While reading the recent Forbes interview with BlackBerry (BBRY) CEO John Chen, I was disappointed to see him trotting out the Porsche analogy.
It had shades of 2012 when BBRY celebrated an outdated BlackBerry Bold 9900 tarted up in Porsche-inspired trim and a ludicrous $2k price tag — one of previous CEO Thorsten Heins’ first public missteps. Complete with a vintage Porsche 911 at the big party.
What is it with comparing BBRY to Porsche? There is a Porsche in the smartphone world and it’s called the iPhone. If BlackBerry is going to be compared to an automobile in any way, it’s more like a Suzuki (SZKMY).
“Take the automotive industry; it’s not all about volume. What do you call Porsche? What do you call Lamborghini? Porsche is doing extremely well. Now, Porsche serves a particular segment of the market, doing well for its shareholders and owners. It always serves the market for a purpose, which is the whole point.”
It’s not that I disagree with Chen’s statement per se — everyone’s familiar with the idea that niche businesses can do quite well without competing for mass market domination. It’s the concept of using BlackBerry and Porsche in the same sentence, as though trying to establish a similarity between the two (and worse, indicating that BBRY management sees the similarity), that grates.
Why AAPL is Porsche
It’s worth repeating: BBRY is not Porsche. If anything, Apple’s (AAPL) iPhone is the Porsche.
The iPhone has an air of exclusivity — it may be popular, but only 15.1% of all smartphone sales in 2013 were iPhones. Like a Porsche, the iPhone has sufficient demand to command a premium. Check the AT&T (T) wireless website and you’ll see the iPhone 5s starts at $199.99 on contract. The latest BBRY devices, the BB10-running Z10 and Q10? Both free on contract. People pay more to buy a Porsche — they don’t pick them up on the discount rack.
Porsche owners are accustomed to having others admire their ride, and they take a certain amount of pride in the performance, quality and exclusivity of their car. BBRY owners? According to the New York Times, there’s a good chance they’re ashamed of being seen using their “uncool” smartphone.
When the long-delayed BB10 smartphones finally hit the market in 2013, there were no lines, stores were left with Z10s no one wanted, and BBRY had to take a $934 million write down on unsold inventory. That’s not the description of a product people covet.
And then if you want to get to the meat of Chen’s statement, Porsche is indeed doing well for Volkswagen AG (VLKAY) and serving its shareholders quite well. BlackBerry? I don’t need to trot out the details on how its shareholders are likely feeling.