BlackBerry 10 launch lacks surprises, and fails to address a looming problem

Thorsten Heins, CEO of Research in Motion, introduces the BlackBerry 10, Wednesday, Jan. 30, 2013 in New York.  (AP Photo/Mark Lennihan)

Thorsten Heins, CEO of Research in Motion, introduces the BlackBerry 10, Wednesday, Jan. 30, 2013 in New York. (AP Photo/Mark Lennihan)

After more than two years of work and multiple delays, Research In Motion (now rechristened BlackBerry) finally unveiled its new operating system and two handsets at an event in New York hosted by CEO Thorsten Heins. When the time came to reveal the new devices, Heins stepped aside while a pole rose up from the stage, attached to which were the two new BlackBerry models. Heins plucked them from their perches and asked, “Aren’t they beautiful?”

He went on to praise the features of the new smartphones—the touchscreen Z10, and the Q10, which is equipped with a physical keyboard. But the company’s share price, which had been on a tear leading up to today, is down more than 6% as of this writing. There could be a few reasons for this. Investors might be disappointed that the Z10 and Q10 won’t launch in the U.S. until March and April respectively. But perhaps more significant is that Heins didn’t really reveal any major new features. Many of the things he highlighted were well-known. Secondly, there are still many unanswered questions about the computer’s future.

But before getting to that, it would be unfair not to point out the Z10 and Q10 are very impressive smartphones. The multitasking capabilities are powerful, and the ability to seamlessly switch through applications is slick. The BlackBerry Hub, a kind of universal inbox for all of your communications feeds, is also an improvement over what other smartphones offer. Heins himself was quite enthusiastic about the touchscreen keyboard’s efficiency. “Only one thumb!” he remarked while a colleague typed a message on-stage. (More features are here.)

But we’ve known about these features for a while. One new goodie Heins did announce, video calls through BlackBerry Messenger, drew large cheers from the crowd, but seems a little unremarkable coming after Apple’s FaceTime, and Skype. The innovation BlackBerry added, the ability to share screens with whomever you’re talking to, is unlikely to push an undecided consumer to BlackBerry. Because there were no big surprises, (aside from appointing Alicia Keys the vaguely defined job of global creative director) the doubt over how many people will adopt BlackBerry 10 remains.

There is also a looming problem Heins has to address at some point soon: the future of the company’s service revenue. He surprised investors in December when he said the company will shift to an a la carte model for services (such as security) rather than a one-size-fits-all approach. Customers will pay for varying levels of service with BlackBerry 10. Analysts widely believe this change will cause the company’s service revenue, which accounted for 36% of total revenue last quarter, to decline as customers upgrade to BlackBerry 10. Heins said last month that this important revenue stream isn’t disappearing, but did not indicate how the company will boost it in the future. Paul Carpino, vice-president of investor relations, said on a conference call last month that, “You’ll have to wait until we start to launch some of these services to get more detail.” And so we wait.

The most intriguing part of today’s launch was when Heins hinted at the potential for BlackBerry 10 beyond smartphones and tablets. More and more devices, from your car to the your fridge, are gaining Internet connectivity, a trend known colloquially as the Internet of Things. “We will soon give you more ways to connect your mobile experiences and yourself…to the world around you,” Heins said. “We will be the leader in connecting you to your Internet of Things.”

BlackBerry 10 is based on QNX, software that runs in cars, nuclear reactors, and high-speed trains, amongst other places, and so it is well-suited to do just that. Smartphones and tablets are rapidly becoming commodity products with low margins, after all. The future of the company—and its profits—may lie in ensuring its software moves far beyond the BlackBerry.

Of course, the handsets revealed today are crucial in ensuring the company starts turning a profit again, and stabilizes the business so that Heins can build on the BlackBerry 10 operating system. “Today is definitely not the finish line,” he said. “It’s the starting line.”

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