4 min Security

CEO John Chen, who saved BlackBerry from collapse, is retiring

CEO John Chen, who saved BlackBerry from collapse, is retiring

In 2013, the board of ailing smartphone maker BlackBerry appointed John Chen to save the company from collapse. Over the course of ten years, it has morphed its portfolio beyond recognition. Under the leadership of “turnaround CEO” Chen, it exited the phone market to focus entirely on cybersecurity and IoT devices. On Nov. 4, the man who said he “always needs to be doing something”, is stepping down.

Chen said in 2019 he always had a soft spot for BlackBerry. “It was a very iconic company, and I didn’t want to see it die,” he said. In December 2013, a month after he was appointed, his new employer reported a quarterly loss of $4.4 billion – having already lost 1 billion the previous quarter. Three years earlier, it had shipped 49 million phones, but in 2013 it only managed to sell to 19 million customers; 150 million iPhones were selling like hotcakes. The message was clear: The smartphone market had slipped out of BlackBerry’s grasp and was moving relentlessly, incontrovertibly toward Apple and Google’s Android ecosystem.

Idle hope

Attempts to save the BlackBerry smartphone line proved to be in vain. However, several features that first appeared on a BlackBerry would prove successful elsewhere years later: examples include a screen without a home button and encrypted messages. It did, however, at least could count on it always having an excellent reputation for device security, with government agencies purchasing phones en masse as a result.

Chen’s decision in 2014 was final: “We’re going back to our enterprise roots,” he proclaimed at the time. According to him, the company had spread itself too wide and lacked focus. The takeaway: no more phones, and all attention diverting solely on cybersecurity and IoT. Several security parties were acquired in the years following this decision: the most prominent being Cylance. That U.S.-based company cost BlackBerry $1.4 billion in 2018, bringing expertise in AI-assisted threat intelligence. Despite such reinforcements, making a drastic transition like this did not prove to be easy. “I underappreciated the fact that I had a strong culture to overcome, because it was a hardware company and had been a darling of the world,” Chen told CNBC in conversation.

The acquisition of Cylance proved to be very successful. “That purchase really solidified our cybersecurity capabilities,” said CTO Charles Eagan in 2022. “It had a very compatible set of technologies that rounded out our portfolio and its AI and machine learning capabilities were unprecedentedly successful.”

Tough competition

Meanwhile, cybersecurity is a crowded playing field, with competition from numerous parties of equally numerous sizes. In addition, BlackBerry’s twin directions of security and IoT is evidently still not focused enough. Next year, the IoT division should split off from BlackBerry’s security services and go public.

Still, there are many hopeful signs for the company. For example, shares were up tremendously this year, well beyond the general trend of 2 percent in the green on the Toronto Stock Exchange. 64 percent of revenue comes from cybersecurity, which shows why that group will presumably continue to operate under the same familiar name and not the IoT part. Recently, however, thanks in part to global economic conditions, there appeared to be limits to the (re)growth; as a result, some turbulence is to be expected in the near term.

Regardless, BlackBerry has won over a treasure trove of customers under John Chen’s leadership: Jaguar Land Rover, the U.S. Senate and all sorts of anonymously presented major banks, airports and government agencies rely on the company’s security services.

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There are some rather cursory indications online that note, among other things, noting that under Chen, BlackBerry’s shares fell 38 percent in a decade. Also, the company’s shares closed 6.4 percent higher on Monday after Chen’s decision to step down was announced. The tone one can take away from such reports is a somewhat negative one. A critical attitude is essential, of course, but it’s easy to draw conclusions a little too early. After all, anyone able to turn an ailing smartphone maker into a successful security and IoT company can take some significant amount of credit.

Also read the findings of BlackBerry’s Research group earlier this year here: Government and public sector in demand by hackers