BlackBerry CEO says new phones needed to stay relevant

BlackBerry chief executive Thorsten Heins plans to unveil a broader array of new smartphones this year, catering to markets around the world, as the company works to recoup a stronger position with devices for more than just business users.

Plans to roll out lower-priced models

BlackBerry CEO Thorsten Heins introduces the BlackBerry Z10 in New York on Jan. 30, 2013. Heins says that the company will have to release new models in order to stay relevant. (Mark Lennihan/Associated Press)

BlackBerry chief executive Thorsten Heins plans to unveil a broader array of new smartphones this year, catering to markets around the world, as the company works to recoup a stronger position with devices for more than just business users.

As competitors like Apple and Samsung prepare their next round of attacks in the highly competitive industry, with new models expected later this year, Heins is aware that BlackBerry will need to respond with more than just the pair of new phones it has announced so far.

"In order to stay relevant, we have to build a portfolio," he said in an interview with The Canadian Press.

"We will bring it out at the moment when we can expect the biggest market attention for these products."

Heins is thinking big these days, but he's also well aware of the stumbles that BlackBerry has faced in the past. Its former leaders famously let the smartphone's success go to their heads and innovation fall by the wayside as competitors surged ahead.

As he talks about the future, Heins sits among the smartphones that built the BlackBerry name. The company is preparing to open the BlackBerry Experience Centre at its Waterloo, Ont., headquarters where it will celebrate the company's roots while showcasing the new line of products.

On the walls of the museum of sorts, which officially opens to the public in April, a timeline reminds visitors of the "history" of the BlackBerry and the devices that helped build the company to its once-dominant position. While Heins poses for photos, he's careful not to stand beneath the "History" sign on the wall, a public relations nightmare for a company trying to prove it's still a serious competitor in the smartphone race.

Reviving BlackBerry

Certainly, BlackBerry isn't out of weeds yet, but Heins has helped the company come a long way since he took the top position in January 2012 and navigated through the make-or-break product launch of BlackBerry 10.

In March, the BlackBerry Z10 touchscreen smartphone arrived in U.S. stores, often considered its most crucial market. But Heins isn't sitting on the sidelines tallying sales.

'In order to stay relevant, we have to build a portfolio.' —BlackBerry CEO Thorsten Heins

Instead, he's moving ahead with a BlackBerry product line that will have three tiers: smartphones for high end users, as well as variations that sell at mid- and "entry-level" prices.

The lower-priced models will also use the BlackBerry 10 operating system, but will be designed with markets like India and Indonesia in mind. It's an intricate shift that involves gradually encouraging its loyal users in emerging markets to make the switch to its new operating system, while recognizing it's not going to happen overnight — and in some cases perhaps not for years.

In the meantime, the company will release another round of BlackBerry 7 models in some countries, which continue to use the old operating system.

Heins doesn't want to miss out on potential sales by ignoring one of its most loyal segments in countries where buying a low-priced smartphone is sometimes the only reasonable option for consumers.

"We want to give them a good BlackBerry experience. So this is where probably another BlackBerry 7 product in that range makes a lot of sense," he said.

"We're not excluding those markets from BlackBerry 10 because of us wanting to sell BlackBerry 7. You will see both in coexistence for awhile in those markets."

Creating a lower-priced smartphone is the next frontier for competitors like Apple and Samsung, who have a stronghold in North America and Europe. BlackBerry, already has a formidable position in emerging phone markets like Nigeria, where it is ranked as the No. 1 smartphone.

Rollout of mid-tier, entry-level models

The rollout of the new wave of smartphones will begin sometime between September and November with a "mid-tier" priced model of both the touchscreen and keypad, or QWERTY, phones. Details and dates haven't been announced.

"Then we are working on something exciting for the holiday season," Heins said.

"We will be continuing to develop a portfolio also that covers the entry-level segment."

It's a plan Heins is approaching with plenty of caution, as the wounds BlackBerry is trying to heal are still fresh.

Several years ago, the company flooded the market with variations of its smartphone, ranging from a combination keypad and touchscreen version to a flip-phone model. Some observers said it overcomplicated the product line, confused consumers and left too many BlackBerrys on the market.

"I would tend to agree with it," Heins said.

"We want to stay really pure in the future portfolio…be really clear, and be unambiguous."

His vision of the ideal BlackBerry lineup would be a touchscreen and keypad version for each of its three product tiers, which would put six BlackBerry phones on the market at one time. But if one of the lower-priced phones fails to catch on with customers, it'll be scrapped.

"Each and every segment has to make money," he said. "There is no cross-subsidy from one segment to another, and if we don't make money, we don't do it."

Turning a profit at BlackBerry has been a priority for Heins, who began a massive cost-cutting initiative last year that involved laying off about 5,000 employees in a plan to save $1 billion. He achieved that goal about three months ahead of the company's own schedule.

On Thursday, BlackBerry managed to overcome recent quarterly losses and post a US$98-million profit that beat analyst expectations.

Within the results lurked some concerns though, including signs that more BlackBerry users jumped ship to other devices, as subscribers slipped to 76 million from 79 million.

Boosting revenues with services, features

As BlackBerry rolls out its new phones, the company is working behind the scenes to create additional services tied to its popular BlackBerry Messenger and other phone features that could boost revenues.

"The question is how quickly can we really come up with services that we can monetize, and what is this transition curve going to financially look like," Heins said.

"The intent of BlackBerry is not to stay in the service business, the intent is to grow our services business."

In its outlook, BlackBerry said it expects to "approach break-even" results in the first quarter of its current financial year based on lower costs, a more efficient supply chain and improved hardware margins.

Rumours have circulated for months that BlackBerry could sell its hardware business and gravitate towards being a provider of services, such as secure networks. Heins downplayed a separation of its hardware and services divisions.

"BlackBerry is an end-to-end solution," he said.

"Throwing one of these pots away would mean we break our business model in terms of security. Security still matters," he said.