The year’s most notable embarrassments in technology run the gamut from the industry’s inability to secure our personal data to the blunders of Airbnb, Twitter and Tinder.
Thanksgiving is almost here, but a look at this year’s list of tech turkeys may stir up memories of Halloween.
It’s scary just how vulnerable we are.
In 2015, hackers went to town with seemingly nonstop breaches. Anthem, the big health insurer, fell victim to the theft of personal information of 80 million customers and employees. That’s one out of every four Americans. Meanwhile, the identities of 30 million would-be adulterers were revealed after hackers got into Ashley Madison, the cheat-on-your-spouse website.
Companies also had a frightening habit of tripping over themselves. Airbnb insulted its hometown of San Franciscowith a billboard campaign that appeared to gripe about paying the taxes it owed for short-term rentals in the city. Sean Rad, CEO of dating-app maker Tinder, meanwhile, demonstrated surprisingly poor knowledge of the English language.
Volkswagen gets a special mention for gaming fuel-emission tests via the software in its cars. And BlackBerry, long proud of going its own way, finds itself pinning its comeback hopes on a phone that leans heavily on software from another company, Alphabet’s Google.
Lastly, all of Silicon Valley gets a turkey this year because the tech industry still can’t figure out how to hire, retain and promote more women and minorities.
Since innovation apparently can mean figuring out new ways to screw up, we’ve rounded up a supersized 17 examples of the most cringe-inducing tech turkeys for your holiday entertainment.
Once the mobile maker to beat, BlackBerry is fighting for survival. Its secret weapon: the first-ever BlackBerry phone powered by Google’s Android software.
Most people go to Las Vegas to gamble, party or see a show.
On a warm winter’s day in January 2014, Ron Louks journeyed there to gamble. But he wasn’t trying his luck at the tables. He was there, on one of his first days on the job as head of BlackBerry’s smartphone business, to bet on the company’s future.
After landing in the desert city at the start of the annual Consumer Electronics Show, Louks checked in with BlackBerry CEO John Chen and then set off for his first and most important appointment. Tellingly, it wasn’t with a wireless carrier or one of BlackBerry’s manufacturing partners. It was with Google.
“Android, in our mind, was a longtime coming,” Louks said in an interview last week.
Chen, a software industry veteran hired to help save the Canadian company in late 2013, had already been talking to Google about how BlackBerry could better work with Android, the world’s most popular operating system.
The next step was up to Louks, who previously worked at HTC and Sony Ericsson.
Nearly two years after that Vegas meetup, BlackBerry is getting ready to sell the $700 BlackBerry Priv, its first smartphone not powered by the company’s own mobile software. Chen and Louks hope that by tying their fortunes to Android, BlackBerry will do something it hasn’t been able to do in five years: win over customers who abandoned its once-almighty keyboard-based gadgets for Apple’s iPhone and Samsung’s Galaxy phones.
If the Priv is a flop, that will likely spell the end of the BlackBerry smartphone.
“If this doesn’t resonate with users, there’s not much else they can do,” said Chris Hazelton, an analyst at 451 Research.
Chen has already set the stakes, saying, repeatedly, that he’ll dump the smartphone business if it doesn’t turn a profit. While BlackBerry doesn’t break out earnings from its devices business, the company lost more than $6 billion in the last two and a half years. To move into the black, BlackBerry will have to sell 5 million smartphones next year. That’s a tall order considering it sold just 800,000 last quarter, less than half as many it sold a year ago.
Consider also that BlackBerry-powered smartphones represent less than half a percent of a market that’s led by phones running on Android and on iOS, the software that powers Apple’s iPhone, according to research firm IDC. That’s a pitiful statistic given that BlackBerry controlled nearly a fifth of the market in 2009, just behind another now-fallen giant, Nokia.
Chen also said that 2016 is a make-or-break year for both the company and his leadership. “Otherwise, I have to think twice about what I do there,” he said at a mobile conference in October.
Here’s where things stand today: BlackBerry has been “engaged” with the top carriers around the world, all of which have agreed to help market the Priv, Louks said. In the US, AT&T will be the first carrier to sell it, and the Canadian carriers and UK’s Carphone Warehouse will offer it, too. The Priv launches Friday.
The thing is, we’ve heard this story before from BlackBerry. A few times. So far, none of those stories has ended well.
The elusive Ron Louks
On the second day of CES in 2014, Chen was holding court before reporters in a ballroom at the Monte Carlo Casino. Louks, whose hiring was announced the day before, was nowhere to be found.
He remained missing from view for the next 11 months. He was a no-show at the unveiling of the low-cost BlackBerry Z3 at Mobile World Congress in February 2014 and skipped a security summit five months later, where BlackBerry gave an early look at its BlackBerry Passport smartphone.
In September 2014, Louks got sick and skipped a New York presentation on the Passport.
I asked BlackBerry (half) jokingly if Louks actually existed and was still on the job. It turns out he was quietly making the case for building a BlackBerry using Android.
While Chen wanted a stronger relationship with Google — one of the services BlackBerry offers is managing email on mobile devices, including those powered by Android — Louks pushed things forward by asking to build an Android smartphone in early 2014.
Chen wasn’t sold on the idea. And he wasn’t alone. BlackBerry veterans are accustomed to using the company’s own software to ensure the most secure devices, and Android lacked a reputation for security.
“There’s normal tension when you change a strategic decision,” Louks said. “People are going to question it.”
It wasn’t until Louks convinced Chen he could build an Android smartphone with security embedded in the hardware that he got the green light.
For the first BlackBerry Android phone, Chen wanted something special.
Outing the slider
During BlackBerry’s press conference at the Mobile World Congress trade show in March 2015, Louks walked onto the small stage with purpose. He whipped out a mystery smartphone with a slide-out keyboard and a curved glass display that wrapped around the sides. Just as quickly, he stowed it away in his pockets.
The “Slider,” as Chen called it, left an impression. A curved glass display was one of the marquee features of Samsung’s Galaxy S6 Edge, unveiled two days earlier. Samsung’s executives talked up the complicated process of building that wraparound display. Yet here was BlackBerry with the same feature.
Louks “understood the value in creating buzz,” said Scott Wenger, BlackBerry’s head of design. He joined the company in September 2014 after working with Louks at HTC and Sony Ericsson.
There was a reason for the don’t-blink-or-you’ll-miss-it cameo: The device was little more than a mockup, with a backlight used to simulate an active screen. If you looked closely, the BlackBerry 10 home screen was visible — no Android.
Work on the prototype began in earnest after BlackBerry launched the Passport, a squat-looking smartphone with a square screen, in September 2014. But executives eyed concepts like the curved display, which Samsung supplied, months before.
The problem is, the Galaxy S6 Edge and the larger S6 Edge+ are already in the market with their curved displays. Won’t the BlackBerry’s Priv lose a little of its chic?
“Initially, I felt the wind was taken out of the sails,” Louks conceded. But he thinks BlackBerry can piggyback on Samsung’s marketing and sell people on wanting a phone with a curved display.
Louks and Chen are also betting the slide-out keyboard and the focus on security turns some heads.
Reason for excitement
Most assumed the slider phone would run on the BlackBerry 10 software. It was, after all, how the company had always operated.
Over the summer, however, leaks and images about an Android-powered BlackBerry popped up with increasing frequency.
In September, BlackBerry confirmed it would sell an Android smartphone in the fourth quarter. The Priv, which takes its name from “privacy” and “privilege,” aims to address the top complaint of former and current BlackBerry users: the lack of apps.
With Android, Priv users can tap into more than 1 million apps. As of last year, the BlackBerry World store offered 234,500 apps, although its phones can access Amazon’s Appstore with more than 330,000 programs.
“It’s the No. 1 issue across any device we release far and away,” Marty Beard, chief operating officer for BlackBerry, said in an interview last week.
The Priv was announced the same day in September that BlackBerry posted an adjusted loss and revenue that disappointed investors. Those investors are questioning the progress of Chen’s transformation of the business from a pure devices company into one that makes its money off software and services. Perhaps the Priv will give the company something to rally behind.
“This is the first thing that will get us cranking the other way,” said Greg Dunko, head of product development for BlackBerry.
The same story again?
BlackBerry’s last comeback effort was a disaster. Its BlackBerry Z10 smartphone launched with a marketing campaign that included a Super Bowl commercial and the support of multiple wireless carriers. The company ultimately had to take a charge of nearly $1 billion to account for unsold Z10 phones.
By embracing Android, BlackBerry has the potential to tap into a huge customer base. Yet many big-name companies, including HTC and Sony, are already struggling to make a dent in the Android smartphone market.
Google didn’t respond to requests for comment.
“It’s a near insurmountable challenge to succeed where others have failed,” said Maribel Lopez, an analyst at Lopez Research, about BlackBerry’s consumer prospects. Still, BlackBerry may be able to carve a niche in the business world, a place where it once held so much sway.
Louks is prepared for the challenge. The whirlwind pace of getting the Priv ready for prime time has meant that in the past year, the longest stretch he’s spent at home has been two weeks. But to Louks and his team, the sacrifice has paid off, and he believes the Priv is that something special Chen wanted.
Once the mobile maker to beat, BlackBerry is fighting for survival. Its secret weapon: the first-ever BlackBerry phone powered by Google’s Android software.
Most people go to Las Vegas to gamble, party or see a show.
On a warm winter’s day in January 2014, Ron Louks journeyed there to gamble. But he wasn’t trying his luck at the tables. He was there, on one of his first days on the job as head of BlackBerry’s smartphone business, to bet on the company’s future.
After landing in the desert city at the start of the annual Consumer Electronics Show, Louks checked in with BlackBerry CEO John Chen and then set off for his first and most important appointment. Tellingly, it wasn’t with a wireless carrier or one of BlackBerry’s manufacturing partners. It was with Google.
“Android, in our mind, was a longtime coming,” Louks said in an interview last week.
Chen, a software industry veteran hired to help save the Canadian company in late 2013, had already been talking to Google about how BlackBerry could better work with Android, the world’s most popular operating system.
The next step was up to Louks, who previously worked at HTC and Sony Ericsson.
Nearly two years after that Vegas meetup, BlackBerry is getting ready to sell the $700 BlackBerry Priv, its first smartphone not powered by the company’s own mobile software. Chen and Louks hope that by tying their fortunes to Android, BlackBerry will do something it hasn’t been able to do in five years: win over customers who abandoned its once-almighty keyboard-based gadgets for Apple’s iPhone and Samsung’s Galaxy phones.
If the Priv is a flop, that will likely spell the end of the BlackBerry smartphone.
“If this doesn’t resonate with users, there’s not much else they can do,” said Chris Hazelton, an analyst at 451 Research.
Chen has already set the stakes, saying, repeatedly, that he’ll dump the smartphone business if it doesn’t turn a profit. While BlackBerry doesn’t break out earnings from its devices business, the company lost more than $6 billion in the last two and a half years. To move into the black, BlackBerry will have to sell 5 million smartphones next year. That’s a tall order considering it sold just 800,000 last quarter, less than half as many it sold a year ago.
Consider also that BlackBerry-powered smartphones represent less than half a percent of a market that’s led by phones running on Android and on iOS, the software that powers Apple’s iPhone, according to research firm IDC. That’s a pitiful statistic given that BlackBerry controlled nearly a fifth of the market in 2009, just behind another now-fallen giant, Nokia.
Chen also said that 2016 is a make-or-break year for both the company and his leadership. “Otherwise, I have to think twice about what I do there,” he said at a mobile conference in October.
Here’s where things stand today: BlackBerry has been “engaged” with the top carriers around the world, all of which have agreed to help market the Priv, Louks said. In the US, AT&T will be the first carrier to sell it, and the Canadian carriers and UK’s Carphone Warehouse will offer it, too. The Priv launches Friday.
The thing is, we’ve heard this story before from BlackBerry. A few times. So far, none of those stories has ended well.
The elusive Ron Louks
On the second day of CES in 2014, Chen was holding court before reporters in a ballroom at the Monte Carlo Casino. Louks, whose hiring was announced the day before, was nowhere to be found.
He remained missing from view for the next 11 months. He was a no-show at the unveiling of the low-cost BlackBerry Z3 at Mobile World Congress in February 2014 and skipped a security summit five months later, where BlackBerry gave an early look at its BlackBerry Passport smartphone.
In September 2014, Louks got sick and skipped a New York presentation on the Passport.
I asked BlackBerry (half) jokingly if Louks actually existed and was still on the job. It turns out he was quietly making the case for building a BlackBerry using Android.
While Chen wanted a stronger relationship with Google — one of the services BlackBerry offers is managing email on mobile devices, including those powered by Android — Louks pushed things forward by asking to build an Android smartphone in early 2014.
Chen wasn’t sold on the idea. And he wasn’t alone. BlackBerry veterans are accustomed to using the company’s own software to ensure the most secure devices, and Android lacked a reputation for security.
“There’s normal tension when you change a strategic decision,” Louks said. “People are going to question it.”
It wasn’t until Louks convinced Chen he could build an Android smartphone with security embedded in the hardware that he got the green light.
For the first BlackBerry Android phone, Chen wanted something special.
Outing the slider
During BlackBerry’s press conference at the Mobile World Congress trade show in March 2015, Louks walked onto the small stage with purpose. He whipped out a mystery smartphone with a slide-out keyboard and a curved glass display that wrapped around the sides. Just as quickly, he stowed it away in his pockets.
The “Slider,” as Chen called it, left an impression. A curved glass display was one of the marquee features of Samsung’s Galaxy S6 Edge, unveiled two days earlier. Samsung’s executives talked up the complicated process of building that wraparound display. Yet here was BlackBerry with the same feature.
Louks “understood the value in creating buzz,” said Scott Wenger, BlackBerry’s head of design. He joined the company in September 2014 after working with Louks at HTC and Sony Ericsson.
There was a reason for the don’t-blink-or-you’ll-miss-it cameo: The device was little more than a mockup, with a backlight used to simulate an active screen. If you looked closely, the BlackBerry 10 home screen was visible — no Android.
Work on the prototype began in earnest after BlackBerry launched the Passport, a squat-looking smartphone with a square screen, in September 2014. But executives eyed concepts like the curved display, which Samsung supplied, months before.
The problem is, the Galaxy S6 Edge and the larger S6 Edge+ are already in the market with their curved displays. Won’t the BlackBerry’s Priv lose a little of its chic?
“Initially, I felt the wind was taken out of the sails,” Louks conceded. But he thinks BlackBerry can piggyback on Samsung’s marketing and sell people on wanting a phone with a curved display.
Louks and Chen are also betting the slide-out keyboard and the focus on security turns some heads.
Reason for excitement
Most assumed the slider phone would run on the BlackBerry 10 software. It was, after all, how the company had always operated.
Over the summer, however, leaks and images about an Android-powered BlackBerry popped up with increasing frequency.
In September, BlackBerry confirmed it would sell an Android smartphone in the fourth quarter. The Priv, which takes its name from “privacy” and “privilege,” aims to address the top complaint of former and current BlackBerry users: the lack of apps.
With Android, Priv users can tap into more than 1 million apps. As of last year, the BlackBerry World store offered 234,500 apps, although its phones can access Amazon’s Appstore with more than 330,000 programs.
“It’s the No. 1 issue across any device we release far and away,” Marty Beard, chief operating officer for BlackBerry, said in an interview last week.
The Priv was announced the same day in September that BlackBerry posted an adjusted loss and revenue that disappointed investors. Those investors are questioning the progress of Chen’s transformation of the business from a pure devices company into one that makes its money off software and services. Perhaps the Priv will give the company something to rally behind.
“This is the first thing that will get us cranking the other way,” said Greg Dunko, head of product development for BlackBerry.
The same story again?
BlackBerry’s last comeback effort was a disaster. Its BlackBerry Z10 smartphone launched with a marketing campaign that included a Super Bowl commercial and the support of multiple wireless carriers. The company ultimately had to take a charge of nearly $1 billion to account for unsold Z10 phones.
By embracing Android, BlackBerry has the potential to tap into a huge customer base. Yet many big-name companies, including HTC and Sony, are already struggling to make a dent in the Android smartphone market.
Google didn’t respond to requests for comment.
“It’s a near insurmountable challenge to succeed where others have failed,” said Maribel Lopez, an analyst at Lopez Research, about BlackBerry’s consumer prospects. Still, BlackBerry may be able to carve a niche in the business world, a place where it once held so much sway.
Louks is prepared for the challenge. The whirlwind pace of getting the Priv ready for prime time has meant that in the past year, the longest stretch he’s spent at home has been two weeks. But to Louks and his team, the sacrifice has paid off, and he believes the Priv is that something special Chen wanted.
The smartphone manufacturer, poised to launch the Android-powered Priv, is laying the groundwork to scrap its own troubled software.
The BlackBerry Priv could change everything for the embattled smartphone manufacturer.
The Priv, which the Canadian company confirmed Friday will come out in the fourth quarter, is the first of its products to run on Google’s Android mobile software. The device marks a radical departure from BlackBerry’s history of selling products using its own homegrown software.
But hardcore BlackBerry fans should look at the Priv with trepidation. The Android device isn’t meant to complement the company’s existing line of smartphones; it’s intended to kill it. After years of battling Android, the world’s most popular operating system for smartphones and tablets, BlackBerry is laying the foundation to jettison its own BlackBerry 10 software, also known as BB10.
“This move to Android is another signal that the company is stepping away from once holy ground,” said Chris Hazelton, an analyst at 451 Research.
The move would mark a radical new chapter for a company that once dominated the white-collar world with smartphones packing its trademark physical keyboards. Since the rise of Apple’s iPhone and devices running Google’s Android operating system, BlackBerry has fought a losing battle to avoid irrelevancy. In the second quarter, smartphones running its software accounted for 0.3 percent of the market, according to IDC. Android’s market share: 83 percent.
BlackBerry disclosed in its fiscal second-quarter report, which it released Friday, that it sold 800,000 devices in the period, or a third of its total from a year ago.
“Blackberry has finally recognized that they simply do not have a sufficient number of customers to make it worthwhile for developers to build apps for them,” said Roger Entner, an analyst at Recon Analytics.
When CEO John Chen was asked on an analyst conference call Friday whether he would “throw in the towel” on BlackBerry phones running on the company’s software, he didn’t dismiss the idea. “That’s a good question,” he said.
The only thing holding back from a complete switch is the base of government and regulated business clients that insist on sticking with BlackBerry. But Chen hopes that an Android phone infused with BlackBerry security software will convince them to switch.
“If our plan of doing the BlackBerry Android implementation works well and the security is accepted, of course we could replace or merge” the BlackBerry software side of the business, Chen said.
Chen highlighted other benefits to a move to Android. Building an Android smartphone is cheaper because the industry infrastructure for such a device is already in place, meaning his company could focus on the security and business aspects of the device. He added that BlackBerry is working with Google on the project.
In a sea of companies making bland, me-too Android smartphone, BlackBerry actually has a credible way of standing out from the crowd. While it’s unlikely to create a world-beating product like the iPhone 6S or even a Samsung Galaxy S6, the combination of its security software and the familiar Android operating system could be attractive to a more business-oriented segment of the market.
“Of the device vendors, they have the best technology to differentiate on Android,” Hazelton said.
That’s not to say BlackBerry is doing away with BB10 right away. Chen said in a commentary piece that ran on CNBC.com that he would continue to support the software. “Fans of BlackBerry’s workhorse BlackBerry 10 smartphones can continue to depend on us, and we appreciate their commitment,” he said.
But BlackBerry has no plans to release another BB10 smartphone this year, and Chen isn’t a stranger to radical change. The CEO, who joined BlackBerry in November 2013, embarked on a mission to transform the company so it was more reliant on software and services for revenue. He maintained that he would stick with the phone business as long as it remained profitable.
But BlackBerry’s smartphones, including the Classic, the squat Passport and all-touchscreen Leap, have failed to make an impression in the market. Chen admitted on the call that he was disappointed in the phone sales.
Chen hopes the adoption of Android will boost sales. “It’s the answer for former BlackBerry users who miss the physical keyboard but love their apps,” he said.
The Priv, which takes its name from the words “privacy” and “privilege,” is “the most secure Android device in the market,” he added.
It also may represent the last chance for BlackBerry when it comes to the smartphone business.
“If the foray into building fortified Android smartphones is not an immediate success,” said Avi Greengart, who covers consumer products at Current Analysis, “it is hard to see the company continuing to invest in building phones at all.”
A month after @evleaks published one press render of BlackBerry’s upcoming Android-based smartphone — yes, with a physical keyboard — he’s back today with several new photos of the device. And there’s even a GIF. According to Blass, the BlackBerry Venice is headed for all four major US carriers this November. The previous leaked render didn’t offer any look at the device’s keyboard, but today that changes.
Judging by the icons seen here, the Venice looks to be running a version of Android that’s very close to Google’s stock software. That keyboard also looks like a treat, though it also seems somewhat small and cramped thanks to the phone’s slider design. But this is BlackBerry we’re talking about — a company that’s rarely if ever made a terrible keyboard. Both sides of the screen are curved a la the Samsung Galaxy S6 Edge.
Blass also tweeted images that appeared to show another BlackBerry device running Android. The second device doesn’t have a slider, looking instead like the company’s Passport, a big and square smartphone that would — if the leaks are accurate — now run Google’s operating system.
Blackberry-owned company Secusmart has unveiled a new tablet in collaboration with Samsung and IBM.
The Secutablet is “based on” the Samsung Galaxy 10.5 and runs on Samsung hardware, the firm said.
The additional security it offers is aimed at businesses and governments, but less vigorously protected social media and video platforms can also be used on the device, Secusmart added.
The tablet is likely to be priced at $2,380 (£1,609), according to reports.
The Secutablet is compatible with Blackberry 10 and is currently undergoing security certification at the German Federal Office for Information Security.
It incorporates IBM’s “app wrapping” technology which adds extra layers of security to sensitive data.
“Security is ingrained in every part of Blackberry’s portfolio, which includes voice and data encryption solutions,” said Dr Hans-Christoph Quelle, CEO of Secusmart GmbH, a Blackberry company.
Blackberry’s Playbook tablet has not been a big hit for the firm
“Subject to certification of the Secutablet, German government agencies will have a new way to access Blackberry’s most secure and complete communications network in the world.”
Blackberry has struggled in the tablet market, and its PlayBook device did not hit sales targets when it was launched in 2010.
It acquired German voice and data encryption firm Secusmart, in December 2014, and the Secutablet was unveiled at tech fair CeBit in Hanover at the weekend.
“Historically Blackberry has been strong in Germany because of its high-end security offerings,” said analyst Nick McQuire, vice-president of enterprise at analyst CCS Insight.
‘Very specific’
“Clearly the Secutablet is designed to play into Blackberry’s core focus of high grade security.
“The price point is quite expensive – part of the target base is going to be people who can afford to deploy a tablet at that price,” Mr McQuire added.
“It’s aimed at businesses and sectors where security is paramount. Let’s not fool ourselves, this is a very limited solution for a very specific area of the marketplace.”
There has also been speculation that the device will be Android-powered because of the Samsung hardware.
Android speculation
“It is highly likely – but not confirmed – that it will run on Android given that Samsung is a partner, and given Blackberry’s focus on becoming more of a cross-platform security company,” Mr McQuire said.
“One of the things they will want to be known for is to be a mobile security company. Even in the Secusmart business, you can’t be entirely platform specific.
“You want to be as secure as you possibly can but you also want to be user friendly.”
The Secutablet might face competition from the likes of privacy platform Silent Circle, which unveiled the next generation of its security-focused smartphone Blackphone 2 at Mobile World Congress in March, Mr McQuire said.
Fairfax Financial Holdings Ltd Chief Executive Prem Watsa said on Wednesday he is confident the consortium he leads can find the money to fund its $4.7 billion bid for smartphone maker BlackBerry Ltd.
“We wouldn’t put our name to such a high-profile deal if we didn’t feel confident that at the end of the day that our due diligence would be fine and we’d be able to finance it,” Watsa said in an interview.
The Canadian-led consortium put in its $9 a share bid for BlackBerry on Monday, arguing that the troubled company would have better chances as a private entity, away from Wall Street’s constant gaze. The company pioneered mobile email communications but has lost ground to Apple Inc’s iPhone and other snazzier rivals,
BlackBerry shares closed a full dollar below the bid price on the Nasdaqon Wednesday, indicating that investors were skeptical the deal would succeed. The stock edged up to $8.05 in after-market trade.
“Short term these things fluctuate, there is speculation one way, there’s speculation the other way,” Watsa said of the movement in BlackBerry’s share price. “We never pay too much attention to the marketplace.”
Fairfax is BlackBerry’s biggest shareholder, and Watsa said he did not expect Fairfax would need to contribute more than its existing stake of about 10 percent to the buyout bid. He said the bid was led by Fairfax and Canadian funds, but not restricted to them.
“BlackBerry is one of Canada’s great success stories,” he said. “There is no question it’s fallen on hard times recently, but we have every confidence it will be successful again. We’re putting a consortium together to make sure that that takes place.”
The group has until November 4 to conduct due diligence, in which time BlackBerry can also seek out other buyers.
Asked if the bid price could be reduced, Watsa said he didn’t expect that to happen unless the review of BlackBerry produced negative surprises. He said Fairfax had never changed the terms of a deal in 28 years.
Watsa declined to name any participants in the group, citing confidentiality agreements, or to comment on questions around possible collateral the group could use to secure financing, or on the possibility of bridge financing that could be repaid using BlackBerry’s existing cash pile.
He said the group did not include any strategic players, but that one or two technology companies could possibly join.
Watsa, who stepped down from BlackBerry’s board when the company said it was looking for buyers in August, said the “timing was right” for a deal after BlackBerry warned on Friday that it would post a heavy loss in its fiscal second quarter ended August 31 and cut more than a third of its workforce.
“For the benefit of the company’s customers, its employees, it was the right time to do the deal,” he said.
BlackBerry Ltd’s plan to retreat from the consumer market in favor of its traditional strength serving businesses and governments is widely seen as a desperate move that industry watchers warn will only accelerate its downward spiral.
The strategic shift and dramatic restructuring are fueling fears about BlackBerry’s long-term viability. The uncertainty created could easily push a growing number of its telecom partners,business customers and consumers to abandon the platform.
“Perception is nine tenths of reality and if customer and supplier confidence continues to fall it doesn’t matter how much cash they have on the balance sheet. Things could get worse,” said GMP Securities analyst Deepak Kaushal.
The Canadian smartphone maker, once the leader in wireless email, announced the change in focus on Friday afternoon when it also said it will report a quarterly loss of close to $1 billion and slash more than a third of its workforce.
BRING YOUR OWN DEVICE
In response to queries about its future sales strategy BlackBerry said on Sunday it would provide more detail when it announces quarterly earnings on September 27.
On Friday, Chief Executive Thorsten Heins said the strategic shift to focus on so-called enterprise customers would play to the company’s strengths in security and reliability.
“Security matters and enterprises know the gold standard in enterprise mobility is BlackBerry,” he said in a statement.
Blackberry still has a substantial subscriber base – 72 million users globally at the end of June, though that did decline from 76 million three months earlier.
The company has struggled ever since Apple Inc’s iPhone and Samsung Electronics Co Ltd’s Galaxy phones, using Google’s Android software, grew to dominate a market that was previously BlackBerry’s and had once made it highly profitable.
BlackBerry bet heavily that its Z10 touch-screen smartphone – the first powered by its new BlackBerry 10 operating system – would help it recoup some of the luster it enjoyed when users of these devices were mostly lawyers, bankers and politicians.
The bet has not paid off. GMP’s Kaushal estimates as many as 3 million of the latest BlackBerry 10 phones are gathering dust with distributors who have been unable to sell them. For the second quarter, the company said it expects to have sold about 3.7 million BlackBerry smartphones to end users.
“I don’t understood why they thought they ought to be pursuing the consumer at all, given the fact that Apple and Samsung really had the strength in that area,” said Ross Healy, a portfolio manager with MacNicol & Associates, whose clients own BlackBerry shares.
A shift back to corporate customers is no clear fix. Many big organizations are already handling rival devices on their internal networks and employees are increasingly allowed to choose their preferred device, blurring the boundary between business and consumer markets.
For example, Credit Suisse is not supporting the Blackberry 10 and is helping employees globally to switch to iPhone and Android-run devices.
“We don’t support BlackBerry 10 because of the added cost to our servers,” said Credit Suisse U.S.-based spokeswoman Marcy Frank. The bank still supported older BlackBerry devices because there were plenty of staff who continued to use them, she said, but added: “We’re driving people toward bring your own device (BYOD) … we encourage people to give up their BlackBerry.”
The head of technology procurement at a major North American bank, who declined to be named because he is not authorized to speak to media, said that while email and security are features in BlackBerry’s favor, employees were increasingly turning to Apple and Android.
“We will purchase a limited number of BB10 but our inventory of BlackBerry devices will definitely and drastically reduce as we implement a broader BYOD implementation over the next 18 months,” he said.
BlackBerry was losing support at companies even before Friday’s warning, said Phillip Redman, vice president of mobile solutions and strategy for Citrix Systems Inc, which provides software that helps companies manage mobile devices.
He said he had met with technology staff at 60 companies in various industries and none had a strategy of adding more BlackBerrys to their mobile device fleets. Redman’s own company has limited capacity to handle Blackberry devices.
“The writing is on the wall,” he said.
CARRIER JITTERS
BlackBerry’s shift away from consumers will also change the dynamic with network operators, who have already been burned by the poor showing of the Z10 and a string of previously delayed product launches.
The company on Friday wrote off almost $1 billion, mostly on a ballooning stockpile of Z10s it must discount sharply, even as it launched a fresh flagship device – the larger-screen Z30.
Poor sales of the Z10 made it difficult to get carriers to commit to the Z30, according to a source at BlackBerry, who declined to be named because of the sensitivity of the situation.
“Many carriers will now pull much if not all of the BlackBerrys from the shelves because shelf space is valuable and coveted and there are many other handset vendors who would eagerly invest a lot to displace BlackBerry,” said a former senior BlackBerry executive who used to negotiate directly with carriers.
A spokesman for U.S. operator Sprint Corp said questions about any change in how BlackBerry devices are sold should be directed towards the company. A Verizon Wireless spokeswoman also declined to comment specifically on BlackBerry but said it would support its customers.
Highlighting the problems that have come to define BlackBerry in recent years, the company suspended the launch of its popular BlackBerry Messenger instant chat application for iPhones and Android devices scheduled for this weekend.
THE NEXT NORTEL?
Many industry analysts are now drawing parallels between BlackBerry and Nortel Networks Corp, the now-defunct Canadian telecom equipment giant.
Both companies, at their peaks, were the largest publicly listed names on the Toronto Stock Exchange. But as Nortel’s revenue collapsed, it dumped employees in repeated restructurings and was eventually broken up and sold in parts.
BlackBerry has already hired advisors to look at finding a buyer for all or some of the company.
Given the dismal picture, Morningstar analyst Brian Colello said BlackBerry is likely to quickly attempt to go private or sell off some, or all, of its business units.
But he said he was no longer confident that a private equity buyer, who would shield management from the scrutiny of being a listed company, could turn the company around.
“We see no hope for BlackBerry at this point,” Colello stressed in a note to clients following the warning on Friday. He said, in his view, BlackBerry was in “a death spiral.”
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Blackberry’s Playbook tablet has not been a big hit for the firm
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