Comeback kid BlackBerry aims high but will it succeed?: Page 2 of 2

Making sense of BlackBerry’s strategy

For his part, Chen told journalists at its recently concluded BlackBerry Security Summit in London that the past three and a half years have been tough going for the company but it now has a strategy and an execution plan that are starting to match-up to what he believes is the key to unlocking the company’s No 1 value – that of a leading cyber-security software company.

“When I first showed up [at BlackBerry in November 2013], virtually all the analysts had written somewhat detrimental or negative things about us as a company and rightfully so as it’s their job to do that,” he said in his keynote address at London King’s Place.

“I appreciate it. But after these years, we’ve really turned things around and at least some [analysts’] perception is that they understand our company.”

At a 45-minute press briefing following his keynote, Chen expanded on what were his priorities at the time for the company, noting that these include building one [specialised segment of the business] at a time.

“We knew we had to focus so we picked highly-regulated industries as the market [for us to build on] and a selected group of verticals,” he explained. “These include the financial services industries (FSI), healthcare, legal and public sector and we proceeded to build a go-to-market strategy around that with a direct salesforce.”

Asked by DNA what other priorities he has for Blackberry going forward now that he has publically declared that the company is “out of danger,” Chen boldly said that the other broad strategy is for the company to expand its channels and alliances in order to grow its business.

“We gotta expand our channel partners, technology solution partners, related to QNX and enterprise apps, and this is something we are not going to take likely,” he stressed.

“In the past, the emphasis was on what the next frontier for smartphones was, which is great as we are very proud of our heritage, as BlackBerry has embedded a lot of technology into it.

“We continue to license this to those who want to build handsets [such as TCL, BB Merah Putih and Optiemus] and we do believe we have the most secure Android platform around,” he claimed.

“But we need to get out of the smartphone business, to move away from hardware to software, and for BlackBerry to get back on the positive track, customers need to see the value add that we provide today.”

Chen said he loves to talk about BlackBerry’s legacy but conceded that merely doing so isn’t going to help the company.

“I love to talk about BlackBerry, but that can only go so far. We have to move away from this and I’m so glad that our new strategy is starting to resonate,” he said.

Chen also revealed that many have asked him to change the name “BlackBerry” as it pivots away from being a handset maker, something he said he was unwilling to do.

“People have asked me to change our name from BlackBerry to something else, but we’ve not done so,” he argued. “Our consistency in getting our message out there is starting to take off and this narrative change is helping our business.

“We’re turning a good result, we have good margins, we have great software and services numbers, year-over-year growth, and we have profitability across all segments and reasonable cash in the bank (US$2.5 billion).

Still a great brand

Echoing Chen’s thoughts on not changing the BlackBerry name was BlackBerry’s chief operating officer Marty Beard (pic, above), who believes that the brand should be used even more going forward.

Arguing that the BlackBerry brand has always been associated with security, productivity, professionalism and business, he said, “We did a brand analysis when I joined in 2014. What we found out blew me away, that is, how well known the brand is [still amongst enterprises] so there is no way that you would not want to leverage on the brand.”

Asked how true this was given that many consumers today consider BlackBerry a “dead” brand, Beard conceded that the wider public may think so, but was quick to argue that there are three tiers of people BlackBerry needs to convince.

“The perception is like a pyramid and at the top end [smallest segment of the pyramid], are executives of enterprises and businesses who know we’re still very focused on the enterprise.

“The next group is businesses in general, and for this we have sales persons who are going out to talk to people and educating the market that we’re not selling hardware but software.

“And the bottom of the pyramid [the largest segment] we need to get into the small and medium enterprise (SME) and consumer space, and for this, the best advertising ultimately is good results. We’ve had fantastic results and we have been executing on the turn around. That is totally getting out there more than any TV Spot can do.”

That said, Beard also revealed that BlackBerry will start advertising again, noting that it would need to shift people’s minds away from the company being a handset maker to a software provider.

“We have to constantly hit that group through direct contact, digital advertising, physical advertising, speeches, blogs, social, basically everything we call the marketing mix.”

Beard said the company needs to keep executing well on that vision, so eventually, the vision will become real.

“The challenge is to let people know every day, this is what we do – security. It’s going to take years and every day until people understand that we’ve pivoted from being a hardware handset maker to one that is doing security software, and that our products are in a car, rather than being in a handset.”

Analyst views

Counterpoint Research’s Shah (pic, above) believes that BlackBerry is essentially on the right track for recovery and that its hardware and IP licensing revenues for devices is at a US$200 million run-rate and will boost margins for the company.

However, he warns that it has to do more than rely on this as it needs to grow beyond just doing that, noting that BlackBerry is now just a US$1 billion business per year and it remains to be seen how it can scale up from this point.

“With growth of ‘enterprise of things’ and security being the elephant in the room, BlackBerry has a unique opportunity to power and secure cloud, middleware, applications, communications and endpoints.

“Furthermore, with QNX, BlackBerry is well positioned to cash in on growing connected car space targeting applications from telematics, ADAS (advanced driver-assistance systems), infotainment to acoustics and cluster along with security layer across all these feature sets,” he argued.

Shah also said BlackBerry needs to continue to invest in security and next generation technologies such as blockchain and device, cloud-level cryptography solutions once Chen has a stable balance sheet.

“I’d expect research and development (R&D) investments and acquisitions in this area. Connected cars is another area in which it will need to consistently develop and striking partnerships across automotive value chain players is key.

Asked what other challenges BlackBerry will face going forward, Shah said, “Retaining good talent and capturing immediate opportunities in front of BlackBerry to sell its core solutions across different private and public-sector entities will be key to keep revenues coming for future investments.”

Tomorrow: A candid conversation with BlackBerry CEO John Chen, and where he sees BlackBerry going forward.

Edwin Yapp reports from the BlackBerry Security Summit in London at the invitation of BlackBerry Ltd. All editorials are independent. He is contributing editor to Digital News Asia and an executive consultant at Tech Research Asia, an advisory firm that translates technology into business outcomes for executives in Asia Pacific.

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