Once more unto the breach, dear friends, once more,
Or close the wall up with our English dead!
In peace, there’s nothing so becomes a man
As modest stillness and humility,
But when the blast of war blows in our ears,
Then imitate the action of the tiger:
Stiffen the sinews, conjure up the blood,
Disguise fair nature with hard-favoured rage.
Then lend the eye a terrible aspect;
Let it pry through the portage of the head
Like the brass cannon. Let the brow o’erwhelm it
As fearfully as doth a gallèd rock
O’erhang and jutty his confounded base,
Swilled with the wild and wasteful ocean.
Now set the teeth and stretch the nostril wide,
Hold hard the breath and bend up every spirit
To his full height. On! On, you noble English,
William Shakespeare, Henry V, Act III, Scene 1
Last Friday’s earnings report certainly provided a lot of fodder for the negativists. But it once again proved that BlackBerry’s goals and focus are definitely out of alignment with those of the market analysts. It adds overhead to executing on a turn around with a public company. Why did they miss the somewhat artificial “expectations” of analysts? A few obvious ones:
- Carrier launches of Q10 sales in the U.S. were delayed beyond the quarter end. This is the one product form factor that the market readily identifies BlackBerry with.
- Unexpected withholding of $72 million of service revenue by an unpredictable loose canon South American government
- Retail store visits and parts order information from vendors is not an indicator of actual revenue recognition; they are definitely not in time sync with revenue recognition.
The good news: cash rises to a new high; revenues are rising as are unit sales.
The bad news: BlackBerry is no longer providing two key metrics: BB10 device sales breakout and number of users. Getting to an operating break even in the short term is a challenge.
However, at this point BlackBerry continues to be a company in transition; there is really no historical or market data for analysts or anyone else external to BlackBerry to base any claims on. Hugh McLeod describes it very graphically in his recent Gaping Void cartoon: “Portrait of a Sale”. On the other hand BlackBerry needs to “keep moving” internally … rallying again to the challenge of “once more unto the breach”.
Where does BlackBerry go from here?
If I sensed one message coming out of the analyst call it was “Focus”:
- It is clear that BlackBerry management is going to “stay the course”, becoming even more focused on BlackBerry 10 and its existing customer base market demands. They are not going to be distracted by stock market volatility and critics’ “instant solutions”.
- Recall there are many successful startup companies who stayed a course and combined their vision with market feedback and user experience to eventually become successful.
- We know that Heins is not a fan of doing a tablet; the support runout announcement for PlayBook was not a surprise. There was obviously no business case for another tablet. (More in a follow up post)
- Announcing a new BB7-based device says they have market information and customer feedback looking for ongoing acquisitions of the most recent OS7 devices. I know of one enterprise customer who has just signed a contract with their carrier/ISP to continue using OS7 devices for the next couple of years. Three other points:
- There are various markets in, say, southeast Asia where any BlackBerry is the leading product. At a recent local event a lady who had just returned from India came up to me to mention that BlackBerry is a status symbol in India.
- BlackBerry is supporting OS5/6/7 devices for the BBM Channels beta. I see lots of feedback from their users pointing out issues that would be expected in a beta. And they support BBM Voice calling on these devices.
- You cannot ignore an element of your legacy business where there are at least prospects for a sustainable ongoing profit. Basically both are business decisions based on the potential market for the relevant device.
Bottom line: BlackBerry’s total focus is on BlackBerry 10 and extending its reach onto other devices, such as the automobile and healthcare markets. Leadership requires both focus and passion; it requires staying a course not governed by three month deadlines. Clearly the current C-level team is on a mission to create a mobile computing platform that is unique, sustainable and profitable. At the same time they need to support their legacy customers where the product currently has strong sales and the prospect of taking the customer eventually to a BlackBerry 10 platform. It’s a transitional period that will last for at least a couple of years.
(Recall Playbook has about 500,000 users vs over 60 million with an OS7 device.)
But what would help BlackBerry become more successful?
A few observations from my own perspective:
- Carrier sales reps at the retail level are either uninformed or not motivated to promote BlackBerry. It’s too easy to make the iPhone or Android sale.
- End users are having difficulty transferring from their previous device and getting set up, especially if they had been synchronizing with Outlook via the BIS server algorithm
- Or often I find I am pointing out basic features, such as how to use the camera’s features, including Time Shift
In today’s socially networked world it’s all about engagement. Engagement with consumers, engagement with carrier customer sales and support reps and engagement with enterprise IT departments. Sales aids and user guides over the Internet are definitely useful resources. But two aspects of marketing related engagement come to mind, based on my past experiences dealing with retail distribution channels:
- Getting focus and mind share with the retail sales and support reps. While training videos and collaterals are available using the Internet, there still need to be activities that capture the eyeballs, mind share and attention of the individuals reps. In-store beer and pizza training sessions, distributor/carrier road shows, incentive rewards were all part of the equation when it came to selling PC hardware and software 20 years ago; why should it be any different today? At some point they need at least one personal one-on-one contact and training with a live BlackBerry representative; then they remember. Technology changes; human nature does not.
- Supporting a new user experience. The “Keep Moving” focus is at odds with the targeted user’s need to adjust to the new gesture and touch-based experience (even on the Q10) as seamlessly as possible. They need more interactive help in an easily digestible format.
- When migrating to a BlackBerry 10 from a legacy device they need to be able to not only bring up Outlook synchronization via MS Exchange and BES Servers but also achieve synchronization for prosumer and consumer users (who formerly used the now legacy BIS route). While recently resolved by upgrades to BlackBerry Link, it was a major contributor to “stop moving” when transitioning.
- You only have one shot a this “keep moving” target customer; fundamentally they are very busy and resistant to any peripheral changes in their activities. They don’t want to spend time finding issues and, eventually, deciding to return product out of frustration; they can deal with a short learning curve but not an extensive one.
Bottom Line: Marketing needs to step up their approach to retail representatives and provide tools that help users transition more seamlessly with easily absorbed training collaterals.
In my experience, there was a time when everyone looked at “enterprise” markets as the killer business. But the challenge has always been to get through the lengthy sale process of enterprise adoption. It means focusing on IT and communications managers as well as C-level executives to agree to adoption; it’s a “team” decision. It’s a long process – anywhere from a few months to years (look at how slowly Microsoft Windows upgrades are adopted at the enterprise level).
With over 60% of Fortune 500 companies evaluating BES 10 and a migration path, we should not only see a breakout of BES 10 installations (with their highly secure support of iOS and Android devices through Secure Work Space) but with no specific time frame. It would probably would also drive significant numbers of BlackBerry 10 device sales. I am aware of one major multi-national who has put all their BlackBerry purchases on hold while they transition to BES 10 but it will take a few months to cover their worldwide locations.
In the normal progress of a product, BlackBerry is devoting significant efforts to upgrading the Operating System. From one employee’s BBM Channel we know there is a OS 10.1-MR mid-summer update coming. OS 10.2 is probably due at some time later in the fall. This is standard practice in the evolution of a product; BlackBerry’s challenge is to get these out in a timely manner and to figure a way to remove some of the hurdles to carrier adoption (especially in the U.S.) Unlike the evolution of Microsoft Windows over its initial eight years, we cannot wait for a “version 3.1” before getting viral market traction.
While BlackBerry 10 has had the fastest ramp up of applications, there are still some popular apps that need to appear. While I don’t have any great desire for Instagram and Netflix, they are certainly near the top in popularity. Some application developers are starting to build an appreciation of the benefits of native apps (Songza and WordPress) and many Android apps are being ported successfully (Skype, even in Preview). Many developers also want to see the user volume grow yet some BlackBerry developers are seeing significant revenues relative to their iOS and Android versions. It’s a challenge to the developer relations team but with the experience and relationships they are building and their ongoing training and developer support centres, the next year should see significant growth not only in popular applications but also in native applications that take full advantage of the BlackBerry 10 OS.
As Henry V said “Once more onto the breach, dear friends.” Stay the course with more focus; add in some marketing activities that involve a more personal approach, build the enterprise base and continue the aggressive approach to developers.
“Stiffen the sinews, conjure up the blood.” “Hold hard the breath and bend up every spirit to his full height.”
Chris Umiastowski, CrackBerry.com: Is BlackBerry stock now at rock bottom?
Full disclosure: The author has a small holding of BlackBerry shares. But he also has iOS and Android devices in order to experience a cross section of the smartphone and tablet market. These observations are based on publicly available information combined with his own past business experience at senior management levels in high technology markets. His main interest is in seeing several thousand jobs maintained in not only the Canadian economy but also in BlackBerry organizations around the world.
Given that BlackBerry stock has been somewhat volatile for the past few months I can only say check with your investment advisor before taking any action. These posts are for information purposes only.