This article is more than 1 year old

BlackBerry: Comeback canter should be a trot... yet, weirdly, isn't

Great products, but good luck buying them

Analysis Investors looking to make long term bets in technology companies are often faced with a conundrum. Is the company exaggerating its assets? Or does it have great assets, but isn't selling them as well as it should? BlackBerry might be a textbook example of the latter.

The company posted higher than expected revenue on Friday ($557m non-GAAP, $548m GAAP) and its narrowest loss in years, once adjustments for acquisitions are removed.

The positive signs abounded in the earning statements. Even after acquiring arch rival Good for a hefty $565m, BlackBerry has $2.71bn in the bank. Software and services revenue grew to $162 million, with BlackBerry claiming a 183 per cent increase in organic software revenue over the year, a fifth of which came from the Good acquisition. The ASP on devices rose from $215 a year ago to $315.

BlackBerry sells fewer phones, but makes more on each one. The "PRIV by BlackBerry" was only on sale for three weeks in the three month period, and even then, hampered by channel exclusives (for example, AT&T as sole US carrier, and Carphone Warehouse as the sole third-party UK channel). But it could well breath new life into a collapsing hardware business. BlackBerry could only shift 800,000 devices in the preceding quarter.

And yet. The company is in a unique position to benefit from cybersecurity and national security fears – but can't fully capitalise on it. Businesses visiting a country where devices may be compromised, and key trade secrets may be thrown open to the world (ask Sony Pictures), have plenty to worry about.

BlackBerry's credibility here continues to grow: Angela Merkel uses it for secure voice, while the company is withdrawing from Pakistan because it can't guarantee business users security from casual government snooping.

Nobody else operates a secure proprietary intelligent network layer, rather more than just "a cloud", on which they can build a range of services. This allows BlackBerry to provide a strong end to end picture: the most secure client device, for example, and secure lifetime document management (acquired through its WatchDox acquisition).

So BlackBerry's reinvention as an enterprise software and services company appears to be proceeding in the regulated space - but its wares are unknown amongst many businesses who would like some of the same security - but can't get it.

A year ago sales chief John Sims, formerly SAP's head of mobile sales, promised us multitenancy in the cloud. Carriers, we were told, were eager to take MDM and the other parts of BlackBerry's stack, and bring them services to a much broader market. BES12 offers this, but only for the largest of enterprises, and only via BlackBerry. BlackBerry had already done the hard work by becoming platform agnostic, and simplifying the UI.

But it hasn't happened. Sims was replaced as head of sales by Carl Weis in July. OpenXchange has demonstrated how much potential there is in taking niche products to a broad market using carriers, even when the alternatives such as Google's enterprise suite are low cost, or free. People place a renewed value on security and privacy. Offer something that isn't Googley, and you can make money from it.

Recently I was in China, where the shortcomings of commercial VPN services were apparent. BlackBerry offers only VPN authentication, not a VPN service. And it should be as easy to sign up your company to BlackBerry's software stacks, whether it has five hundred people or fifty, as it is to sign up to Slack.

It's almost two years since John Chen promised that after "banks, the insurance companies, the health care, the governments, state and federal" buyers broader businesses will be able to join in. We're still waiting. ®

More about

TIP US OFF

Send us news


Other stories you might like