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BlackBerry Passport sells out; CEO foresees profitability in 2015

Matt Hamblen | Sept. 29, 2014
Chen says banks and government are coming back to BlackBerry.

Chen warned the strong uptick in EZ Pass interest might result in BlackBerry ending the program earlier than the original Jan. 31, 2015, date.

Of the $916 million in revenues, 46% came from hardware, another 46% from services and 8% from software, BlackBerry said. About 2.4 million BlackBerry smartphones were sold to end-user customers in the second quarter. Overall, IDC and other analyst firms have said BlackBerry's total share of the global smartphone market is now less than 1%.

BlackBerry also reported it had reached 91 million monthly active BBM messenging service users, up from 85 million in the prior quarter.

While Chen was upbeat on initial Passport sales, several analysts said it's unrealistic to expect smartphone hardware to bring BlackBerry to long-term growth.

"Over time, I'd like to see the revenue mix shift to software and services, since the device business is a losing battle for most companies," said Maribel Lopez, an analyst at Lopez Research. "There is some potential for sales of more special purpose devices, but general smartphone sales are a loss leader."

Ken Dulaney, an analyst at Gartner who last year urged Gartner clients to seek alternatives to BlackBerry, said Passport would need to be sold in the "millions and millions" to have an impact on BlackBerry's financial profitability. The trouble is that Passport is focused on worker productivity and not on the much larger consumer market.

"They probably have new energy over there that they can save BlackBerry, so they probably felt they could make a device that would take the world by storm," Dulaney said. "The problem is that they have to sell millions and millions to consumers and consumers have moved on to other devices. Once you buy a bunch of apps, you aren't going to switch [operating systems] when you have to re-buy all your apps. Why would consumers go out and buy this Passport when there really isn't anything wrong with Android and Apple devices and then risk not having the apps they will want?"

 

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