Analysis Last year we invited you, as a thought experiment, to value BlackBerry as an oddball cluster of startups – and now it seems the company has taken our advice to heart. It forms the heart of its strategy: the once tightly coupled divisions are free to compete – even if it means taking business off each other.
It also means playing down the "BlackBerry" brand, executives told us in briefings this week. But BlackBerry is reassembling the divisions in quite an interesting way – with its own private network in many cases providing something others can’t, and that translates into a lot of convenience.
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“BlackBerry customers were like a little lost platoon that’s been left out, and was running out of ammunition,” when the new management headed by turnaround artist John Chen, arrived a year ago, BlackBerry’s global enterprise chief John Sims told us.
BlackBerry ploughed on, investing $1.5bn annually into R&D and ignoring the pundits who advised a rapid breakup of the company, which comprised a private secure network (the “NOC”, or Network Operation Centre), management server software, and a beleaguered devices unit. Analysts concluded that because mobile users fetched email directly rather than by a proxy, the NOC should be divested. In fact it has turned out be useful for new services in some subtle ways.
The software house that BlackBerry R&D built
At last this month, the R&D bore fruit. Eyebrows were raised, though, when along with the flood of announcements alongside the expected BES12 were a wide range of value-added services. BlackBerry now wants to raise $500m of revenue getting an enterprise software business off the ground (from $250m now) and bolt-on goodies including BBM Meetings, Blend, Secure VPN and a clever virtual SIM for enterprises.
This means playing down the BlackBerry Brand, John Sims, global enterprise chief and former SAP executive told us.
“It’s a work in process to rehabilitate the brand as a cross platform brand. We did that at the start of the year as something to work on.”
So BES isn’t called “BlackBerry Enterprise Server” any more, just BES. Likewise BBM. All slides must demonstrate the cross-platform nature of the services and offerings.
Treating divisions like startups meant they were free to strike their own deals – the most eye-catching being the Samsung Knox partnership. The result is that Samsung has the “most manageable” Android device offering – doing secure boot and app containers – while BlackBerry’s server does the management. Previously, the proposition was that for a secure work/personal partition you needed both a BB10 device and the BlackBerry server.
Executives admit the first meetings with Samsung were “frosty” as the Korean giant viewed BlackBerry with suspicion.
Similarly, the devices unit opened up the management APIs so that other MDM software, not just BlackBerry’s, could do the device management – benefiting rivals such as MobileIron or AirWatch.
Our secret weapon: a network
We outlined the range of new goodies here – a long list – and it is striking how many use the unfashionable NOC in some small but important way. BBM Meetings simplifies the cumbersome steps required to set up or join a conference call (voice or video with screen-sharing) into one or two simple steps. This uses standard calendaring software on the client. The NOC allows "push" notifications to be sent to the participant and opens up the secure channel. It isn’t hard to imagine interest for this for execs visiting China – where eavesdropping is routine. BlackBerry is pricing it aggressively, at $12.50 per user per month.
Similarly, the new BlackBerry VPN is much more power efficient than a keep-alive VPN, because it can use push from the NOC, so the phone itself is the token. It also uses the NOC for security, “as a bouncer at the front door”. And owning a network means the enterprise’s app catalogue can be pushed down. And thanks the NOC, authentication via the new VPN Authentication offering is a simple Yes or No choice for the user.
It’s handy having your own network.
The virtual SIM, acquired with Movirtu, is another useful and well-implemented feature. It separates voice and data traffic on single SIM devices into two virtual devices, each with their own bills. Switching between them is trivially easily on an Android device, via one tap on the Notifications shade. It operates at the switching level and is completely transparent to the user.
But will the numbers add up?
The question is whether enterprises will be lured by the offerings, which represent marginal income – a few dollars per user here and there, as add-ons to BES. (See the UK price list here).
Sims is confident that with 70,000 accounts out there, some will, and BlackBerry has set the aggressive goal of doubling enterprise services revenue to $500m by FY2016.
Currently the services side relies on legacy NOC service revenue from the era when carriers hooked consumers and business customers up to BIS, for around a fiver month, via the SAF or "Subscriber Activation Fee". It was a nice deal for both partners, but one that has been in sharp decline as punters moved away from BlackBerry. (There’s a decent analysis of this Tarzan rope-swing manoeuvre, here).
One thing’s for sure: BlackBerry doesn’t expect revenue to come from MDM (Mobile Device Management) alone, as it thinks this has become commoditised.
“MDM is a minor feature of what we do,” Jeff Holleran told us. “None of the MDM guys make money – Good pulled an IPO, Mobile Iron lose money, and Airwatch’s numbers are pretty ugly,” says Sims.
Oh, and Microsoft’s coming. ®