1. MartyMcfly's Avatar
    September 22, 2013 8:51 PM

    BlackBerry Makes Risky Bet on Services

    BlackBerry to Focus on Selling Smartphone Services to Businesses

    By*RYAN KNUTSON,*CLINT BOULTON*And*WILL CONNORS BlackBerry*Ltd. begins life this week as a company focused on selling smartphone services to businesses, a risky, last-ditch bet that it can hang on to rapidly eroding ground in the market it pioneered.The plan appears to be to position the company as the go-to provider of systems to manage smartphone use for employers like the government and banks, where the need to ensure security is at a premium.That approach plays to the company's strengths in markets where it has suffered the least damage, but BlackBerry's position in the business market has eroded greatly amid gains by devices likeApple*Inc.'s iPhone. It also faces tough competition from startups and established rivals like*Microsoft*Corp.Executives responsible for buying smartphones and the software to manage them say BlackBerry faces long odds.Tracey Rothenberger, chief operating officer of Ricoh Americas Corp., Malvern, Pa., said that fewer than 500 of the 9,000 smartphones he manages for the printer and copier maker are BlackBerrys. The remainder are made by Apple or powered by Google Inc.'s Android software. "For me, it's kind of 'game over' for them," he said.Mr. Rothenberger added that BlackBerry still makes great software for securing mobile devices and that companies needing an ultra-secure environment will likely continue to value it. But he said there is nothing compelling that would lead him to use BlackBerry devices or software. "I think there is a limit to how long they can hold out as the premier secure solution in mobility," he said.On Friday, BlackBerry said it would pull out of the consumer market and focus instead on its core business and on professional customers. They "helped build BlackBerry into the leading brand today for enterprise security, manageability and reliability," Chief Executive*Thorsten Heins*said.The step makes a virtue of necessity. The company's share of the consumer-smartphone market in North America has fallen below 3%, according to technology research firm IDC, and it is taking a charge of nearly $1 billion, largely to reflect the diminished value of unsold new-model Z10 phones.The collapse of its devices business has already left the company as largely a seller of services. BlackBerry said its revenue in the quarter ended Aug. 31 would be about $1.6 billion, down from $2.9 billion a year earlier, and about half of that would come from services.An update to the firm's BlackBerry Enterprise Service enables it to support Apple's iOS operating system and Google's Android software, and it now has more than 25,000 commercial and test servers installed globally, up from 19,000 in July. BlackBerry said it will announce eight new business contracts on Tuesday.The company remains the leader in securely managing mobile devices for companies, said spokeswoman Kara Yi. "BlackBerry is much more than a device company," she added.BlackBerry still has a market share of about 38% among businesses with more than 10,000 employees, as well as more than a 33% share in government and financial institutions, according to*Steve Brasen, managing research director at Enterprise Management Associates Inc., which analyzes the information technology industry.But overall, its position with business customers has collapsed. Three years ago, BlackBerry could point to a market share of nearly 70% among business customers in North America, according to IDC. This year, that figure has dropped to around 5%, IDC says. Globally, BlackBerry's business-market share has slipped to around 8% from 31% in 2010, according to IDC.The cause is the same as in the consumer market: BlackBerry has been pushed into the corners by dominant smartphone makers Apple and*Samsung ElectronicsCo. Once consumers grew addicted to using iPhones in their personal lives, they began insisting on being able to bring them to work.BlackBerry itself recognized the threat and developed a touch-screen smartphone to combat it. Abandoning the consumer market could mean falling further off the pace in terms of devices people want to carry.Douglas Menefee, chief information officer of Schumacher Group, began allowing employees to use their own devices at work two years ago. About 100 employees at the Lafayette, La., health-care staffing firm use BlackBerrys, down from 450 a few years ago. He also supports 635 iPhones, 250 iPads and 75 smartphones that run on Google's Android software."It's been a no brainer for us to embrace a model which provides our workforce their own personal preference for their mobile devices," Mr. Menefee said.BlackBerry's position eroded in part because it was too focused on its business customers and ignored changes in the consumer market, Mr. Brasen said. When it did try to adapt with phones like the touch screen Z10, which hit the market this spring, it was "too little too late," he said. And pulling out of the consumer market now won't help as it tries to win back business customers.Larry Conrad, chief information officer at the University of California at Berkeley, which lets employees use their own devices, said he doesn't see workers returning to BlackBerrys. He says he hasn't seen any of the school's several hundred administrators using them.As BlackBerry shifts strategy, its board is looking at options, including an outright sale. A number of big private-equity firms have considered a bid over the past 18 months, but some of the industry's bigger players have taken a pass.BlackBerry is a tough bet as a conventional private-equity play because the business appears to be in a decline that shows no sign of reversing, according to bankers and private-equity executives. Private-equity firms often target companies that can be turned around through some sort of restructuring or management change and sold at a higher price. BlackBerry has a bigger structural problem. Its devices have fallen out of favor, and its prize featurea secure networkhas become increasingly easy for rivals to reproduce.Senior executives at private-equity firms that have looked at BlackBerry say its device management business could have been really valuable a few years ago but has grown less attractive as competition has grown.Private-equity firm Silver Lake, a big player in the tech industry, is among the those that have decided after casual conversations not to bid for BlackBerry, people familiar with the matter said. That isn't to say the company won't fetch a buyer for all or part of itself. Private-equity firms that specialize in distressed companies or technology companies could still see value there.But BlackBerry would have to build mobile technologieshardware or softwarethat would "reinvent mobile computing if they plan to regain the trust of the enterprise customer," said Mr. Menefee of the Schumacher Group. "I just don't see it happening."-Dana Mattioli and Sharon Terlep contributed to this article. Write to*Ryan Knutson atryan.knutson@wsj.com*and Will Connors*

    http://m.us.wsj.com/articles/a/SB100...?mg=reno64-wsj
    richardat likes this.
    09-22-13 09:10 PM
  2. qbnkelt's Avatar
    It is risky. I know my agency is doing what I thought was impossible; they're looking at going away from BlackBerry. No matter how much I stalled the process of change, in the end, I think I lost.
    09-23-13 04:16 AM
  3. richardat's Avatar
    Yes, I've said before that I'm not optimistic about their services, and that remains unchanged for me. As I always say, percentages are rather inane for this kind of thing, but somehow they seem so appealingly descriptive - I'd say:

    BBM has about a 10% chance of becoming a significant competitor to the other major message apps. It would be about 25-30, if I had confidence that BB could produce timely, reasonably bug-free software. As I said when a couple months ago, that 30% is largely due to the developing countries base, and nostalgic support from former users , still, BB being BB, and being incredibly late to the game....AND considering the plan seems unclear and seat-o-pants (uh....where does the basic revenue come from?), failure is likely.

    BB has about a 5% chance of once again becoming a dominant (or very strong) player in enterprise

    As a much, much, smaller service company they have about a 40% chance of surviving as a provider of BES-type services.

    ...and of course, as I've been saying for quite some time, there is a 0% chance of the company continuing to exist, in the way we know it as....or used to know it as.

    ....and of course, all of this is assuming no sale occurs. No way to tell what a deal would mean....could strengthen the odds of of BBM, or services succeeding.....or mean their instant elimination.
    09-23-13 04:49 AM
  4. richardat's Avatar
    It is risky. I know my agency is doing what I thought was impossible; they're looking at going away from BlackBerry. No matter how much I stalled the process of change, in the end, I think I lost.
    QB, I hope you realize when I sent you that message long ago, urging you not to stick out your neck for BB in a career-threatening way, it was only because you seem like a nice person (anyone who loves animals is OK in my book! lol), and you had said a few things like this back at the time. Now of course, I did not know anything about your work, or your position, but I did not want to see anyone go down if the outcome that I thought was nearly certain, occurred.

    They used to say: nobody ever got fired for buying IBM.....lol.....
    09-23-13 04:57 AM
  5. qbnkelt's Avatar
    QB, I hope you realize when I sent you that message long ago, urging you not to stick out your neck for BB in a career-threatening way, it was only because you seem like a nice person (anyone who loves animals is OK in my book! lol), and you had said a few things like this back at the time. Now of course, I did not know anything about your work, or your position, but I did not want to see anyone go down if the outcome that I thought was nearly certain, occurred.

    They used to say: nobody ever got fired for buying IBM.....lol.....
    I understood your intent and I appreciated it. I pushed hard to stay BlackBerry because I am absolutely certain that BES is THE absolutely BEST solution for my agency, security and logistically. However, someone has come in who outranks me and I am getting shot down. I've got nothing left, and each time a new set of news comes in about BlackBerry's financial troubles and frankly, botched execution, I lose more credibility and more bargaining power. I've lost a great deal of ground and I've become a bit of a joke with folks who want to push something other than BlackBerry.

    But that's my own little h3ll. No need to bore anyone with it.
    richardat likes this.
    09-23-13 05:02 AM
  6. richardat's Avatar
    I understood your intent and I appreciated it. I pushed hard to stay BlackBerry because I am absolutely certain that BES is THE absolutely BEST solution for my agency, security and logistically. However, someone has come in who outranks me and I am getting shot down. I've got nothing left, and each time a new set of news comes in about BlackBerry's financial troubles and frankly, botched execution, I lose more credibility and more bargaining power. I've lost a great deal of ground and I've become a bit of a joke with folks who want to push something other than BlackBerry.

    But that's my own little h3ll. No need to bore anyone with it.
    Your knowledge of Enterprise deployment and security seems unquestionable to me - I - as a complete neophyte in those areas - have learned a great deal from your posts on the subject, and your judgment has always appeared well thought out, so I have no doubt that your stance on BES was sound. It sucks that you took hits based on BB's ineptitude - but....at least you can take comfort in knowing that was completely and totally beyond your control.
    09-23-13 05:23 AM
  7. Morten's Avatar
    It is risky. I know my agency is doing what I thought was impossible; they're looking at going away from BlackBerry. No matter how much I stalled the process of change, in the end, I think I lost.
    The good thing about "change" is that it's a constant thing - so - it can - and will change again one day - Keep it up :-)

    There are no ways around it - if you need one of the best communication devices there is, cell,wifi + mail integration, - BlackBerry 10 devices are still the one to get...

    Things that we take for granted, like transitions between cell towers, cell zone and Wifi, - other devices struggle with,
    dropped calls we sometime experience - but rarely caused by the device itself, - other brands are still struggling to keep the call steady...

    -and one message to get out there - is that there are more Happy and satisfied BlackBerry10 users - than not. It is the few who scream loud who cause a lot of the negativity....

    Anyway .. #KeepMoving with #B10
    09-23-13 07:45 AM
  8. berklon's Avatar
    I don't think it's risky at all... at least not for Blackberry in their current situation.

    It's like your apartment is on fire and you're trapped. The only way out is through the window, but it means having to jump to the next building over. There's no risk because at that point you have nothing to lose. It's a last ditch effort to remain alive. That's what Blackberry is doing here - trying anything to stay alive.
    richardat, Roo Zilla and schmeat like this.
    09-23-13 08:05 AM
  9. BerryWizard's Avatar
    I think the plan is to restructure for a smaller, more manageable corporation. Unfortunately, This means, possibly, an even leaner workforce . The user base will be smaller. The revenue will be smaller.if they can make it work and focus to deliver a premium service to enterprise customers, in the mean time developing in the background software and hardware meant to the consumer, and once they are ready, that they have made back their reputation ( it say ~ 5 years ) then we can expect a comback into the consumer market. This is not totally impossible. It is also not impossible to perfectly manage a 100% enterprise oriented only company . It would be more healthy financially, this is of course assuming they can offer nothing but the best to these costumers.
    The problem with this market is that it is a small one, they don't upgrade often to the freshly released hardware.
    The good point about this market is that it's a more stable, it takes a lot for a company to switch over their entire smartphone float. Also, you can charge service fees to compensate the lack of revenue from hardware updates. This can represent even more revenue if managed properly.

    What I'd like BlackBerry to become in 5 years is what IBM Accomplished. Both companies were always the top level when it comes to Research and Development for Software. The few years it took them to put together bb10 is an excellent example. Because people were expecting it, they think this was late...well..if you look at wayyy bigger companies like Google with Android, or recently, Samsung with their new os ( not sure of the name) it took them way more time to build a complete smartphone os from the ground up. even with 10 times the resources of BlackBerry !
    So if they can concentrate on what they do best and generates revenue from service and software developments along with research and development to accumulate patents, they will be a very viable and financialy healthy company.

    Posted via CB10
    09-23-13 08:27 AM
  10. rthonpm's Avatar
    With the lack of interest from the general consumer at large, what options do they have left? There are a few parts of BlackBerry's portfolio that could help them make the change to a software and services company. In terms of the company, there are two different perceptions: consumer perception is incredibly low, but on the infrastructure side they're still well thought of in terms of security. Without the consumer base weighing them down and the chance to focus on being a mobile management company with features that Good, Mobile Iron and the like don't offer (corporate network access without VPN software, tokens, etc) there is a chance for the company.
    richardat likes this.
    09-23-13 08:34 AM
  11. richardat's Avatar
    I don't think it's risky at all... at least not for Blackberry in their current situation.

    It's like your apartment is on fire and you're trapped. The only way out is through the window, but it means having to jump to the next building over. There's no risk because at that point you have nothing to lose. It's a last ditch effort to remain alive. That's what Blackberry is doing here - trying anything to stay alive.
    Spot on. Yes, that's exactly what I had in mind when they first announced it, and I said something like "not likely to work - a couple years too late, but it's worth a shot!"

    Yes, what else are you going to do?? You are right - and I've said the same - this isn't part of some meticulous, diligently researched plan....this is leaping around trying to find any angle to pursue. Of course, that makes it all the more unlikely to work, i"m sure they themselves are not exactly sure how to monetize it, or whether any of it is viable....just taking a shot, seeing if something is there - can they get a decent base and some momentum?
    09-23-13 08:48 AM

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