BlackBerry – Bottom bumble

Stability buys time, but for what?

• BlackBerry has staved off the immediate threat of collapse but where it goes from here is a mystery.
• The job cuts and consolidation have created a company with $4bn in revenues, 0.6% market share in smartphones and critically one that is cash flow neutral.
• This gives it time to consider its options but hopes for its up and coming smartphones are not high.
• The BlackBerry Passport has very little to entice users other than those who have no choice where the device is handed to them by IT.
• Even in the enterprise market where BlackBerry now focuses, there is aggressive competition and I don’t think that BlackBerry’s devices are here for the long term.
• This issue is also highlighted by BlackBerry’s recent re-organisation of its key assets into a single unit called BlackBerry Technology Solutions.
• This new unit now holds the patent portfolio, QNX embedded software, the Internet of Things project and various other applications and innovations.
• The idea is to generate new revenue streams along the same lines that Nokia is doing with Nokia Advanced Technologies.
• However, the patent portfolio is not strong and QNX has a limited number of applications.
• Consequently, this looks like a division that is not going to produce the much sort after return to growth.
• This combined with a hardware business that also does not have much future leaves me wondering where BlackBerry intends to go.
• One potential direction is to use the BES server to offer mobile device management for enterprises along similar lines to Good, MobileIron, AirWatch and Microsoft.
• BlackBerry has a long history and a longer client list than many of its competitors, but this service is rapidly becoming a commodity.
• Consequently, there needs to be innovation on top to make it interesting for clients and profitable for the provider.
• Here, BlackBerry seems to be short of ideas and I am not optimistic that revenues will be able to outpace price erosion.
• Consequently, I see a period where BlackBerry bumbles along the bottom while it tries to figure out where its future lies.
• There are much more interesting places to invest in the digital and mobile ecosystem (such as Yahoo!, Microsoft and Google).