BlackBerry – Commodities trader

BlackBerry now looks stable but commoditising fast

• Blackberry held an event in San Francisco where it unveiled the new version of its server product (BES12) and launched a partnership with Samsung for regulated industries.
• The new version of the server makes a number of meaningful improvements over BES10 that include:
  • First: Seamless support for all platforms.
  • The platform supports iOS, Android, Windows Phone, BlackBerry 10 and BlackBerry OS.
  • The ability to run both versions of Blackberry in the same place is a meaningful improvement as until now the two different versions had to be managed separately.
  • Second: The platform supports all ownership structures including: BYOD (bring your own device), COBO (company owned business only) and COPE (company owned personal enabled).
  • Third: the platform has designed to be saleable with up to 25,000 devices per server and 150,000 devices per domain.
  • Fourth: BlackBerry has placed its development emphasis on user experience, extensibility into Internet of Things (IoT) and total cost of ownership.
  • Fifth: A number of advanced features such as VPN authentication, simple and secure authentication among other features were also launched but only for BlackBerry devices.
• At the same time, Samsung and BlackBerry have jointly announced that BES12 will support Samsung Knox and that the two companies will work together to address the regulated and government sectors.
• These are two sectors where security is incredibly important and where Android’s lack of security has hampered its adoption.
• Samsung Knox is also thought to be not that secure and teaming up with BlackBerry will help Samsung penetrate this industry more deeply.
• I suspect that this relationship will be along the lines of offering a complete device and service offering for these industries.
• Here, I think that BlackBerry devices will address the COBO and COPE segments of the user base and Samsung devices the BYOD piece.
• John Chen is doing the right things to keep BlackBerry solvent but what is emerging is a vendor of MDM services.
• This is a tough and competitive landscape with Airwatch, MobileIron, Good Technology, Microsoft and a host of others all vying to manage an enterprise’s mobile devices.
• BlackBerry still has an advantage here as it has around 50m subscribers which is far more than any of its competitors and its solution is still the most comprehensive.
• However, BlackBerry is having to offer heavy concessions (EZ Pass) to keep customers happy and I fear that this segment is rapidly becoming a commodity.
• Consequently, I suspect that BlackBerry should now stabilise but the days of high margins, high growth and a high multiple are long gone leaving the shares with a difficult and uncertain future.
• I would prefer Microsoft as an investment in the Digital Work ecosystem.