BlackBerry Steps Back

By Lori Castle, Editor in Chief — July 02, 2013

It was the saga of two BlackBerrys on the Q1 earnings call that took place, Friday, June 28. CEO Thorsten Heins talked about the “platform transformation” which “will drive future smartphone devices, greater enterprise efficiencies, and new mobile computing opportunities for many years to come.”

But in the same conversation  he also killed the tablet —a device  that many believe is the future of the enterprise — and talked about this year’s release of a new product for the company’s previous platform BlackBerry 7. As it looks forward to a Q2 loss, it also seems to be looking back — stuck in a transition of what it was, what it actually is and what it wants to be.

The Past
Heins, gave nod to the past saying, “Embracing our heritage of mobility first is very important as we build our culture and go through this transition.” Yet, while the company wants BB10 to be the de facto enterprise platform, it cannot ignore the fact that adoption is not as rapid as the typical pace of change in mobile. Heins acknowledged that the “enterprise environment requires a longer sales cycle than consumer-only-focused devices.”

He said that “eventually” all products will move to BB10, but the existing BlackBerry 7 customer base “remains an important market to us.”  Heins noted that enterprise customers are still using the Bold 9900, and called it “the most productivity focused and secure smartphone in the world today.” 

Many emerging markets continue to purchase BlackBerry 7, and to that end, according to Heins, ”We still intend to launch one additional product this year to support the BlackBerry 7 segment as well.”

The Present
If the 9900 is “the most” when it comes to devices, what does that make the Z and the Q10s?  Heins said, “The BlackBerry Z10 has been an effective launch product to showcase the renewed and reengineered BlackBerry 10 experience to both consumers and enterprises.”

So it looks like there is room to grow, as he noted the BB10 smartphone portfolio is just starting to fill out, but confirmed that there will never be more than six devices in the market at any given time. The latest, a QWERTY phone, which arrived late in Q1 and likely what most BlackBerry users were waiting for, is available now in 96 countries, with 50 more to launch in Q2.

With “enterprise mobility services,” Heins referred to  both “traditional enterprise business” and “new mobile computing opportunities”  in vertical markets. Enterprise BES still has a strong leadership position according to Heins, and BlackBerry’s goal is to remain number one in that segment, for what he termed the most comprehensive solution on the market today, the “ultimate mobile platform for business.”

To date, 18,000 companies are on board and 60% of Fortune 500 customers have either ordered or downloaded or installed BES10, including top companies in retails, financial, construction, communication, healthcare, etc. according to Heins.

The talk of a vertical specific strategy is somewhat new for BlackBerry. The company always cited highly regulated industries as top users, due to the security capabilities of the BlackBerry platform, but rarely mentioned industry beyond that.
Meanwhile, No. 2 competitor Samsung, has clearly laid out a go-to- market plan for the enterprise that focuses almost exclusively on vertical markets.  Is the former leader now following the competition’s strategy? When asked about this by Mobile Enterprise, BlackBerry declined to comment.

Consuming BlackBerry
The company is also aggressively concentrating on new services for the consumer, such as BB Messenger, what Heins insisted is the “preeminent messaging platform.” BBM Channel was launched in Beta on May 14th and now 60,000 users are engaged. A global rollout is expected for August. Previously, at BlackBerry Live, the company announced that BBM will be available for iOS and Android as well.

How interlinked is the consumer business with the enterprise business for the company?  Heins referencing BYOD said, “It’s a bit of a dichotomy that you have to be good in consumer to be good in enterprise, because right now it is actually also the employee deciding which device makes it into the business.”

With that kind of segmentation in the enterprise, Heins posed the question that IT has been asking since the trend started:  “Where can I deploy consumer devices without having too much of a security concern?”

BlackBerry 10 seeks to solve this with, of course, not just typical BB security feature, but the ability to manage iOS and Android devices as well.  Last week, BlackBerry launched “Secure Work Space,” a new solution that extends BlackBerry’s security platform to other devices “while delivering the best user experience.”

The solution separates and secures work and personal data on all mobile devices — whether BlackBerry, iOS or Android.  In a statement, the company said, “This came in response to the clear call from customers for a flexible end-user experience that is balanced with the most secure mobile computing environment.”

Of this Heins said, “That’s the way we look at it at the moment…[our] customers look at us to provide an end-to-end solution still, and we [can’t] break that paradigm.”

The Future…is Not Tablets
It’s unclear whether the company may plan to support other OSes when it comes to tablets, but Heins has made it abundantly clear that BlackBerry is not counting on this form factor for success or including it in the overall strategy.

He said a team was working hard on moving BB10 to the PlayBook, but added: “Unfortunately I am not satisfied with the level of performance and user experience, and made the decision to stop these efforts.”

He has previously gone on record saying he did not see the need for tablets in five years, but since they currently appear to be taking over the business world, Mobile Enterprise asked BlackBerry to elaborate on the CEO’s frequently cited vision of a “new world of mobile computing” — if not tablets, than what devices, processes and solutions will be running the enterprise? Comment  on this was also declined.

Still, Tim Coulling, Senior Analyst, Canalys, believes BlackBerry has made a smart move to shelve the tablet plan. “The original PlayBook has not really sold in any large numbers or volume,” he said in an interview with Mobile Enterprise. “In fact, the launch price had to be reduced considerably before it could even sell.”

It’s not completely out of the question, that BB may have a tablet in the future, Coulling noted, however, he reiterated that Heins doesn’t see the form factor as viable. In addition, it’s difficult to make money on the tablet hardware itself.

“Consumers demand cheap products. Amazon and Google choose to subsidize their products which enable them to sell in good volume.”

BlackBerry, instead, has to focus on its core products — the smartphone, Couling concluded.

For the Time Being
Heins, it appears, would disagree. He stated, “We’ve never been a device-only company, as we are also running a global secure data network and services business. And we don’t plan to run the company with a short term device-only strategy.”

He gave a nod to M2M and the so-called “Internet of Things” — and that may be where the company intends to build his “new world.”  BlackBerry released an automotive solution earlier in the month enabling the management and delivery of over the air software updates to vehicles.  “We have the opportunity to leverage BlackBerry's existing global and secure infrastructure to capitalize on this new market,” he said.

Working on a long-term strategic view, Heins said he is visiting with a lot of big corporate customers, and according to him, these clients don’t look at BlackBerry in pieces either. “They actually look at BlackBerry as an end-to-end solution that includes the device. Right now, I will not break that logic. I need to provide my customers what they require. They require best and highly innovative security, and that, for the time being, needs the device to be part of that end-to-end solution.”

Related articles:
Does BlackBerry Have Any Playbook?
Why BlackBerry?
Windows Knocks BlackBerry Down a Spot

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