BlackBerry: Staying the Course and Transitioning to the Future

Observations from last week’s BlackBerry Annual General Meeting at the University of Waterloo.

I attended, with one of my MBA classmates who is a retired IBM employee, BlackBerry Limited’s Annual General Meeting in Waterloo whose highlights were:

  • Formal approval of the company name change to BlackBerry Limited
  • Formal approval of management’s slate for Board of Directors with three new directors, including former C-level executives at  Sony Ericsson and Verizon with their extensive mobile communications experience
  • CEO Thorsten Heins presentation on BlackBerry’s achievements of the past year and where they are going for the next couple of years.
    • followed by a Q&A with some shareholders.

Transformation.3Stage

The major take-away for me from this presentation was the importance of building up the infrastructure and customer base for offering mobile computing services:

  • BlackBerry will continue to provide BlackBerry 10 end points, beyond simply smartphones to automobiles, healthcare devices and other offerings considered as end points on “the Internet of Things”.
  • However, BlackBerry’s key goal for the next year is to build up the customer base of the BlackBerry Enterprise Service 10 platform. It’s the cornerstone to building value add for customers while building sustainable value for shareholders.
  • BYOD support is important; the launch of Secure Work Space supporting management of iOS and Android devices is critical to building an enterprise user base. Whereas previously RIM had seen other smartphones as competition, BlackBerry’s new management team recognized a significant opportunity for leveraging their existing carrier-embedded network operations infrastructure.
  • While providing secure cross-platform device management services it also creates a foundation for delivering  new mobile computing services.
    • Brings the Personal/Work features and security of BlackBerry Balance to a broader range of devices. It elevates BES10 to a cross-platform offering, critical to the scaling BlackBerry is looking for and a key strategic direction for BlackBerry and its enterprise offerings.
    • The on-site demonstration of Secure Work Space on an iPad and Samsung Galaxy phone showed the simplicity of securely getting started and keeping up to date with approved applications on the Enterprise VPN, once a user has been approved for participation. Of course it also allows disconnection of devices for those who no longer have a relationship with the enterprise.
BES10.PrimaryBenefit BES10 Installations.Jul13
  • The most significant metric provided in the presentation: 19,000 – the number of BES10 installations ordered, installed or downloaded.
    • It’s not simply a precursor to how many potential BlackBerry 10 device sales it may bring.
    • The key selling point for BES10 is “enabling a company to focus on managing its business, not on managing its devices.” Reminds me of how one of my acquaintances replaced 12 employees in a larger enterprise with a fully automated way of managing password activities across a 12,000 employee company. Build services that address routine, but boring, business processes with automated processes.
    • It’s an increase of 7,000 from the number provided at BlackBerry Live in May.
    • Heins stated that this is the key metric for BlackBerry’s future growth.

The successful adoption of BES 10 in enterprise remains the most important driver for us, for future unit sales and service revenue opportunities.

  • Combined with BlackBerry’s Global Data Network, with secure connections to over 650 carriers in 175 countries, BlackBerry can move beyond offering secure communications to offering a secure mobile computing platform supporting communications and data services that build a sustainable business.

Bottom line:

  • The course is not only set for future directions but also backed by the board, who received almost unanimous support from shareholders. Forget about suggesting a sale or other alternatives. When you have $3B in cash you not only can control your destiny but also build value in the company.
  • The primary challenge and metric going forward is how many enterprises adopt BlackBerry Enterprise Server 10 (“BES10”).
  • It also explains why the company has elected to stop supplying numbers of BlackBerry smartphones sold and the size of the user base. These become secondary to BlackBerry’s primary focus.
  • Security is the stealth driver. To quote Heins at the meeting:

We all follow the news and, let’s be very, very clear, the topic of security in enterprises, the topic of privacy for consumers, is coming back full force. That is where BlackBerry 10 helps protect corporate assets and information. That is where, on the device side, BB10 also helps to keep your privacy. It matters; nobody loves to talk about it but it’s there.

  • Between Heins’ presentation and the follow up Q&A, as well as a couple of personal meetings later, it is very clear that BlackBerry management not only has its strategy but also is very aware of their challenges in returning to the mobile communications (and computing) market as a major player.
  • It all hit home when my IBM retiree acquaintance said after the meeting: “We saw the same transition at IBM 20 to 30 years ago when IBM transitioned from a hardware vendor to focus at a higher level on delivering enterprise services as total solutions”. IBM is a very different, yet successful, company today. They still offer hardware but it is secondary to, and in support of, the services they deliver.
  • The real risk for investors is not penetration of the smartphone market but rather BlackBerry’s execution on delivering these services to the enterprise market and, where feasible, on end point devices that have the potential to address both personal and work requirements on a single device.

About Jim Courtney

Bringing over thirty years' experience in the sales, marketing and management of cutting edge technology businesses.

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