Does BlackBerry Have a Chance?

By Lori Castle, Editor in Chief — March 25, 2014

BlackBerry continues to clean its own house, but surely does not want the same to be said of others—in particular the White House, which is reportedly testing Samsung devices. If the White House moves BlackBerry out of its portfolio, will it still open a previously announced (at CES 2014) security  innovation center in Washington D.C.?  Is the Fed the last bastion of hope for the organization to remain viable?

Even CEO and Executive Chair John Chen told the Financial Times in February that while he is hopeful, there is a “50-50” chance his new strategy will work.

Where BlackBerrys Grow
Chen laid out that strategy via a new operating unit structure when he assumed his new role at BlackBerry and took part in his first earnings call in December 2013. The plan, meant to support “operational excellence,” appeared to be more focused and streamlined (and his attitude more upbeat) than that of the prior reign, and reemphasized BlackBerry as the best answer in mobile enterprise security.

The pleasantry stopped there as restructuring is typically a euphemism for cleaning house—a sweep that started even before it was announced in September, is supposed to end in May and has included leadership on down. The saga continued when last week BlackBerry laid off 120 workers at a product development center in Ontario.

Concurrently, the company announced an agreement in which it will sell the majority of its real estate holdings in Canada. “The successful sale of property in Canada will help us move toward our goal of continued operational efficiency,” said Chen in a release. “As previously stated, BlackBerry remains committed to having a strong presence in Canada and we continue to consider Waterloo home to our global headquarters.”

Under the terms of the agreement, BlackBerry will sell more than 3 million square feet of space as well as vacant lands. BlackBerry will also lease back a portion of the space and expects closing to occur in the first quarter of fiscal 2015.

What else is BlackBerry selling?

During Mobile World Congress, the company introduced a new QWERTY device, an update to BES 10, along with a simpler pricing model, to entice diehards and businesses alike.

But the biggest BlackBerry diehard of them all (or at least the most high profile), is President Barack Obama, who has publically said that he is “not allowed to have an iPhone for security reasons.”

Android in the White House?
In light of this, the news from the Wall Street Journal about the White House testing LG and Samsung devices is a bit surprising. The President had also said he uses an iPad, that, along with iOS’ overall reputation as being more secure than Android, at least implies that Apple would be on the top of the testing list.

On the other hand, Samsung has been hitting the enterprise pavement in order to gain more market shares, while security has been a top initiative through the SAFE program and KNOX features.

Plus, several other branches of the Federal government, whose mission is actually security, have migrated from BlackBerry to other platforms, enabled, by MDM and MAM solutions and other enterprise services.

Dr. Rick Holgate, CIO, Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF), outlined the mobile initiatives in a recent article with Mobile Enterprise. He wrote, “In a few short years we have moved at a previously unthinkable pace to adapt to a rapidly changing mobile technology landscape and adopt commercial, consumer technology into the Federal enterprise. Our ability to achieve and sustain that pace depends on a spirit of collaboration and a willingness to share solutions and services, both of which have reached unprecedented levels. That continued leadership and partnership will enable us to move collectively more quickly than we could individually in the mobile space.”

So with the government going elsewhere, does BlackBerry have a chance?

Analyst Perspective
Eric Klein, Sr. Analyst, Mobile Software, VDC Research, told Mobile Enterprise, “I have seen the reports that claim the White House is in the early stages of evaluating other platforms. I do think that ultimately they will migrate away—however, there definitely is quite a bit of infrastructure investment in place that supports the BlackBerry/BES solution, which may delay a switch. However, if the White House ultimately does migrate to a competing platform, it will certainly be damaging to BlackBerry’s reputation as the platform of choice in Federal markets.”

In a recent blog, Klein reviewed the case for BlackBerry, acknowledging Chen’s strategy and pursuit of regaining enterprise confidence. He wrote, “Both in Barcelona and at a meeting with analysts in January, Chen stressed the relationship with enterprise as central to the company’s strategy and success.”

Beyond that, Klein pointed out potential revenue enhancing opportunities like BlackBerry’s support of the Windows Phone platform and Ford’s announcement that it will be using the company’s QNX platform for its next-generation Sync system.

However, he noted, that while these initiatives have potential, “We see the company’s reluctance to abandon its hardware orientation as hurting its long term prospects.” He praised BlackBerry’s decision to outsource manufacturing to Foxconn, but called the release of the upcoming Z3 (low-end consumer device) and the recent Q20, “the company’s last chance.”

Klein explained, “This is primarily due to the fact that there is a marked loss in mindshare with enterprise customers—according to a recent VDC survey, the lack of confidence is quite stark.”

Get on the BYOD Bandwagon
According to Klein, VDC Research’s survey showed that BlackBerry’s support among larger enterprises (organizations with greater than $500M in annual revenues) has continued to lose ground to both iOS and Android. It is also the least-supported OS, both among BYOD and enterprise-issued devices according to the VDC study.

VDC also believes that while Apple and Android are the dominant mobile platforms in the enterprise right now, “there is room for a third ecosystem—particularly one with enterprise-grade capabilities.”

Klein suggested BlackBerry continue to enhance its focus on BYOD management solutions—or face a long, “uphill road.”

To do that, however, BlackBerry will have to get out of its own way. In the Inside BlackBerry for Business Blog, Joe McGarvey, Enterprise Content Strategist at BlackBerry, gave a “Requiem for MDM Pure Plays,” in which he wrote about the former burgeoning solution, which has now evolved as MAM and further, as EMM.

McGarvey wrote, “BlackBerry has been the worldwide leader in mobile enterprise security since 1999. Nearly all of the largest government agencies and organizations in regulated industries partner with BlackBerry because they recognize that its end-to-end security solutions have reached a level of trustworthiness unrivaled in the industry.” This statement is oblivious to the facts laid out above, regarding the Fed.

“BlackBerry started at the high-end of the security stack, recognizing that a well-tempered sword constructed to defend a fortress could meet the security needs of any enterprise. Given their heritages in the low-end MDM space, rival vendors are now bolting on security and application management capabilities. If not an impossible task, it is the metaphorical equivalent of forging a sword from tin foil,” he continued.

Most experts do agree that pure play MDM, as he puts it, is a thing of the past, but as the evolution has gone on without BlackBerry, other solutions have been put in place and still others are quickly up and coming, and enterprises are unwilling to undo this work.

Finally, he said, “We are just now transitioning into a new and critical phase of a movement on course to be so disruptive as to redefine the way we work and the role that information technology plays in the success and competitiveness of today’s businesses. As this movement progresses, the demand for mobile security and app management that is simultaneously ironclad and transparent, affording workers a consistent experience regardless of their location or device, will only intensify—as will the requirement for a vendor with a proven mobile enterprise pedigree.”

This denial is familiar and sounds like the failed year-long mantra of BlackBerry under Thorsten Heins, where the company seemed to believe if it repeated the same message enough times, like Dorothy, it would be magically whisked back to where it wanted to be.

BlackBerry’s Q4 earnings call takes place on Friday, March 28.  

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