Is BlackBerry Ltd (NASDAQ:BBRY) Setting Itself Up For More Pain?

At BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB), they have high risk appetite, because what else can explain the company’s stay in a money-losing business – hardware? It turns out BlackBerry is working on two new Android-based smartphones for release in 2016. BlackBerry’s initial Android-themed handset was the Priv, which looking at the performance of the company’s hardware division, has failed to fuel hardware sales.

In 1Q2016, BlackBerry Ltd (NASDAQ:BBRY) only sold 600,000 smartphones. At that rate, it will be difficult for BlackBerry to reach its self-imposed target of selling at least 3 million smartphones in 2016.

Some have called for the company to ditch hardware business and focus its attention on software and services markets. BlackBerry’s software and services divisions are expected to register up to 30% growth in 2016. Therefore, the company seems to have better changes to success in concentrating in software and services business than losing more in the hardware market.

As such, while BlackBerry claims pricing blunder caused the apparent failure of Priv and looks to right the ship with two new Android phones, others see a company setting itself up for more pain. If BlackBerry doesn’t exit hardware business, it doesn’t seem like its woes will end any time soon.

Physical keyboard and full touchscreen

The two Android smartphones BlackBerry is planning to release this year will feature one with full touchscreen and another with a physical keyboard. Details are still scan about the upcoming BlackBerry Android devices, but they are said to be codenamed Hamburg and Rome.

Mid-level market

BlackBerry Ltd (NASDAQ:BBRY)’s new Android smartphones will target the mid-range market. As such, they are likely to come with a sub-$500 price without carrier contract. The Priv goes for $700, making it a high-end smartphone. But according to BlackBerry’s CEO, John Chen, targeting the high-end market with their maiden Android smartphone was a miscalculation that has resulted in low sales of the device.

In recent interview, Chen said that enterprise customers were praising Priv for its high-end internals and security features, but they are worried about the price. Those enterprise customers are telling BlackBerry Ltd (NASDAQ:BBRY) that they would be more interested in a device that costs $400 or there about and that $700 price tag is too high.

Neha Gupta

Neha Gupta has been in the financial space for over six years now. Gupta earned her MBA degree from Symbiosis Centre of Distance Learning in 2009 and her passion for finance led her to pursue Chartered Financial Analyst (CFA) course. She has successfully completed Level II of her CFA. She is a veteran in article writing, which is depicted in her numerous pieces published on SeekingAlpha, Nextiphonenews, InsiderMonkey, MarketWatch, and Techinsider. Her crisp and eloquent writing finds its best place in Researchcows, where emphasis is given on developing rich content for various websites, products, business plans, trainings, and book writing.

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