Stop futzing with video games BlackBerry, and get more business apps on board, says Wayne Rash
It’s hard to believe that it was only six months ago when BlackBerry started selling the new Z10 touch-screen phone in the United States, which the company claimed would help it reclaim its place as a leader in the smartphone market.
The BlackBerry Z10 phone was greeted with enthusiasm with its slick new operating system, its well-designed hardware and a growing collection of apps. But despite the initial promise, sales fell short, the stock price collapsed and even the staunchest BlackBerry fans had to wonder if the company would survive at all.
BlackBerry – a dying company?
Then, on 20 September, the same day that Apple launched the latest version of the iPhone, BlackBerry announced a $1 billion quarterly loss and that it was laying off 40 percent of its employees. BlackBerry’s battered stock tanked. The clamour of nay-sayers rose to a deafening pitch. BlackBerry is a dying company, many said.
Well, BlackBerry isn’t dead yet. But it is going private – if the deal with Faifax goes through. A lot of the reason for the move, announced on 23 Sept, is to escape the investor panic that is steadily eroding the company’s value. The idea is that by working with Fairfax Financial Holdings to buy out the public stock at a slight premium, BlackBerry will get the peace and quiet it needs to really restructure and get its business into shape to either come back or to sell itself to some other company.
The company has said little about its decision to takes itself private, or about the planned restructuring. What little was said about the future of BlackBerry came from Prem Watsa, CEO and chairman of Fairfax Holdings who is also a former BlackBerry board member.
“We believe this transaction will open an exciting new private chapter for BlackBerry, its customers, carriers and employees. We can deliver immediate value to shareholders, while we continue the execution of a long-term strategy in a private company with a focus on delivering superior and secure enterprise solutions to BlackBerry customers around the world.”
Forget about consumers
You’ll note that there was no mention of BlackBerry’s consumer business in that statement, and that’s important. If BlackBerry still retains an edge, it’s with large corporate users, governments and in the financial services industry where security and reliability are paramount. This is also the market where BlackBerry was born and the market that fostered much of BlackBerry’s initial growth.
This likely means that BlackBerry is intent on returning to its roots where what matters most is security. This is the one area where BlackBerry’s technology sets it apart from its competition, as evidenced by the fact that it’s the only phone that is certified by NATO to handle classified information. It’s no coincidence that nearly all of the Fortune 500 still maintain BlackBerry Enterprise Server networks.
By working with Fairfax Holdings to get itself away from Wall Street, BlackBerry will be able to move beyond the tyranny of quarterly results. That move will theoretically give the company the breathing space it needs to consolidate its strengths and become a leaner, more focused company.
But of course, it’s not a done deal. Fairfax could decide during the due diligence period that BlackBerry isn’t worth $9 a share, in which case the $4.7 billion deal could unravel. Or BlackBerry, which retains the right to shop itself to another buyer, could find another date to the prom. Then it would have to pay Fairfax a penalty of about 30 cents a share. BlackBerry Founder Mike Lazaridis is apparently thinking about making a bid for the company he started up partly with money borrowed from his parents.
But let’s suppose for now that all goes according to plan, and BlackBerry does take itself private with the help of Fairfax Holdings. What’s next?
First, the company could stop spending money competing with consumer phones such as the iPhone and with Android phones and focus its effort on its corporate users. This would mean actively working with app developers that support enterprise users and it could stop spending money on games and entertainment apps. Right now, the weekly lists of new BlackBerry apps seem dominated by low-end games that provide little incentive to buy a high-end smartphone.
Business apps, not video games
Instead, BlackBerry could spend money to support the kinds of applications that that enterprise and government users are likely to need, including financial services apps, front ends for customer relationship management (CRM) systems and ERP systems and productivity systems such as Microsoft Office. And yes, BlackBerry will need to help fund such app development because of its small market penetration. But the company needs business apps much more than it needs another video game.
Likewise, BlackBerry needs to keep development alive on its enterprise and business devices and software. Few people realise that BlackBerry’s QNX software is a major player in the automotive and embedded systems market. These markets don’t get a lot of visibility, but they’re critical systems for the companies that use and sell them.
This is not to suggest that BlackBerry will abandon its existing customer base since its Z10 and Q10 smartphones are important to the company’s long-term future. But it may mean that the BlackBerry 7-based legacy systems may be around longer than previously thought, and it may also mean that devices clearly aimed at high-end consumers, such as the Z30, may get less attention to their hot new sound systems and more attention for their built-in security.
Ultimately, the move to go private means that BlackBerry has realised that it’s never going to compete for consumers the way the iPhone does, nor will it become a mass market favorite like Android. But BlackBerry’s chance at survival is in the niche it knows best—the enterprise.
Wallow in the misery of BlackBerry’s year so far with our quiz!
Originally published on eWeek.