level of support market to market, the same level of sentiment in market to market."

You have to keep playing. You have to keep fighting. You're not just going to say, "Oh, let's quit." It's one of those things I laugh at, occasionally you'll see a tech blogger say, "Oh, BlackBerry's done, just give up." I'm like, "OK, Mr. Smarty Pants, great analysis. I really appreciate what you just said. Let's flip it. Go be CEO tomorrow. What are you going to do? Tell your employees to go home?"

No, you're going to roll up your sleeves. You're going to get it done, and you're going to pick a strategy that helps to do that. I think what he's picked as a strategy is, for lack of a better word, I've been saying it's very sober. I think it's very logical. It's very sober in the sense that it's not necessarily exciting. The prospect in 2013 of BB10 saving the day is awesome.

That was such a come-from-behind story. So many people wanted to see it happen. A lot of people who even previously maybe didn't cheer for BlackBerry started to, "Oh, yeah. Maybe they can pull this off. Let's see the turnaround happen."

Rene: It was "Rocky III." It was the former champ got beaten down. He's going to come back. He's got new training, and maybe he can win this one.

Kevin: Exactly, and I think now it's like, oh, 2014. [laughs] Kevin's not going to be growing his hair out for any big events, right?

Rene: [laughs]

Kevin: This is a little bit different year, but at the same time I think the expectations have been very realistically set as to what we should expect to see. The word "Enterprise" will definitely be used a lot. There's going to be some phones that maybe we won't get excited about initially because they won't be the flagship high-end stuff. Hopefully they do release something in 2014 that truly gets...

Rene: Here's an interesting question. We've seen Chromebooks building in the Enterprise, taking a bite out of Microsoft in the Enterprise. You think there could be a thin client play on mobile? Google's not using Chrome on mobile. They're using Android still. Could there be a very inexpensive purely service-driven phone maybe made by BlackBerry targeted for Enterprise and could that work?

Kevin: It's a good question. If you read between the lines to a lot of the things they've been saying, you get the feeling there could be a few surprises that we haven't fully thought out yet. To hone in on what they've been saying, it's things like, "Ah, we would love to bring the BlackBerry experience to other platforms." Let's think about that [laughs] now, right? What does that mean?

Right now they're doing the thing where they're bringing other platform's experience to BlackBerry. They're bringing Android apps onto the BlackBerry 10 platform. They are also taking BlackBerry experience to other platforms, aka BBM, and yes, with the BES servers.

But if you start to really embrace that and say, "OK, if BlackBerry's focused around security, productivity and communication and we want to take those three pillars of our DNA, those are three strands of DNA." You know what I'm saying. Those are three things that are core to BlackBerry.

We start to say, "What's the best way to bring productivity, security, and communication, you know that real instant communication feeling to other platforms or to Enterprise, what does that start to look like from a product standpoint, from a software standpoint, etc?" I think that's where we start to see some ideas.

Now could that be a thin client or something? I'm not quite sure, but I think whatever we see it's going to adhere to these principles of what BlackBerry is about. If you hit the delete key on BlackBerry phones and you still say, "OK, BlackBerry's a company and here's what it loves to focus on -- security, productivity and communication -- those are your three things.

I think there's still a lot of opportunity out there for them to go after. It's still a game that's very much not over in these areas, and it's still a game where there's a lot of things in a state of flux right now. On the handset side as we've been talking it feels more like we're getting into an iPhone-Android world with Android being Samsung, then some other players picking up the other spots, and then low-cost stuff filling up the other void.

Things will still move I think, and John Chen has said he really views the phone business as being like the movie business where you're only one hit away from being a star again. Maybe BlackBerry will hit a product that becomes a star on the handsets again, too. But aside from that I think there's still just a lot of opportunities out there assuming they have the strategy and assuming they have the talent to deliver.

Talent's been one of those areas where I've been really concerned about the company. During the interview with John Chen last week, when we spoke about this he alleviated some of that concern. Look, I know a lot of people over the past couple of years who just aren't at BlackBerry anymore.

They now work for -- Rene -- the company you love to cover [ Apple ]. Some of them work for the companies that Phil loves to cover [ Google, Android manufacturers ]. Some work for other companies that Dan loves to cover [ Microsoft, Nokia ]. A lot of BlackBerry has gone to the other platforms.

Rene: A lot of smart Canadians out there. [laughs]

Kevin: There are a lot of smart Canadians that are now working for other companies. At the same time, there are still a lot of smart ones that are left. Part of that too is the fact that when people sit down and make a family in Waterloo, depending on their age and everything else, if their kids have friends in school, they're not going to pack up and leave that quick. They're going to ride it out. There's still a lot of talent there. BlackBerry does have a lot of talent that's in other areas around the world too.

Rene: Their QNX branch, their Torch Mobile branch, they have some geniuses there.

Kevin: They have some geniuses. One of the things that Chen made me realize is he won't have any trouble recruiting top talent, which surprised me.

I was like "Really? It seems like maybe if you're top talent, you wouldn't want to go to BlackBerry. You'd want to go to your other companies, some of the other companies that are in a better spot right now."

He said, "No. You've got to remember. A beaten-up company with a low share price...If you're really good and you have a really good team, that's the best corporate environment you can be in. If you turn things around and that share price goes from six dollars or eight dollars to...

Rene: Stock options, baby.

Kevin: A lot of options, baby.

Rene: [laughs]

Kevin: If you go into a company with a high share price, what's going to happen? You'll get some shares, but they're not going to grow, grow, grow, grow, grow.

If you go into a company like BlackBerry and you can pull that together, especially at a senior level, in a position where you really can make that impact and change the fate of where things are going, you're going to get rewarded for it.

I half-joked, was half-serious at the end of my follow-up piece to my interview, where I said, "Hell. I almost want to go take that job." If you believe in it and you think you've got the team to pull it together, there's opportunity. Chen does seem to be already pulling in some really good guys. One of the things I like about him too is he seems like a smart guy, but he seems smart enough to know what he doesn't know.

That's one of the things that always scares me about smart people. If they're too smart, then they think they have all the answers. Inevitably, people don't have all the answers. It takes a lot. You want to surround yourself with people who are smarter than you.

Rene: No one has all the answers to a million different customers.

Kevin: Exactly. He hired Ron Louks to come in and basically take over the handset business. His background is at HTC and Sony Ericsson, I believe, previous to that. Those companies have made some good hardware.

HTC gets a lot of kudos for doing some good devices. I don't know if he's been responsible for all of that lately, but he's definitely been in that environment. Chen spoke of him as the kind of guy who can spot a phone across the room and tell you everything about it. He seems to be putting a lot of faith in that new person. Hopefully, he pans out to be good. He's iterated that he wants BlackBerry to still retain the BlackBerry-ness, the design and that.

When they work with companies like Foxconn, it's just going to help them to do it quicker, more affordably, and at a better scale. The problem with BlackBerry before is they're paying too much money for components. They just can't get the deals.

The thing with phones is 75 percent of the components tend to be the same between all the phones. It's the 25 percent that makes the difference. If they start saving money, immediately, on that 75 percent, it's going to help them a long way to get the margin back into the handset business.

What we're hoping to see in 2014

Rene: I want to wrap up with this. What is Kevin Michaluk looking for in the next few months? What are the good signs you're looking for? What's going to make you think that they're going in the right direction?

I know they're not going to do BlackBerry Live this year. That might have been an easy one to point to. Absent that, what are the key things that have to happen, in your mind, for this to become a successful turnaround?

Kevin: That's a great question. I'm not sure I've fully thought it through. As you can tell, I can usually talk pretty good once I get on a topic.

There are a few areas of things I'm looking for. One is to actually get the messaging out there. During this podcast, I've given you a lot of the messaging as I believe John Chen as CEO of BlackBerry would love every human being on Earth to understand it.

"BlackBerry is not just handsets. Quit saying BlackBerry is dead. We're a portfolio of businesses. We've got $3 billion in the bank. We're the world's biggest startup right now, but we have great brand awareness." In some cases, it's good recognition. In some cases, it's bad recognition. "We have a lot of smart people. We have a lot of existing customers who we can better service."

One of the things I'm looking for is that change of sentiment, a little bit more patience from investors, the media, the average consumer, to say, "BlackBerry, they're still in it. They're maybe not against iPhone and Samsung today, at the same capacity as they were in years past, but they're still a business that's doing good things."

That's one thing I'm looking for, can they get the messaging around this new packaging of the company out there in a way that people understand it and, better yet, not just in the markets where they're trying to push something, but in the markets where they're not pushing something.

I get the feeling that maybe in the US, you're not going to see a lot of BlackBerry presence in stores, as you already haven't seen. Again, the average American consumer, just because of that, is like "BlackBerry doesn't even exist anymore. They're off the map. I can't even find one in the store."

Will they realize that "No, no. BlackBerry's selling phones. They just haven't come back to attack us here, and things will change"? I don't know if you can even hope for the average person to understand that, whose job isn't to do this and they're not a techie. I'm really curious to see how that pans out, if they can make people understand that BlackBerry is more than a handset company, the way they've now been telling investors and guys like us that.

Rene: They have to replace the current thinking with their new messaging.

Kevin: Yeah. I think so. Can we start to see that take root? Two is on that enterprise side. It's easy to talk well about BES. They have the talking points already. "We're number one. We're still number one in MDM and all that." It's easy to tell a great story. In reality, we know a lot of that number one comes on the back of BB7 phones. Just me personally, I don't think it's fair to count. 

When we put our analytical hats on, we need to say, "Yes, you're still number one. You have a lot of that built on legacy. How quickly can you be number one off your new stuff?" I want to see that happen. Part of that is getting out there and selling it better. One of the things Chen told us was he doesn't really have a great enterprise sales team right now. He's building one.

One of the problems with the way they did the sales before was the phones were the sale supported by BES, instead of just really selling BES as a solution. I'm sure that's not the full story. I do know there are guys out there. I've met the guys who sell these enterprise solution before. He was very clear that he wants to build a new enterprise sales team that really knows how to go out and sell it.

Seeing what kind of traction we get there, not just on sales, but on guys who like it. I know a lot of the IT administrators, guys like my friend Craig Johnson, who's been with me on the CrackBerry podcast since episode zero.

He did a great roundup of all the MDMs not too long ago. BES 10 wasn't winning in there yet, but that was also before BES Cloud was out. If you go look through the CrackBerry forums, we have a lot of people who are on the betas right now, the demos, who are saying a lot of great things about it.

I'm curious to see how quickly they can get back into the running on that side, because it's not an easy business. Like even for these companies that seem to be, again, they're almost like startups the last couple years, but they're making some big dollars now going after basically BlackBerry's old customer base.

The scaling part is hard. Like a lot of these big companies, they operate in 50 plus countries. They need 24/7 support. And these companies start off selling in the US and they're not necessarily scaling as quickly, as maybe BlackBerry all ready has the systems and people and all that in place to offer those kinds of services better. How quickly they can do that.

I'd really like to see them do, just for my selfish benefit. I really want to see a high end phone. I want to see everything get straightened out on the current BlackBerry 10.2 point whatever OS, whether it's 0.1 or beyond.

As 10.2.1 got rumored and announced and leaked in our forums, we had a lot of people thinking hey, you can install APKs now. Does this mean we can install Google services? I think that's one thing that a lot of our readers and the hardcore BB10 users would love to see. Is somehow to legally get...See a relationship happen where we can get Google services on BB10.

Rene: There was a rumor about Google Play coming, right?

Kevin: I don't even know if there is...Yeah, sorry, Google Play store? Yeah, that would be it. It's a weird thing because BlackBerry has a great team pushing BB10. They've done a great job on their BlackBerry10 developer community the last couple years. Like just night and day from what they had before.

There's a lot of people, like a lot of devs I've met over the last couple years, who really love building the native apps and supporting. But no matter what, they just are not getting that traction to date and they need to solve it.

It's the number one pain point for BlackBerry phone owners right now is just I don't want to be second fiddle on apps. If they could just get those services online, and support for Google Play, then all of the sudden you essentially have a BlackBerry phone that has the best of BlackBerry. But you have that Android ecosystem supported.

I think that would solve, similar to how the Foxconn deal solved the losing money on phones. I think that would solve a lot of problems from the customer standpoint. Because there's a lot about BB10 we love. A lot of the new features coming in are just, they appeal to that core user of the past.

I think even to non-BB10 users who pick it up. There's a lot of great things in there between the hub, the gestures. The toast notifications are getting baked in. We just want our darn apps. If that could do it, I think that would be huge. I would love to see something materialize that pushes that a step forward. 

Rene: There's a lot of opportunities Kevin. If people want to follow along with your adventures and keep track of what's going on in this space, where can they go?

Kevin: Obviously you can go to CrackBerry.com. It's funny enough. I've been doing a little bit more writing across all of our existing sites, iMore, Android Central, WPCentral, lately with or without the permission of each site's EIC. I just like to show up and drop a post.

We have a new website too, Smartwatch Fans, which people should definitely check out if they're into smartwatches or other wrist wearables because we'll cover some of them. And you can find me on twitter and instagram @kevinmichaluk.

Rene: All right, awesome. Thank you so much Kevin.

A lot of people are counting BlackBerry out of the conversation but it has been there since the beginning of mobile and its influence is absolutely undeniable. And I think their story, especially over the last couple of years, has been so fascinating. I want to thank you for sharing it with us.

Kevin: Thank you. I echo that sentiment and I think the bottom line is they still have a lot of smart people at the company, a lot of passionate people who do not want to give up. And they have money in the bank to keep fighting.

It's going to be a different BlackBerry going forward that we've known but they're going to do a lot off the things that maybe we've seen before and hopefully even do them better.

Rene: BlackBerry Act Three.

Kevin: Amen.

Rene: Thanks Kevin.

Kevin: Thank you Rene.

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