BlackBerry CEO Heins: Focus on enterprise mobility over device sales

BlackBerry CEO Heins: Focus on enterprise mobility over device sales

Summary: Thorsten Heins, CEO of BlackBerry, tried to recast the company narrative around enterprise mobility management instead of devices.

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Does BlackBerry have any real staying power? That question hung over the smartphone maker after a sluggish first quarter that was supposed to benefit from new product launches. Analysts are likely to question BlackBerry's ability to recover.

Thorsten Heins, CEO of BlackBerry, tried to recast the company narrative around enterprise mobility management instead of devices.

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And there was a good reason for that pitch from Heins. BlackBerry's first quarter missed on multiple metrics as the company's revenue and smartphone shipments failed to live up to expectations. What's most worrisome for BlackBerry is that analysts were expecting a solid quarter based on channel fill.

The company reported a first quarter loss of $84 million, or 16 cents a share, on revenue of $3.1 billion. Adjusted loss for the first quarter, which excludes charges, was 13 cents a share. Wall Street was looking for earnings of 6 cents a share on revenue of $3.36 billion.

Earlier: BlackBerry Q1: Recovery, turnaround not going so well  

Meanwhile, BlackBerry shipped 6.8 million smartphones in the quarter. Wall Street was expecting about 7.3 million smartphone shipments. Of that first quarter sum, BlackBerry 10 shipments were about 2.7 million. BlackBerry also had 72 million subscribers, but won't disclose that tally going forward.

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Here's the problem: If BlackBerry can't nail a quarter that was supposed to be powered by the Q10 and Z10, what will future quarters look like when the company lives and dies by sellthrough to users?

Heins's chore on the earnings conference call was clear yet challenging. All Heins had to do was get folks focused on the long run and emphasize that BlackBerry is about more than devices. Heins then plugged BlackBerry's enterprise roots and its BlackBerry Enterprise Server. The company will continue to roll out its BlackBerry 10 platform and BlackBerry Enterprise Server 10 is expected to gain some traction. However, it's unclear whether BlackBerry can be that "vibrant player" Heins needs the company to be.

Heins's argument boiled down to a few key quotes from the conference call:

We are five months into our platform transformation that we anticipate will drive future Smartphone devices, greater enterprise efficiency and new mobile computing opportunity for many years to come. We've never been a device-only company, as we are also running a global secure data network and services business, and we don't plan to run the company with a short-term, device-only strategy. What is exciting about BlackBerry today is that we're getting very comfortable with who we are as a company and where we will fit in the market.

Translation: Hey, don't get obsessed with Z10 and Q10 — especially if they don't sell all that well. It's early and most of our coin is made on the enterprise side anyway. We're going back to our roots.

The BlackBerry 10 smartphone portfolio is just starting to fill out. We're only five months in and it has achieved significant numbers of technical acceptances globally. The current and upcoming product in our portfolio will also allow us to address different market tiers. Our goal with our Smartphone portfolio is to have no more than six new devices in the market at any given time. This targeted approach to devices will allow us to efficiently establish and differentiate BlackBerry 10 based on features such as user interface, our iconic QWERTY keyboard and our secure enterprise productivity strength.

Translation: The portfolio is important, but Heins noted that the Z10 and Q10 are also about emerging markets, which are still buying BlackBerry 7 devices. The numbers back Heins up a bit. You can't necessarily judge BlackBerry entirely by the U.S. By region, BlackBerry's fate increasingly relies on Europe, Middle East and Africa. That region showed strong sales growth from a year ago. In the first quarter, EMEA revenue was $1.34 billion, up from $1.03 billion a year ago. Asia Pacific also showed a revenue gain. However, North American and Latin American sales fell from a year ago.

While the enterprise environment requires a longer sales cycle than consumer-only-focused devices, the successful adoption of BES 10 remains an important driver for future unit sales and service revenue opportunities. 60% of BlackBerry Fortune 500 customers have already ordered, downloaded or installed BES 10. And in another way, we look at the strong interest in BES 10 by a vertical market demonstrating the broad enterprise appeal of our platform. Based on third party sources ranking size of companies by industry, BES 10 has already been ordered, downloaded or installed by three of the top 10 companies and leaders in hospitality. 4 of the top 10 companies in retail, 5 of the top 10 financial institutions, 3 of the top 10 companies in construction, 4 of the top 10 companies in communication, and 6 of the top 10 companies in healthcare.

Translation: Wall Street needs to focus on BlackBerry's enterprise and bring-your-own-device management potential.

We are also targeting new services in consumer, starting with leveraging BlackBerry Messenger. Our approach to growing BBM cross-platform is an example of the service revenue opportunities we can capitalize upon with our technology and innovation.

Translation: BlackBerry can play prosumer services too.

What's unclear is whether or not BlackBerry can convince people that its enterprise strategy has legs. Perceptions about BlackBerry's enterprise mobility fate largely rests with IT deployment cycles, which take time.

Topics: BlackBerry, Mobility, Smartphones

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20 comments
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  • Nice

    Thanks for the briefing and translations :)
    Cheers!
    SinfoCOMAR
  • Half right

    He's half right.

    Ditch the hardware, develop a Blackberry App for IOS. Android, Windows Phone, $5 a month, and smell the same coffee that Good Mobile Messaging guys are serving. Give kids a free Lite 'in' to Blackberry with a limited client for Nintendo DS, PS3, XBox360, iPod Touch, and do a deal with Amazon to include if for free/half price on 3G Kindles.

    Have Blackberry made any profit on hardware in the last 5 years ?

    The money is in BBS backend and monthly subs.
    neil.postlethwaite
  • Dead Man Walking

    Yeah, it's the enterprise and emerging markets, cuz that strategy worked so well for us before our new phones. That's the ticket! I'm dating Morgan Fairchild.
    Vabraxys
    • You had me at Morgan Fairchild :-)

      :-)
      omdguy
  • Wall Street needs to focus on...

    BlackBerry's enterprise and bring your own device management potential.
    Seriously? I'm sure BB would like that but Wall Street needs to focus on their top line, their bottom line, and their future viability for market share growth. And that's exactly what Wall Street is doing and why BBRY is down 27% so far this morning.
    Johnny Vegas
  • tough quarter

    BlackBerry needs to focus on services, auto systems and software.

    Personally I think they should get away from devices but then again, Microsoft has done that and has seen trouble with some handset makers to the point where if Nokia pulled out and went Android they would be in big trouble.
    kooool1
  • too late

    Android and IOS7 is bigtime into enerprise features as well as messaging. Blackberry needs to bring out the real Next Generation Smartphone, then the rivals will follow their lead, like it is suppose be.
    Dave Hargraves
  • Fork

    Stick it in...
    NinjaZX7R
  • Sorry, Enterprise market is also already gone BB!

    Relevance of BES 10 will continue to fade away as there are much better featured and priced software available on the market. For eg. Microsoft already has robust support for BYOD in Windows 2013 server built in plus host of other enterprise features with much better pricings than ridiculously priced BES 10.

    Win 8 and WP 8 devices have built in hardware based encryption than what BB can offer with software based secure communication which is breakable.

    BB will become totally irrelevant in a couple quarters. Ba bye BB, nice knowing you!
    msunda
    • totally agree

      well said windows phone ios and android will be the dominant 3 in the smartphone market by the end of the year
      ITGuy000
      • Nice try.

        Attempting to put Windows phone on par with Android (~58%), and Apple (~38%).

        But if we compare BB (~1.5%) against MS (~2%), now there's a battle.
        I'd put my money on both going extinct.
        anothercanuck
  • Should Blackberry should have seriously considered Windows Phone OS?

    I can't help but think BB should have gone with Windows Phone OS when they were approached by MS. I say be solely on the enterprise strength of both BB & MS. If they had done so, they would have had devices on the market a long time ago and may have been much stronger particularly in enterprise.

    By choosing to develop their own OS, I think the missed a window of opportunity (no pun intended) as it would be difficult with a new OS and limited resources to mount a strong challenge to MS for 3rd place.

    They could have differentiate the devices in the very manner that Nokia is doing with their own application hub on windows phone. Even Nokia is making a play in enterprise and with success; I don't see how BB would have failed in that market.
    Kerwin Ellis
    • Windows also was meant to be the life-belt ...

      ... for dying Palm Inc.
      Sadly it turned out to be only clutching at straws.
      hopper.kiel
  • @ Larry Dignan

    This graph - " You can't necessarily judge BlackBerry entirely by the U.S. By region, BlackBerry's fate increasingly relies on Europe, Middle East and Africa. That region showed strong sales growth from a year ago. In the first quarter, EMEA revenue was $1.34 billion, up from $1.03 billion a year ago. " - is not complete as noted in an earlier statement. Consumer channel fill continues to use the older RIM devices in these regions. So revenue increase is not due to new smartphone unveiling but due to older device inventory clearance.

    Their only real revenue increase or stagnation in a few quarters will come from new version update of BES server product. But this product now competes with Windows Server 2012. I would think even RHEL Server new revision should have new features soon to help it compete it against BES 10. Essentially Blackberry has no new revenue increasing or profit generating products starting next quarter Q3 2013. Their annual revenue will ultimately collapse to $3 billion or even $1 billion by end of Q4 2014.

    Yahoo and Blackberry are two companies that would have benefitted enormously from an acquisition by Microsoft. Had Microsoft been allowed to acquire RIM in 2008 or 2011 (when they approached them together with Nokia), then things may have been different for them now.

    Too late and what a pity!

    RIP RIM. I mean RIP Blackberry. Premature RIP that is.

    I am still waiting on this list of companies to go belly up since I called it out first on Zdnet two years ago -
    #1 HTC
    #2 Nokia
    #3 Motorola
    #4 Sony Mobile
    #5 Blackberry (finally going down, next stop bankruptcy or acquisition by Huawei or bake sale of BES to Microsoft)

    Apple, Samsung, Huawei, LG, TCL, Micromax and Karbonn are the only real winners of the smartphone market. Not Microsoft. Not Google. And definitely not the above companies which will all be shutdown or be bankrupt or split up by end of Q4 2014.
    calahan
  • Last Gasp?

    I have to agree w/Ninja - I've heard this refrain quite a few times. And when English needs to be re-translated to help normal humans understand corporate babble speak, it just says that whatever is getting said is gibberish. The numbers don't add up nor do the trends in mobile. BYOD and offloading of operational expense dollars for telecom and data to employees are huge for cash strapped firms. Does Blackberry really think any company is going to line up to pay more data center dollars? Really?
    Kuffy01
  • roll out...

    they need to roll out more devices; platform is good but hard to compete with one device...
    silviustd
  • BES 10.1

    BlackBerry has one big advantage and that’s his NOC. When you look at the new BES 10.1 platform you see why all communication between devices (BB, iOS, Android) can be routed and secured all company content over that NOC you just has to open one port and all is secured. That’s a big advantage to other MDM vendors. BES 10.1 is at this moment one of the best MDM solutions I have seen and I did a study about more as 15 solutions in the last year.
    Also the QNX software on the devices is an advantage as it is use in a lot of other appliance what makes it possible to communicate in simple way with Cars, home systems, ect.... . That’s also one of the reasons why BlackBerry is talking about mobile computering and device are no longer the main business. I have seen already demo's about the mobile computering and it is really amazing. You will see that this platform will come also to all other main device OS.
    I want also to put some questions about figures on device shipments all figures talk about residential sales and not on professional. When you look at mobile provider data on devices used you see complete different figures. I give one example on Europe.
    Android 47%
    Apple 23%
    Blackberry 19%
    Nokia Symbian 7%
    Windows CE / 7 /8 4%
    So my point is that BlackBerry has taking a new direction and that will take some time to be deployed BES 10.1 and BlackBerry 10 devices are only a small part of it. I am sure thy will come back.
    u56482
    • BlackBerry use

      BlackBerry still has over 50% market share in some countries.
      bb_apptix
  • 1st Quarter - Huh?

    " If BlackBerry can't nail a quarter that was supposed to be powered by the Q10 and Z10, what will future quarters look like ?"

    The Q10 was not available in 1Q13. I got one of the first AT&T Z10s, and it shipped on 21 March, hardly enough to make a 1st Quarter dent.
    bb_apptix
  • freelance eng.

    ummm all of Blackberry's rivals are into enterprise mobility big time , Samsung's claims that their knox features surpasses Blackberry enterprise security features 10 fold and Apple is probably not far behind thoses numbers. Blackberry need someone in their that has innovation and creativity skills.
    Dave Hargraves