BlackBerry's future rides on supporting the past

BlackBerry's future rides on supporting the past

Summary: BlackBerry is plugging "classic" devices on an older operating system and promising enterprises backward compatibility with BES12. It's a keep-the-loyalists-in-the-fold strategy until it can grow.

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BlackBerry's comeback plan depends on its ability to position its BlackBerry Enterprise Service as an enterprise mobility management tool, but the only way that effort will work is to support its installed base and operating systems the company had hoped would have handed off to its latest technology.

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BlackBerry sets out plans for BES12

Enter BlackBerry Enterprise Server 12, an effort announced at Mobile World Congress and due in November (October if CEO John Chen gets his way).

Chen's comments last week on BlackBerry's fourth quarter earnings conference call--the company reported a better-than-expected loss, but revenue fell short of estimates--highlight just how much is riding on BES12 and the company's ability to convince existing customers to upgrade to it. BES10 had a lot of interest, but companies didn't want to support two BlackBerry operating systems and the infrastructure that went with it.

With BES12, BlackBerry will offer backward compatibility, all the way to BlackBerry OS 5. BES10 required companies to support only the new platform. For good measure, BES12 will manage iOS, Android, and Windows Phone devices.

The challenge for BlackBerry is converting interest into actual deployments. BlackBerry has an EZ Pass program that allows for a migration to BES10 and then a free upgrade to BES12.

Chen explained:

BES12 highlights will include the following: We have a new architecture offering customers the option of on-premise, cloud, or hybrid solutions. Backward compatibility allows the unifications of the BES10 and BES5 deployment into a single platform and console, supporting the BES10 and BBOS device. This is huge, and when I went and talked to -- have time to visit customers, the customer likes a lot of the BES10 features, but they were complaining about having two infrastructures that they have to manage, which is the old BBOS infrastructure, as well as the BB10 infrastructure.

This is the first attempt to merge that two into one, so the customer could move on to newer technology, and yet still protect the investment they already made at BlackBerry. So I know this is huge. We obviously also enhanced the platform support for the iOS devices, Androids, and Windows Phone 8.

bes10blackerry

How an enterprise company decided that customers would want to support two infrastructures is a bit stunning, but does highlight the state BlackBerry was in before Chen's arrival.

Chen noted that BlackBerry can't really sell BES into the base that uses the BlackBerry Bold until BES12 launches.

The larger issue is whether BlackBerry is too late. BlackBerry is seeing service revenue continue to fall and Chen's bet is that BES12 will slow down enterprise defections.

BlackBerry's game boils down like this:

  • Grow with BBM and QNX so the company has positives to talk about. 
  • Offer BlackBerry classic (BlackBerry 7) devices to keep the base. 
  • Sell that base BES12. 
  • And still launch new BlackBerry 10 devices with more efficient contract equipment vendors and hope to break even in fiscal 2015, which is now underway.

Chen talked a lot of about BlackBerry "loyalists" and the company's "base." He has to because BlackBerry hasn't cultivated new customers yet. In the fourth quarter, BlackBerry recognized revenue on 1.3 million devices, down from 1.9 million in the prior quarter. However, BlackBerry has cut its inventory levels substantially.

But rest assured, BlackBerry's future is all about it becoming an enterprise mobility management company. The problem is AirWatch, under VMware, and MobileIron are now aggressively pricing to gain share.

Here's the BlackBerry conundrum:

  1. Enterprises have moved on to Microsoft's ActiveSync technology or rivals such as Good Technology as well as a host of others.
  2. Even if BlackBerry gets enterprise customers to upgrade to BES10 or BES12, it will take a revenue hit. Wells Fargo analyst Maynard Um estimates that one legacy BES5 subscriber generates $96 a year in revenue including annual support. The best scenario under BES10 would include that user paying about $72 a year. BlackBerry revised its pricing on Monday.
  3. Customers -- assuming there is interest in BES at all -- will wait for November and BES12. That reality means BlackBerry will take a few more body blows through the end of calendar 2014.

Topics: Mobility, BlackBerry, Smartphones, Bring Your Own Device

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6 comments
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  • BlackBerry 10

    BES12 is the MDM of choice for the Enterprise.

    BlackBerry 10 is what an iPhone wishes it was, and easier to use than Android. Read the DadDoes review of the iPhone 5 vs BlackBerry Z10.
    bb_apptix
    • I love my Z10, runs Android apps up to Jellybean

      It is fast, easy to use, and a great productivity tool. The browser is the the best, most compatible and very fast. It supports flash so almost everything works with it.

      QNX means there isn't much malware out there. And hopefully QNX in the automotive world begins to take on more than just running the FW for taking care of the engine but infotainment systems. Note QNX pre-dates linux and has been used for decades in the automotive industry.

      Also apps are written in C/C++ (like Microsoft but in contrast to SystemC and JAVA) which means they are fast. Very nice development environment too.

      I would love to have the Z30 though. In addition to all the Z10 supports (HDMI, NFC etc) it adds USB On-the-go, stereo speakers that may be a bit better than the HTC One. A pressure based altimeter and very long battery life. Right now AT&T doesn't offer it.

      My family has an HTC One and a Samsung Galaxy S4. From a productivity standpoint I like my Z10 but it isn't quite as good as a gaming platform. My teenagers dis the iPhone.
      MeMyselfAndI_z
  • Conundrum

    1.Enterprises have moved on to Microsoft's ActiveSync technology or rivals such as Good Technology as well as a host of others.

    Newsflash - BES 10 (and 12) also utilize ActiveSync. Good Technology was stop gap when iOS hit the enterprise. There are a number of companies moving onto better MDM solutions which include BES 10. Good Technoloy is limited in how in scales, has little to no disaster recovery capability and the user experience is dreadful. Read the App reviews. We're in the process of moving off Good as they kept adding functionality for a cost. BES 10 provides features other MDM charge for. If Good Technology was going so great they wouldn't be sending me marketing emails on "How to migrate from BES 5". A good chunk of the MDM market is still controlled by Blackberry. Companies are still deploying Blackberry while they support BYOD for other devices.

    3. Customers -- assuming there is interest in BES at all -- will wait for November and BES12. That reality means BlackBerry will take a few more body blows through the end of calendar 2014.

    I've seen a number of companies announced by Blackberry adopting BES 10. We supported BES 10 for almost a year now and have over 1000 devices deployed. Employees love the new devices. This is still a fraction of our overall managed mobile device (almost 10k) but we have no formal migration plan and also provide options to other MDM if employees wish to use iOS or Android.

    Please stop with the "BES 10 is a separate infrastructure" any sizable company with thousands of users this is a non issue. I can spin up another virtual server and SQL database in 15 mins. We also run multiple versions of many systems. No one does in place upgrades for such a critical system. BES 12 only provides a way to fully sunset BES 5 servers. Which for many companies should be decreasing as they migrate users to newer devices.

    What no one can decide is what is 20-50% of the MDM market worth? Blackberry still has strong government ties and I don't see anyone getting close to delivering secure Android or iOS unless you layer on a TON of extra solutions (and cost) for what BES 10 provides right now and for cheaper.

    EZ Pass just kicked off and you can migrate all your BES 5 licensees and get devices for little to no cost. No one is doing that. Companies should take the time to evaluate before listening to the now 3 year old "Blackberry is going out of business" line.
    MobileAdmin
  • BlackBerry 10 products are quite good

    BlackBerry's major flaw still is marketing. I have had great success with Q10 and Z30 @ work. Big hits. After brief unsuccessful Windows Phone flop.

    BlackBerry still has $3 Billion in cash, has 4 solid BlackBerry 10 phones and good BES. Supporting "classic" is a good idea, but any classic BlackBerry fan could be a huge Q10 fan, takes only a week or two to be fully comfortable with slick new phone
    HenselM
  • BlackBerry's future also depends on picking up the ad budget

    It was surprising to hear Apple spent $1 Billion in advertising last year, and Samsung, who sponsor everything including the Olympics, $4 Billion. BlackBerry still has $3 Billion in the bank after a big money losing year. BlackBerry's biggest problem is lack of awareness of a solid line of BlackBerry 10 phones. In Canada, the Z10 is free on most plans, and a step up from iPhone in many respects. A Z30 is an improved Galaxy alternative for intuitive interface and build quality. The Q10 remains the best phone in the world for compiling and replying to email and other messaging.

    BlackBerry is making great phones, the problem is most users compare the new iPhone to the Storm or other outdated weak early touchscreen or solid, but dated Bold.

    BlackBerry had best spend even 1/3 rd of $3 Billion in cash, as lack of sales will soon eat up the remainder. The Z10 is a great example of a segment leading phone from a year ago that is now just above average, and free. Pick up the ads. Show off the Z30. Otherwise, why bother creating new phones?

    Perhaps BlackBerry should also turn to old school ad media, like billboards. Small business is a great target especially for the Q10 which to me, is the best phone for realtors, those in sales, marketing etc. Perhaps if BlackBerry had spent a billion last year, they wouldn't have list a billion in cash on unsold handsets?

    The MLSE commercial is a good start. Now do more channels. Get Mike Holmes or equivalent to do commercials. Advertise on HGTV, CMT etc. Advertise on billboards. Just please go down swinging!
    HenselM
  • 50 percent of North Americans dont have a "smart phone"

    As of 2013! Half of Americans are smart phone less. When you consider how easy the affordable (free with plan) Z10 is to use, how intuitive the entry level Q5's physical keyboard is, BlackBerry is the logical first choice. Let everyday people know why a Q5 with email with their kids, work etc and a decent camera all in is a good, reliable option. Easier to use than iPhone, which everyone needs to update every year or two for planned obsolescence or just plain old break downs. The Q10 is the best built, most efficient email and messaging device period.

    Time for BlackBerry to hit up the half the market who have felt Apple was too expensive or Android too hard to learn.
    HenselM