[ToniCipriani]

I posted this over at the Priv thread, but I figured it might be worth discussion here:

I have been thinking about this after the Re/code talks. Yes, they should focus in security and privacy, but not in the way they are marketing it right now. Or more so, what they are doing in actions is correct (i.e. "phasing out" BB10 in favour of Android, increased focus on software and MDM), but the way they are spinning it is wrong and they need to clarify it.

BlackBerry's biggest profit comes from the MDM business, hence the "security focus". Even more so with the recent acquisition of Good, this would bring in a good market share for that. The model should be that the centrepiece is, and should be, BES. Android, iOS, BB10 phones are all clients connecting to this, and this includes the Priv. This is what John Chen meant by "they can secure any smartphone", and that is with BES.

Here is one fact: BB10 is "not doing well" in the traditional "smartphone market share" sense, and the way investors are seeing it. It's not gaining market share, because it does not have the smartphone ecosystem most people are expecting. No matter how you spin it, it has BlackBerry World, Amazon Marketplace, Android runtime, whatever. It simply doesn't. Not to say BB10 is completely useless, it certainly isn't and it's still technologically advanced with the Neutrino core and efficient UI design. These are BB10's core competencies. It is better to reduce investment in a sense to keep trying to push BB10 head to head with the mass market smartphone systems. Keep it in lights on mode with maintenance fixes and incremental feature updates, and sell it to people who will buy it and does not care about apps (i.e. government departments or enterprises that needs absolute security) at a higher profit margin. Mass market simply does not care about this type of security and want apps, and will not pay for it. This is where BB10 "failed".

Hence Android in this particular market makes much more sense, because this is what the average market wants. However I do not agree with BlackBerry's current pitch by selling the Priv as a privacy and secure phone front and centre. Inherently using any smartphone (this includes BB10) with any public cloud ecosystem, you already lose some security and privacy, so the grsecurity and BlackBerry Safeguard are only enhancements really in my mind. True security is end to end, not just the phone you are using or whatever enhancements it has. They should focus more on the productivity aspect. Focus more on the keyboard, which is unique in the overall market, maintain the look and feel of BB10's productivity aspect of the BlackBerry Experience Suite to create another unique selling point. The big if is, if you want true security and privacy, you need BES for the Priv to run on top of. THAT is were the security aspect of the Priv, for it to be a supporting "secure" product.

In a nutshell, break this security focused business by market, or "levels of security" you can say:

BEST: If you want top end security, BB10 plus BES is what you want. End to end encryption, QNX Neutrino core, and maintenance only focusing on security over features. This is for absolute secrecy, for running your own mail servers and your own cloud. Tinfoil hat privacy nuts are also welcome to set up their own mail server, BES and use a BB10 phone in their own cloud. Just don't expect app support and be prepared to pay a hefty hardware price without those "cool stuff" you see from the mass market phones.

BETTER: For the average BYOD enterprise that needs security for corporate or regulatory reasons, you can choose the Priv or any smartphone of your choice, plus BES. But by choosing the Priv you also get enhanced (not top end) security with grsecurity kernel and faster security updates to Android, as well as the BlackBerry Experience Suite for its productivity over other phones. Market this as a whole package.

GOOD: Mass market individuals and small business owners can buy the Priv and use it as a productivity phone, that would be sugar on the top for the handset business. Security features should not be the main focus for this. grsecurity, BlackBerry Safeguard, and faster Android security patches provides some basic security as a minor selling point, but it's more of a productivity phone for this market. They don't care about setting their own mail servers for starters.

In other words, reposition BlackBerry's core competencies to maximize the potential for profit. And finally, on top of that you have QNX for the automotive and IoT side. BB10 would also be supported through ongoing development of Neutrino, but it is "dead" as a mass market smartphone system.

This way BlackBerry as a whole can support a healthy balance sheet, and the only way I can see how BlackBerry can support the hardware business.

[cgk]

I disagree with none of that - I'm going to present an alternative scenario about what I think is going on but think your scenario is likely strong:

1) I think Blackberry have worked out that the market for the type of end to end secure communications represented by bb10+BES is actually pretty small (relatively to the overall market) - and that the pricing to make it sustainable with low numbers is prohibitive*

2) Tied to that they have a lot of data about how many Android/iOS devices they are securing via BES

3) The biggest worry given how small the market is for end-to-end therefore is that one of the android players cracks "good enough" and collapses what is left of their secure market

4) The Priv therefore is to address the fact that BB10 doesn't sell and the fear of 'good enough' android. I'm not sure Chen really cares about security beyond currently its his own card.

5) If priv is successful well and good but if not, it's actually a demonstrator to the rest of the Android OEMs that BBRY has the expertise to harden Android and as Chen said at Code Mobile, they sell that to other android players.

6) BBRY then (if priv fails) sticks to security but with a bigger emphasis on working with Android OEMs to provide services to them.

So the Priv might actually be highly successful for BBRY even it is a sales flop.


*(Chen has already hinted at this by having a target of 10 million BB10 devices to breakeven but now five million with android in the mix indicating the vast difference in cost supporting the two OSes)

[nt300]

They are not going to stop BB10, so can we put that to rest. Thinking otherwise is simply lying to yourselves. JC said he's dedicated to BB10 yesterday, today and tomorrow, ND in the foreseeable future. Because no other mobile OS offers better performance, productivity, privacy, security. Only BB10 offers this.

Rocking a Z30

[nt300]

And the reason why they only sold 800K BB10 phones is because JC is releasing the wrong BB10 phones. People want high end full touch BB10 phones not physical keyword phones.
So JC failed. Release a Full Touch BB10 or a Priv version and see BB10 sales increase to 1.5M+. With the right carrier support and backed marketing.

Rocking a Z30

[ToniCipriani]

And the reason why they only sold 800K BB10 phones is because JC is releasing the wrong BB10 phones. People want high end full touch BB10 phones not physical keyword phones.
So JC failed. Release a Full Touch BB10 or a Priv version and see BB10 sales increase to 1.5M+. With the right carrier support and backed marketing.

Rocking a Z30

BlackBerry Leap. And as it stands no carrier will support BB10. And to add to the point, 1.5M is NOT sufficient to sustain the business, Chen already said that.

[cgk]

They are not going to stop BB10, so can we put that to rest. Thinking otherwise is simply lying to yourselves. JC said he's dedicated to BB10 yesterday, today and tomorrow, ND in the foreseeable future. Because no other mobile OS offers better performance, productivity, privacy, security. Only BB10 offers this.

Rocking a Z30

They lose money on every single handset, Charles Arthurs reckons its about $100 per handset and that sounds about right to me - BB10 has already ended deep-freeze with only security patches on the horizon and most of the developers let go - that doesn't happen to non-zombie OSes. If Chen is so committed to BB10 - what's the next handset? Where does he mention that there will even be a next handset? The answer is he doesn't.

[ToniCipriani]

They lose money on every single handset, Charles Arthurs reckons its about $100 per handset and that sounds about right to me - BB10 has already ended deep-freeze with only security patches on the horizon and most of the developers let go - that doesn't happen to non-zombie OSes. If Chen is so committed to BB10 - what's the next handset? Where does he mention that there will even be a next handset? The answer is he doesn't.

Well, I wouldn't completely rule it out, just that it won't be easy nor the way most on this forum would expect. Like I said, consumer market for BB10 is dead, but not BB10 itself (this is what Chen means by they stand behind BB10, there is still value in the product). If a big contract comes along to take an off the shelf phone and rebuild it for BB10, e.g. a certain military/government contract needs a rugged BB10 phone, that currently doesn't exist. Just buy the overstock from Samsung for the Galaxy Rugby, then build BB10 for that, for example. I don't see why BlackBerry wouldn't do that, if the contract covers the upfront cost of development of the drivers and everything, since Chen said that's what's stopping BB10 development of hardware.

It would however be more cost efficient to take the current overstock of BB10 phones and use them if there are no additional requirements beyond what the current stock can provide.

In the business world, never say no to a potential client.

[ToniCipriani]

I disagree with none of that - I'm going to present an alternative scenario about what I think is going on but think your scenario is likely strong:

[redacted]

Well actually I would say our plans are on a similar track, but yours adds a dose of risk management what-ifs to the plan.