The next big thing for BlackBerry is the Internet itself, the Internet of Things that is, and a move back to its enterprise heritage. The struggling smartphone manufacturer held its earnings call on December 20th for 3Q fiscal 2014, and recently appointed CEO John Chen spelled it out for investors.
On board for 45 days, what he called a very exciting time, Chen noted he is very pleased to report on progress, and discuss the company’s reach, heritage and goals. Chen did seem pleased, in a speaking style remarkably upbeat, in direct contrast to the ousted Thorstein Heins who often sounded flat.
Unfortunately, revenue was $1.2 billion, down from $1.6 billion in 2Q, (a 24% loss from previous quarter, 56% year over year.) The loss was attributed to intense smartphone competition, and the fact that BES 10 is currently in trials through the end of the year.
And while the last few weeks may or may not have been exciting, it’s certainly been one of comings and goings. Chen spent his Thanksgiving cleaning out the C-Suite, wishing the CFO, COO and CMO a happy holiday and sending them on their way while welcoming new faces to the team. The most recent addition is a former SAP executive and major mobile player, John Sims. He will oversee the Global Enterprise Services Business.
With execution and operational excellence on his mind, Chen discussed the creation of four different operating units, with devices being the biggest (and the one with the largest risk exposure.)
“I finished a job that was laid out by the board and prior management: a discussion with Foxconn. It’s a smart move.” BlackBerry will now have someone to manage and design hardware designs with faster turnaround, and the partnership removes a large chunk of exposure for inventory.
Why bother to stay in devices? Chen was asked. He did not have a specific reason, although noted he was happy to have a break even or low margin unit. But bottom line, he wants to make sure the company does not lose money, and continues to serve the customer well.
In addition, packaging software and services and aggressively reworking the go-to-market is what BlackBerry will focus on going forward. Chen said he is building a new salesforce around this and making a play for regulated industries - an historically strong market for the Canadian company.
This includes secure layering of software, identity management, integration with BBM – all features and opportunities according to Chen. “Stay tuned on that. This is an area I know a little bit about,” he said.
Another unit with potential is BBM, which already has good penetration. Indeed, according to BlackBerry, 85% of organizations on BES are running BBM. The selling point for the end-to-end solution is its logging, archiving and auditing of BBM conversations, which assists in compliance for regulated industries.
BlackBerry has also seen great adoption of BBM on other OSes and separated this unit to highlight the prosumers that spend a higher than average time on BBM. Chen said he expects to see reasonable revenue from this unit by FY2016, but views it currently as a start up.
The "crown jewels," however, is QNX, a real-time operating system that BlackBerry acquired in 2010, with an eye on embedded markets. “Customers want QNX, a better technology,” Chen said, adding that it currently dominates the automotive industry via all types of platforms. The plan is to invest and grow, reaching other adjacent verticals, while building a cloud-based M2M platform. “The next frontier is all things Internet, M2M. We are already in that space, and working on that.”
A common complaint Chen now hears is: “You don’t care about the consumer!” That’s not true, he said. BlackBerry does want to reach consumers, but through partnerships and after things settle a bit. And with $3 billion in cash, it’s a position that will allow BB to be nimble, attract good talent and implement strategy, one that involves making the business more transparent and focuses on regulated industries.
“We are in enterprise mobility, a highly secure strategic environment. That is what we would like to serve,” Chen said.
He noted that BlackBerry has devoted, committed people who want to do the right thing for the company and the customers. Previously, the company did not align as they should have, and as a result, the market has spoken.
And in just 45 days at the helm, Chen also hears how he keeps "poking himself in the eye," with the bad press and the bleak expectations. But right now, he said, is “the most investor friendly, to showcase our strengths, to be transparent, and I hope you help us...." he stressed. That means quit with the eye poking and give the man a chance.