Why John Chen might just save BlackBerry

Why John Chen might just save BlackBerry

Earlier this month, former Sybase boss John Chen took perhaps the most difficult and thankless job in the tech sector when he became BlackBerry’s chief executive.

He took the role after a $US4.7 billion takeover bid for the company led by Prem Watsa’s Fairfax Financial collapsed, with the Canadian tycoon instead opting instead to loan the company $US1 billion through convertible debentures.

The deal saw Watsa re-join BlackBerry’s board as lead director, with Chen becoming the executive chair of its board of directors, while former chief executive Thorsten Heins standing down.

Then, earlier this week, we saw the Watsa-Chen team begin to clear out the Heins-era executives.

In a dramatic move, chief operating officer Kristian Tear and chief marketing officer Frank Boulben left the company, while chief financial officer Brian Bidulka also stood aside from his role to become a “special advisor to the CEO” for the remainder of the financial year.

While at first glance this looks like more instability at the smartphone pioneer, the truth is that a clear-out of senior executives at the company was long overdue.

Don’t blame the media

There has been a persistent myth on BlackBerry fan sites such as CrackBerry that the media is biased against the company.

The truth is that many of BlackBerry’s wounds in recent times have been inflicted by management, rather than the press.

After Apple released the iPhone in 2007, it wasn’t tech bloggers that caused BlackBerry to fail to come up with a modern all-touch operating system (i.e. BlackBerry 10) until 2013. It wasn’t the media that released the BlackBerry Storm as a stop-gap solution. It wasn’t the press that, in 2011, redirected resources from BB10 to create the PlayBook.

Nor was it journalists who caused BB10 to be delayed from late 2011 until early 2013, meaning there were no significant new smartphones from the company during 2012. The company bled marketshare to Apple and Samsung as a result.

When the first BB10 smartphones finally launched earlier this year– the Z10 and the Q10 – it was Heins’ senior executives that failed to sell them to the public.

People who had bad memories of the Storm, or other mid-2000s BlackBerrys, were generally unaware the company had created a modern operating system from scratch – because the company’s marketing failed to communicate what a monumental leap BB10 was.

The end result of the Heins era was a September quarter in which the company reported just $US1.6 billion in revenues, down 45% year-on-year, with a loss of $US965 million, including a massive $US934 million inventory writedown against unsold Z10 smartphone stock.

And whatever reporters might have written, ultimately, it is the senior executives who served under Heins who need to take responsibility for the company’s current position.

There are still potentially valuable assets

Another myth you often hear about BlackBerry – often from its critics – is that there’s nothing worth salvaging.

The truth is, even if BlackBerry decides to stop producing handsets, there are still a number of assets owned by the company that have a strong potential for growth – with the right management.

Despite a misstep, BlackBerry has rolled out its BlackBerry Messenger system to iOS and Android, with the number of users growing.

BlackBerry Enterprise Server, while it’s set to face a new competitor in Samsung Knox, remains the mobile communications platform of choice for many businesses and governments.

The company also still owns QNX, an operating system that powers many of the world’s embedded computers. There is a reasonable possibility you used a device running QNX today – perhaps a car stereo or an auto component – without even realising it.

And this is without even mentioning the company’s patents in areas such an encryption or the fact it carries no net debt.

Can Chen save BlackBerry?

While it might have looked like more instability, the management clear-out at BlackBerry was long overdue.

The big question is whether Chen can put in a management team that can deliver compelling communications products to governments and enterprises.

If so, the instability of the past week will be remembered as the first step in the company’s turnaround.

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