BlackBerry Ltd's Weird Ways Are Here to Stay

The BlackBerry Passport is definitely unique. Source: BlackBerry.

Say what you will about BlackBerry's new Passport phone, but the device is unquestionably unique in the smartphone market. Modern smartphones have undergone design convergence, and nearly all of them share the same basic design language. In contrast, the Passport features a square display and is physically the same size as an actual passport.

The company naturally hopes to position the Passport as an enterprise device, offering more screen real estate for viewing spreadsheets and other productivity functions.

The device has garnered mixed reviews, with many speculating that at best it will appeal to a niche market. On the last conference call, CEO John Chen noted that the Passport had already received over 200,000 orders in the first couple days. In a recent interview with Reuters, devices chief Ron Louks says that BlackBerry's unconventional designs are here to stay.

There's more where that came from
Louks says that BlackBerry has another unique device in the pipeline, and wireless carriers seem to like it. Additionally, the company is looking to launch at least one unconventional device per year from here on out. Like most large phones, the Passport falls flat in one-handed usage, but the executive teased that an upcoming model will be easier to use with one hand.

The company has started to regain its financial footing. Last quarter's $207 million loss isn't exactly stellar, but it was a significant improvement compared to the $965 million loss a year prior. BlackBerry has made meaningful progress in reducing costs, as operating expenses were down over 40%. Cash was also flat sequentially at $3.1 billion.

This improved financial position is allowing BlackBerry to begin taking more risks, according to Louks. That may be a bit premature, since the overall company still isn't in the clear yet. Chen did confirm that the hardware business turnaround is well under way, posting a non-GAAP profit last quarter -- the first time in five quarters. The CEO previously said that it could operate its hardware business profitably at a scale of 10 million units per year, and the company shipped 2.1 million phones last quarter.

Is it too early to start celebrating?
That's all a testament to the progress the company is making, but at the same time squandering limited development resources toward unconventional devices could be misguided. Doubling down on its areas of strength with devices like the upcoming BlackBerry Classic are clearly smart moves, but venturing into untested waters is potentially very risky.

That's especially true since BlackBerry has committed to slimming down its phone portfolio in order to help cut costs, so the company is effectively dedicating a relatively large portion of its portfolio to such risky designs. To be clear, the Passport's early figures are respectable, but this is more about BlackBerry's ability to take bold risks.

Just because BlackBerry thinks it can afford to take risks now doesn't mean it should.

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Evan Niu, CFA has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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