BlackBerry Returns to Physical-Keyboard Roots Under New CEO

Jan 07, 2014 4:05 pm ET

(Updates with closing share price in sixth paragraph. For more CES stories, see SHOW <GO>.)

Jan. 7 (Bloomberg) -- BlackBerry Ltd., which struggled to entice customers with touch-screen models last year, plans to return its focus to keyboard-equipped phones under Chief Executive Officer John Chen.

“I personally love the keyboards,” Chen said in an interview yesterday with Bloomberg Television’s Jon Erlichman at the International Consumer Electronics Show in Las Vegas. In the future, the company’s phones will “predominantly” have physical keyboards, he said, rather than touch screens.

Chen, who took the CEO job in November, is trying to rebuild the company after last year’s BlackBerry 10 touch-screen lineup fizzled with consumers -- contributing to billions of dollars of writedowns. As part of his comeback plan, BlackBerry is refocusing on the corporate and government customers that fueled its early success. Those users preferred real keyboards because they made it easier to hammer out e-mails.

Last month, Chen announced a five-year deal with Foxconn Technology Group to outsource the manufacturing and design of some of its phones, aiming to offload more of the costs of its unprofitable manufacturing operations.

Inventory Risk

“Foxconn can be a really great partner, not only to eliminate my inventory risk, but also their ability to penetrate various different markets, call it the developing and emerging markets,” he said.

BlackBerry rose 6.1 percent to $8.50 at the close in New York, taking the stock to its highest level since September. The stock has gained 36 percent since the day before the Foxconn deal was announced in December.

While the first Foxconn-built phone is expected to be a touch-screen device, Chen said the traditional keyboard will hold sway in the long run.

In a show of how important keyboards are to the BlackBerry brand, the company is suing the maker of a snap-on keypad accessory for the iPhone, saying it closely resembles its products. That device -- called the Typo Keyboard -- is being unveiled this week at the CES conference.

The Typo, which clicks onto Apple Inc.’s iPhone 5 and iPhone 5s, violates BlackBerry’s patents and designs, according to the complaint. The maker of the keyboard, a Los Angeles startup founded by “American Idol” host Ryan Seacrest, said it would vigorously defend itself against the suit.

Keys’s Departure

In another sign that Chen is focusing on corporate customers and not consumers, the company parted ways last week with pop singer Alicia Keys. BlackBerry’s previous CEO, Thorsten Heins, had hired her to serve as global creative director. She joined him on stage last January when BlackBerry unveiled the Z10, a touch-screen phone that flopped with buyers and led the company to write off almost $1 billion in unsold inventory.

BlackBerry earlier yesterday announced the hiring of former HTC Corp. and Sony Ericsson executive Ron Louks to run its devices business.

“Ron’s a very creative guy,” Chen said. “I think he’s more in touch with not only the technology and design to make a phone great but how people like the phone.”

--Editors: Nick Turner, Stephen West