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Thoughts on Blackberry and the MDM market

Yes, I know that Blackberry has recently been written about quite a bit, but as an avid reader of news, blogs, and equity research, I always think there is space for another opinion. As it stands there are two very different stories to the company. One is that the handset manufacture has clearly been pushed out of favor by the likes of Apple and Android devices and doesn’t have much hope of ever regaining its former glory. On the other hand, bullish investor’s think that Blackberry can reinvent itself not as a handset company but as an enterprise software company.

While I believe that John Chen has done some great things in the past, i.e. Sybase turnaround, Blackberry is a much more difficult situation.

I do think that in his first few months John Chen has done a great job with Blackberry to stop some of the bleeding. He has moved device manufacturing to Foxconn and he laid out a new corporate message to users/investors that they are an enterprise software company and not just a device company. What this did was handicap there next earnings announcement by pushing a long term strategy vs. a short one.

With that said, let us take a look at its business in two segments handsets and MDM software.

Handsets: Is it too late?

In a market filled with a dozen manufactures Blackberry has continued to lose its piece of the pie, and it looks like it will be hard to get it back. In December of 2013, Blackberry made its first major move to try to cut the bleeding and hopefully gain back users; it announced a deal with Foxconn. This would put in place a five year strategic partnership to jointly develop and manufacture BlackBerry devices and manage the inventory associated with those devices. This is a fantastic deal and one of the better moves that could be made by BlackBerry. The issue here is not with BlackBerry and the moves they are making, but the companies they are competing with that may prevent Blackberry from regaining any significant market share. Only a month and half after this deal was announced, the competitive landscape may have changed significantly. Lenovo‘s purchase Motorola from Google along with the success of its new devices is putting them one step ahead. This along with Microsoft‘s acquisition of Nokia could make for a fierce battle for that same third spot behind iOS and Android.

MDM: A major shift for BlackBerry

In late December, John Chen got on CNBC to discuss Blackberry’s new direction and made the statement below:

When it comes to enterprise, we’re still the leader. Don’t be fooled by the competition’s rhetoric claiming to be more secure or having more experience than BlackBerry. With a global enterprise customer base exceeding 80,000, we have three times the number of customers compared to Good, AirWatch and MobileIron combined. This makes BlackBerry the leader in mobile-device management.

Citron Research, definitely agrees with this point in a recent note they published ((http://www.citronresearch.com/wp-content/uploads/2014/01/the-new-bbry-final.pdf)). Based on their research they see BlackBerry BES 10, its MDM product to be the strongest competitor and the largest deployed of solutions currently on the market. Along with this, they also see strong carrier relationships and better adoption now that BlackBerry has a plan set in place.

Citron has laid out a great case for BlackBerry and one that is definitely possible but will be an uphill battle given the company’s current position. Looking at MDM from a CIO’s standpoint it would seem to make more sense to go with a solution from Citrix‘s Zenprise or VMware’s recently acquired Airwatch given an enterprise may already use virtualization products from that supplier. The ability to manage a full stack of applications from one company may prove to be beneficial and something that BlackBerry will not be able to replicate. Competitors like Good Technology also have years of experience and have comparable products to Blackberry.

Conclusion:

While I believe BlackBerry is making all the right moves, I am not sure that they can completely turn around the company and that it potentially makes more sense to sell the company and integrate its products into a larger suite of product offerings that can address the full stack of devices that CIOs work with.

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