BlackBerry to release Android-based 'Priv' smartphone this year with support from all major carriers

At a time when BlackBerry's (NASDAQ:BBRY) smartphone hardware business is shrinking, the company confirmed it will release a security and privacy-focused phone later this year called the "Priv" running on a modified version of Google's (NASDAQ: GOOG) Android platform. BlackBerry CEO John Chen said the firm is working "with all of the major carriers" on the launch of the phone and thinks the company's security heritage will set it apart. However, BlackBerry reported revenue for its fiscal second quarter that missed analysts' expectations and a wider-than-expected loss.

After numerous leaks, which Chen said on the company's earnings conference call made hiding the Priv any longer untenable, the company revealed that the phone will support Android for Work on the BES12 platform and have access to the Google Play store for apps. BlackBerry expects the device to be available late in the calendar year in "major markets in-store and online," and will release further details in the coming weeks. Chen did not reveal pricing or the exact availability of the Priv.

"While the new device will provide a choice in OS to new and existing customers, the company remains committed to the BlackBerry 10 operating system, which enables industry-leading security and productivity benefits," BlackBerry said in a statement.

Chen said on the call that the Priv will be the "most secure Android device broadly available in the market." He said BlackBerry is working directly with Google on creating the security environment for the phone and the phone will not use Samsung's Knox mobile security software.

The Priv will allow BlackBerry to bring its security knowhow to Android, Chen said, and let it "address a larger and growing segment of the enterprise space" where BlackBerry thinks it can be a leader.  

Chen noted that there is a very loyal base of users in government and regulated industries like finance, healthcare and law that are still supporting BlackBerry 10, and that BlackBerry still needs to see if it can make money off of that smartphone base.

However, Chen said that "if our plan of doing the BlackBerry/Android type of implementation works well and the security side of the equation is accepted by the government or this base," he said it would be possible to see BlackBerry/Android phones replacing BB10. He also said it is more cost-effective for BlackBerry to make an Android phone because all of the drivers for chipsets are in place and so is the application ecosystem, so BlackBerry just needs to focus on adding in the privacy and security elements.

The Priv is expected to sport a slide-out physical Qwerty keyboard with a curved touchscreen and an 18-megapixel rear camera and 5-megapixel front-facing camera. The phone is also expected to have a Qualcomm (NASDAQ:QCOM) Snapdragon 808 processor and sport a 5.4-inch QHD LCD screen and 3 GB of RAM.

In terms of BlackBerry's financials, the company recorded a net profit of $51 million, compared to a net loss of $207 million a year ago. However, that was helped by one-time items and without those the company actually lost $66 million, or 13 cents a share. Analysts had projected a loss of 9 cents a share, according to the average of 22 estimates compiled by Bloomberg.

BlackBerry said quarterly revenue fell 46.5 percent year-over-year to $490 million in the period, well below the expectation of $611 million, according to an average estimate of analysts compiled by Thomson Reuters.

BlackBerry posted non-GAAP software and services revenue of $74 million, a 19 percent jump from a year ago and driven by 33 percent growth in software licensing revenue. However that came in less than Wall Street's expectation of $100 million in software revenue, but was in line with the $75 million predicted by Wells Fargo.

Chen said software licensing revenue is growing faster than overall software revenue. Yet Chen said that BlackBerry recorded no IP licensing deals in the fiscal second quarter, which he said is key to the company's future. He said the firm has a "reasonable pipeline" of such deals and is working on generating royalty revenue for licensing its technologies so that such revenue can become recurring and more predictable.

Yet the company's hardware business is flailing. BlackBerry recognized revenue on just 800,000 devices in the quarter, or a third of the number from a year ago, notes CNET. The revenue breakdown for the quarter was approximately 15 percent for software and services, 41 percent for hardware, and 43 percent for service access fees, the first time that category had surpassed hardware.

For more:
- see this release (PDF)
- see this CNET article 
- see this Reuters article
- see these two separate Bloomberg articles
- see this Pocket-Lint article

Related articles:
BlackBerry's software revenue in focus for earnings as new photo of Android phone leaks
BlackBerry to buy Good Technology for $425M, combining #2 and 3 vendors in enterprise mobility management
BlackBerry's Chen acknowledges need for more apps as rumored Android phone appears in new leaked photos
Report: BlackBerry's Android-powered device to launch in November on all 4 major U.S. carriers
BlackBerry CEO: We will cut phone production down to 1-2 per year
BlackBerry to axe more jobs in turnaround push

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