BlackBerry: breaking up is hard to do

By Stuart Sumner
10 Jul 2014 View Comments
Blackberry CEO John Chen shows off Passport and Classic handsets. Image via Crackberry

Your company is worth more than $80bn (£46.7bn) and is the widely acknowledged market leader. You have a private global data network, and just about every large firm uses your phones for corporate voice and email communication. Your devices are convenient, easy to manage and secure. You're even a little bit cool. In fact, when president Obama is elected, he demands to still be allowed to use your device.

You're at your peak. Other firms are starting to release new devices with lots of additional functionality, but you've no need for such innovation. Your position as the business device of choice is unassailable. It's 2008, and you're BlackBerry.

Further reading

Reality check

Skip forward to 2014, and the intervening six years have not been kind. From a high in September 2009 of 83.62, BlackBerry's stock now trades at 11.40. It has recently reported its first quarterly revenue to dip below the $1bn mark, a 64 per cent year-on-year decline.

Worse for the Canadian firm, its position in the market is weakening as customers and partners desert what they are increasingly viewing as a sinking ship. As an example, two CIOs recently told Computing that they've decided to dump BlackBerry for Apple.

"We'll shortly be moving away from BlackBerry and going to iPhones throughout the entire organisation," Paul Mease, head of IT at Unite the Union told Computing. The reasons, he explained, were the current state of BlackBerry as a company and dissatisfaction with its current products.

"Everyone is aware about the situation at BlackBerry and its financial issues. The latest devices that have come out from BlackBerry and their cost doesn't warrant us continuing with them," Mease added.

Bill Peters, head of group IT at the Formula 1 team Caterham Group, also told Computing that BlackBerry's declining market share was a driver in the team's decision to dump its devices in favour of iPhones.

Meanwhile, enterprise software platform provider MicroStrategy, which has developed various analytics and security solutions for mobile devices, has chosen not to build them for BlackBerry because the Canadian smartphone manufacturer represents a "lost cause" that "isn't coming back", according to Michael Saylor, CEO and chairman of MicroStrategy.

Also sticking the knife in was Gary Voller, EMEA strategy and technology lead for HP, who revealed his firm's aversion to BlackBerry during questions after his presentation at Computing's Enterprise Mobility Summit 2014, titled "Designing, deploying and managing apps".

Voller explained that cross-device collaboration tool HP Anywhere is accessible to users on iOS, Android and Windows smartphones or tablets, as well as Mac and PC desktops and laptops. Asked why BlackBerry users are not supported, Voller replied that HP has always been a BlackBerry-free zone.

"HP never went down the BlackBerry route, even in the early days when it was the de facto choice, so I guess from that perspective we were lucky that it's not something that we have to worry about," he said.

"We talk about bring your own device, and it's not one of these devices we would support. So we are Android and iOS and Windows," Voller added.

To fix it, first break it

So the picture is bleak for BlackBerry. Does it have any hope at all? Only if the company is broken up, suggests Ken Dulaney, vice president and distinguished analyst at Gartner.

"We have long believed that the company has more value broken up into businesses that would deliver handsets, mobile device management, Internet of Things operating systems (QNX), BBM services and the NOC [Network Operations Centre] as a global carrier control system.

"They do have enough money in the bank to cover this time period as a single company and John Chen, who is an effective manager, is cutting expenses to ensure the money lasts. But the question is always when you cut expenses, whether those cuts disable core company capabilities."

While Dulaney has praise for Chen, he is scathing about his predecessors.

"[BlackBerry's situation] is due to mismanagement and poor mistakes by the two previous administrations. When companies are as wildly successful as BlackBerry was, they often believe they can survive the tectonic shifts that always occur in the electronics industry. While there is a long story of why it happened, miscalculations between 2006 and 2009 probably doomed the company to the state they are in."

Dulaney concluded that the only way the firm can survive without breaking itself up is to return to selling large volumes of devices, but adds that he doesn't see that happening.

"That is unlikely because of the tremendous innovation from the remaining three, Apple, Google and Microsoft/Nokia. I think ultimately the company must be broken up."

The question now for Chen is, does he have the nerve to take such a dramatic step?

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