BlackBerry's Story Is Far From Over
Some experts have been predicting the death of BlackBerry for the last few years, yet the company has managed to survive, and to an extent, reinvent. Once the market leader and a pioneer in the smartphone business, BlackBerry's global market share has dwindled, currently standing in the low single-digits.
Technology is BlackBerry's core strength
The company has always had cutting-edge technology, evident from the fact that it has one of the most coveted patent portfolios in the smartphone business. The technology's security, flexibility, and user friendliness are unique, differentiating it from the competition.
One of the most well-known BlackBerry users, President Barack Obama, admitted that he was advised to use a BlackBerry due to security reasons. Although the Pentagon recently approved five Samsung devices running on Google's Android OS, there are significant concerns about data security on other Android devices.
The Mobile Device Management, or MDM solution, BES 10, is highly flexible and can manage multiple devices running different operating systems. The BlackBerry-owned QNX platform is also a symbol of versatility, running applications in the fields of automobiles, health care, and defense. The recently announced Project Ion, which marks BlackBerry's foray into Internet of Things, is also powered by the QNX platform. Even the new BlackBerry OS10 has been developed from the ground up using the QNX platform.
OS10 is a user-friendly operating systems that provides an amazingly accurate typing experience on a virtual keyboard. It also has one of the fastest Internet browsers; New Relic analyzed more than 16.8 million page loads between October and November 2013, and BlackBerry 10 devices topped the charts. It's No wonder the company still has a large, loyal fan base.
BlackBerry's dismal performance over the last few years has been due to poor management decisions and an inability to predict and deliver what the market wanted. BlackBerry has always been run by good engineers, but poor management professionals. However, things have been changing since John Chen took the reins.
John Chen -- the savior?
Previously, John Chen turned around Sybase and sold it to SAP for $5.8 billion in 2010, more than six times its value at the beginning of his tenure. One of the first things he stressed after joining BlackBerry was to focus on the company's core strengths -- security and enterprise solutions. Keeping with that strategy, BlackBerry realigned its existing business into the devices business, enterprise services, QNX embedded business, and messaging.
This change allows BlackBerry to provide focused attention to the individual business segments, unlocking their value. The sum of the parts is sometimes greater than the whole, which seems to ring true for BlackBerry. If QNX, its mobile device management business, patent portfolio, BBM messaging service, and the device business are valued separately, the sum could be higher than BlackBerry's overall market capitalization.
The devices business has been losing money for quite some time, so Chen decided to outsource device manufacturing to Foxconn. Chen's strategy has minimized inventor risk, passed on the costs of device manufacturing, and allowed BlackBerry to focus its resources on BES, the BBM messaging platform, and its QNX-embedded software.
As a result, BlackBerry reported lower-than-expected losses in the last quarter of 2014, although eroding revenue continues to be a concern. The tide, however, seems to be changing, at least in a few markets.
Are device sales picking up?
Although IDC forecasts that BlackBerry will have only 0.3% market share by 2018, recent data published by iQmetrix, suggests that BlackBerry device sales in the last six months might have been better than expected in North America.
Also, the recently launched Z3 sold out in Jakarta on the first day of the launch, and pre-orders also sold out across Indonesia. Although there is no way to confirm the number of devices that were available on launch, Chen seemed confident about Z3 sales during an interview with CNBC. A recent Nielsen On Device Meter survey also suggests that BlackBerry is the strongest brand in Indonesia.
BlackBerry still has a long way to go, and marketing needs concentrated effort. BlackBerry has been poor at effectively marketing its products against giant competitors such as Apple, Samsung, and Microsoft. Apart from being a great product, one reason Apple's iPhone has achieved cult status is due to the company's amazing marketing strategies. There is no point in building a good product if consumers are unaware of it.
The bottom line
BlackBerry has all it takes to tick in this highly competitive environment. With focused effort, the company can successfully realign itself as a leading enterprise mobility player, given its roots in security and mobile device management.
BlackBerry is in a position where it can leverage its first-mover advantage with Project Ion in the enterprise IoT space.
The stock, currently trading near $7.78, is at historic lows. Is it a good contrarian buy? The Q1 results are around the corner, and it will be interesting to see if BlackBerry manages to beat Street expectations and set the tone for a buy.
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The article BlackBerry's Story Is Far From Over originally appeared on Fool.com.Saurav Chakraborty has no position in any stocks mentioned. The Motley Fool recommends Apple, Google (A shares), and Google (C shares). The Motley Fool owns shares of Apple, Google (A shares), and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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