BlackBerry is sixteen years old today (or maybe yesterday:)
Just a short year ago it was difficult to see what BlackBerry could do to right its course and become a viable business again. After an incredible year BlackBerry’s strategy is clear and totally focused on the enterprise. John Chen, clearly stated last month the company had successfully completed the first stage of its turnaround plan and is now focused on a return to sustainable profitability.
It’s not just Chen who thinks BlackBerry’s fortunes are ascending. Samsung, currently the largest Smartphone manufacturer in the world also believes BlackBerry’s star is on the rise. Although a recently reported Samsung $7.5 Billion buyout of BlackBerry turned out to be incorrect, Samsung have publicly restated their desire to continue to work with BlackBerry, not buy them.
Two years ago there was hope that two new devices, the Z10 and Q10, running the new QNX OS10 operating system would reignite consumer interest. But despite the huge effort of launching a new operating system and some positive reviews of the OS, neither device caught on with consumers. In March, 2014 the company posted a $5.9 billion loss driven mostly by huge inventory write downs.
BlackBerry’s poor performance saw some analysts writing the company off and recommending that the company should be broken up and sold for parts. But John Chen was now in charge, the executive who had successfully reversed Sybase’s death spiral 15 years earlier had just taken the position of CEO. Chen announced the $5.9 billion loss without drama and promised a return to cash flow positive by March, 2015. He’s delivered ahead of schedule.
Chen’s route to recovery
Chen has sold off assets and created new partnerships to broaden BlackBerry’s business offerings and cut costs. The measures have paid off, the company announcing a positive cash flow of $43 million on its December 19 earnings call.
“We will survive as a company and now I am rather confident,” said Chen in an interview with Reuters last November. “We're managing the supply chain, we are managing inventories, we are managing cash, and we have expenses now at a number that is very manageable. BlackBerry has survived; now we have to start looking at growth.”
One of Chen’s most important initiatives has been to launch devices to support his enterprise focused strategy, BlackBerry phones might have lost their attraction with the carriers and consumers, but new devices like the Passport and Classic are built with enterprises in mind, and by they're proving to be popular. The acquisitions of Secusmart GmbH for Voice and Data encryption and Movirtu for Virtual SIM solutions also adds real value to the enterprise offering
No one does Enterprise Security better than BlackBerry
Perhaps the most compelling strength BlackBerry has is its security expertise. BlackBerry Enterprise Server 12 (BES 12) was released last year and has been positively recieved. BlackBerry has long been synonymous with enterprise and security, and analysts say that with BES 12 it took an exceptional product and made it even better.
“Detractors of BlackBerry should note that unlike Sony, no BlackBerry Enterprise-using company has reported any serious security breach this year,” wrote researcher Alcarez Research.
BES 12 represents a significant opportunity for BlackBerry. Strategy Analytics says more than 600 million smartphones are used by businesses around the world, but the vast majority of these are not connected to any formal mobility management solution.
BlackBerry EMM has more customers than its top three competitors.
BlackBerry’s EZ Pass migration programme was launched on 31st March 2014 and since then over 4 million customers have claimed new BlackBerry Enterprise Service 10 (BES10) client access licenses, with over 840,000 of these licenses being traded in from competitors’ mobile device management (MDM) platforms.
BlackBerry has a golden opportunity to become the dominant provider of enterprise mobility management, wrote Chris Umiastowski, growth investor for Globe Investor’s Strategy Lab, in the Globe and Mail. “Instead, it seems that BlackBerry, under the leadership of CEO John Chen, could be emerging as a high-growth, enterprise software company,” he wrote.
BlackBerry can now sell a single solution to help IT departments manage their iPhones, Android and Windows mobile phones and tablets. BlackBerry is poised to grow its EMM revenues to a $10-billion software and service business.
Everybody is talking IoT security but no one is doing it.…
BlackBerry is working on the Internet of Things (IoT) with a new platform announced at CES “ It combines QNX embedded software with BlackBerry’s secure network infrastructure and device lifecycle management.” The platform provides a message bus with instantaneous data indexing and storage that can validate “every action, message and piece of data.”
Messaging is at the heart of IoT. To send and receive useful data between devices and data centers requires infrastructure, databases, and security working together in a reliable, high availability system. BlackBerry supports both event-driven and store-and-forward messaging for a complete, trusted, and hosted solution. The result is efficiency for developers and a lower TCO for enterprises.
Authentication, authorization, and data security are provided through patented BlackBerry cryptography and key management technologies. These techniques are architected for a wide range of devices, including those operating under resource constraints and those that require high performance.
The BlackBerry IoT Platform is hosted in the secure, global BlackBerry infrastructure.
The IoT landscape includes a massive number of devices – far greater, more diverse and more richly interconnected than the mobile and PC waves preceding it. To support this, the BlackBerry IoT Platform is engineered with modern technologies to support massive scalability, instantaneous data indexing, and redundant long-term storage. The IoT Platform is designed to avoid bottlenecks and to be scalable at every layer of the architecture.
“We believe that BlackBerry’s strategy of beginning with the automotive and industrial sector is a step in the right direction, given that the company has strong credibility with enterprise customers,” wrote a team of analysts from Trefis.com in a recent Forbes article. “BlackBerry’s solid reputation for security could also provide a competitive advantage as security has been a concern in the IoT market.”
BBM will generate revenue
BlackBerry Messenger (BBM), the company’s proprietary messaging platform was considered a dead end when it was exclusive to BlackBerry phones, the service has grown significantly since being expanded to include Android, iOS and Windows Phone. BBM subscribers now total over 140 million, up from just 20 million one year ago. it’s looking like BBM could become a revenue generator for BlackBerry. There are over 140 million new registrations on iPhone and Android, 150 thousand voice calls placed, 1 million BBM channels created, 300 million stickers shared, 175 million visits to the BBM Shop.
BlackBerry reportedly plans to charge for premium services like BBM Protected, which offers secure messaging, and BBM Meetings for mobile collaborations. The company also plans to offer paid subscriptions to consumers covering premium features like ad-free usage. Add to that the money from advertising and stickers (from $0.99 to $1.99), plus services like BBM Banking in India, BBM channels, and some 175 million visitors to the BBM shop, and BBM could hit the $100 million in revenues company chiefs are hoping for in 2016.
Connected cars, a $14 Billion Market
BlackBerry just so happens to have a big stake in the car industry, thanks to its QNX embedded system that powers the infotainment and telematics systems in more than 50 million vehicles around the world. QNX connects a vehicle’s entertainment systems, climate controls and navigation to dashboards sold by other companies like Apple’s CarPlay and Android Auto.
According to research outfit Markets and Markets, QNX owned 53 percent of the embedded vehicle OS market in 2013, while Microsoft trailed in a distant second place with 27 percent. Moreover, QNX’s share will increase further now that Ford has has stopped using Microsoft and begun using QNX. Ford sees value in being both agonistic and secure. “We've always said we don't want you to be making a purchase decision about your $30,000 automobile based on a $200 smartphone,” said Ford CTO Raj Nair in an interview with CNET. With the Ford partnership in place we can expect QNX market share to increase to 75%
QNX is not currently a major revenue earner for BlackBerry but the real question is what is it worth in the future? Markets and Markets reckons the global auto infotainment sector will be a $14.4 billion business by 2016, though most of that cash will obviously go to hardware makers. Even so, BlackBerry, which currently makes around $3 per vehicle from QNX licensing fees, could soon be in a position to negotiate higher licensing fees when its market share gets any bigger and its offering is valued correctly.
The doom and gloom analysts who predicted the company’s Bankruptcy a year ago have become very subdued of late. The company that couldn't find a buyer in the summer of 2013 is undergoing a complete transformation, and people are beginning to take notice. BlackBerry has broadened its horizons considerably. In another year the company will look nothing like the "struggling handset maker" so often disparaged by the consumer centric tech press.
In the words of John Chen
“I recall a year ago when I first started I was watching CNBC and one of our competitors was making fun of us,”.... “My advice to competitors is that we are not only a point product company, we are an EMM [Enterprise Mobility Management] solution, very broad and very deep. They need to understand that. They need to work for a living rather than make fun of us.”
Happy Birthday BlackBerry.