Why does TCL want to compete for BlackBerry when it already has Aka and Palm?

With the pre-sale of the new Nokia 6 model, this long-lost legendary brand has returned to the domestic market. And this year, it is very likely that another former big brand will return to China, that is BlackBerry. Similar to Nokia, BlackBerry was reborn through brand licensing, and its partner is the domestic manufacturer TCL.

On December 16 last year, Canadian BlackBerry announced that it had signed a long-term licensing agreement with China's TCL Group, under which BlackBerry provided security software, service packages and brand assets, and TCL Communication produced and sold BlackBerry-branded mobile devices worldwide. The licensing of almost the entire market scope to TCL indicated that BlackBerry officially withdrew from the hardware business and completely turned to the software and service industry.

BlackBerry is attracted by TCL's strong comprehensive strength

After BlackBerry announced its intention to exit the hardware business, the outside world speculated that it would follow Nokia's example and outsource the relevant business authorization. As early as September, BlackBerry had signed an agreement with BB Merah Putih, an Indonesian joint venture, to authorize the latter to produce and sell BlackBerry devices in Indonesia. At the same time, BlackBerry is also negotiating authorization matters with several manufacturers in China and India, including TCL, which has been a BlackBerry OEM.

BlackBerry chose TCL as a long-term partner mainly because of TCL's comprehensive strength. BlackBerry also said in response that TCL is one of the top ten suppliers in China's smartphone market and one of the top five manufacturers and distributors in China (FXI). In fact, thanks to Alcatel's outstanding performance, TCL has squeezed into the top 10 in the world. In 2015, it ranked seventh with a market share of 4%, second only to Huawei, Xiaomi and Lenovo among domestic manufacturers.

Compared with professional OEM Foxconn, TCL may be slightly inferior in production, but it is far superior to its competitors in design, promotion, sales and after-sales service. Authorized production and sales are different from OEM, and the latter's ability is more valued by the licensor. Nokia did not directly authorize Foxconn to produce and sell smartphones like it did with its previous tablet business, probably because of the above factors.

What is rare is that after TCL acquired Alcatel, after taking some detours in the early stage, its international market operation capabilities have been significantly improved. Alcatel's ability to gain a foothold in the fierce market competition shows to a certain extent that it has the ability to successfully operate BlackBerry brand mobile phones.

BlackBerry and TCL had previously cooperated smoothly on the two Android models DTEK50 and DTEK60. TCL's OEM history is said to date back to 2009, which means that the two parties have a good foundation for long-term cooperation. In the end, TCL, which was more sincere, overwhelmed other negotiating opponents and won the recognition of BlackBerry.

With Aka and Palm already available, why does TCL want to pursue BlackBerry?

This also means that after Alcatel and Palm, TCL will operate three international brands at the same time. After already owning two international brands, Alcatel and Palm, why did TCL actively strive for the licensed production of BlackBerry?

This has to start with TCL's current situation. Although it now owns two brands, Alcatel and Palm, only Alcatel is actually in operation. In early January 2015, TCL acquired Palm from Pratt & Whitney for about $10 million. At that time, TCL wanted to use this brand to enter the mid-to-high-end mobile phone market and form a complete product line with Alcatel, which mainly focuses on the mid-to-low-end market.

But unlike Alcatel, TCL did not get any tangible assets, human resources, patented technology and business. It only got the Palm trademark and some domain names, which was quite an empty shell. Palm has been out of the market for too long, and the original WEBOS system has too distinct characteristics. It is very difficult to restart the market with the Android system. Therefore, although TCL said at the time that it would release a new Palm model at the end of 2015, in fact, it has not taken action until now. This result just fulfilled my previous prediction: "TCL's acquisition of Palm: a useless deal that will not achieve anything."

At the same time, in sharp contrast to Alcatel's international success, TCL, which mainly sells mobile phones in the domestic market, has not been able to make a name for itself. According to people familiar with the matter, TCL sold about 6.48 million mobile phones in November this year, of which only 200,000 were in the domestic market, and its revenue in the domestic market was almost negligible.

In the absence of high-end products and the domestic market is blocked, TCL, a top 10 global company, faces a potential crisis of weak future development. Since the two brands of Palm and TCL are temporarily unable to take on the responsibility, it is a good choice to make a breakthrough in the market by relying on the former high-end mobile phone brand BlackBerry, which still has residual market heat.

What benefits will obtaining BlackBerry authorization bring to TCL?

After obtaining the BlackBerry mobile phone license, TCL can at least obtain the following benefits:

1. Obtain influential mid- to high-end brands at low cost

Because it is a licensed production, and BlackBerry is now declining, TCL was able to acquire an influential mid-to-high-end mobile phone brand at a relatively low cost. Unlike Palm, which had been delisted for three years when it was acquired, BlackBerry is still on the market and maintains a certain popularity; and it has initially completed the transition from BB10 system to Android system, and existing users have generally accepted Android BlackBerry phones. TCL does not have to worry about the risk of discontinuity caused by changing the system, nor does it have to bear the marketing costs of persuading users.

2. It is conducive to improving productivity and obtaining scope economy advantages

TCL is a mobile phone manufacturer with a production plant, which means that it will not need to invest too much capital in the future production of BlackBerry phones. Not only can it absorb the redundant capacity of the existing production line and improve productivity, but it can also bear the costs and expenses of component R&D, production, channel operation, etc. with Alcatel and TCL, and achieve cost reduction through scope economy. If the management is effective, the production costs of Alcatel and BlackBerry are expected to decrease at the same time in the future. Alcatel is more cost-effective and competitive, while the configuration and functions of the new BlackBerry model have been strengthened, getting rid of the original impression of high price and low performance.

3. Strengthening the hardware team and passing on the BlackBerry genes

According to reliable sources, the original BlackBerry hardware team will also be transferred to TCL. In recent years, BlackBerry sales have not improved, mainly due to the lack of applications and the fact that the full keyboard is not suitable for the mainstream. In fact, BlackBerry's hardware design level is internationally leading, which can be easily seen from the design of a series of classic models such as Z10, PassPort and Priv. The transfer of the original hardware team also means that the genes of BlackBerry phones are preserved and passed on, which is conducive to future market promotion. In addition, the arrival of the BlackBerry hardware team has also strengthened the technical research and development capabilities.

4. Get support from BlackBerry in terms of mobile phone system and software

In general, TCL's mobile phone division currently has certain advantages in hardware, design, and quality control, but is relatively weak in systems and software, which is where BlackBerry is strong. Through the BlackBerry mobile phone project, TCL can get support from BlackBerry in mobile phone systems and software, improve its own capabilities, and make up for its shortcomings.

New BlackBerry phones are expected to return to the domestic market

At the recently concluded CES 2017, TCL Communication eagerly unveiled its first mobile phone in cooperation with BlackBerry, but it has not yet been officially named and has not yet announced specific parameters. According to Jiemian, the model will be officially launched at the 2017 Mobile World Congress (MWC) in February.

It is expected that TCL will first promote the new BlackBerry phone in traditional markets such as Europe and North America, and will return to the Chinese market when the time is right. After all, China is the world's largest smartphone market. If all goes well, we will see BlackBerry phones return to the Chinese market in the second half of 2017.

Alcatel, which has been focusing on the mid-to-low-end market, will form a good market complement with the BlackBerry brand in the future mid-to-high-end market. TCL is expected to build a dual-brand market layout. As for TCL and Palm, it is difficult for them to succeed in the mobile phone market. They may be more suitable for smart home or entertainment electronic products.

Overall, TCL's acquisition of BlackBerry's mobile phone licensing business is beneficial to both parties. BlackBerry has gotten rid of its burden for many years, and TCL has gained new market opportunities. This is an equal and mutually beneficial business behavior. For TCL, the risk is relatively small and the potential comprehensive benefits are greater, and the positive factors are relatively greater.

As Nicolas ZIBELL, CEO of TCL Communication, said: "BlackBerry is currently the only brand that can effectively compete with other high-end mobile phones in the high-end mobile phone field. How we can bring this brand back to its former heyday is also the biggest challenge at present." Whether BlackBerry phones can be reborn and return to the mainstream through Made in China in the future depends mainly on the performance of TCL's international team, and we should be cautious about this.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.