Blackberry’s sole remaining selling proposition – security – has gone up in smoke with the revelation that the Royal Canadian Mounted Police has the master key to decrypt messages on consumer phones. Investigative stories by Vice and Motherboard document how the Mounties read encrypted messages, and leave little doubt that it was with the company’s active assistance…
Neither the RCMP, nor BlackBerry ever confirmed where the global key actually came from and the documents shed little light on the matter. They also didn’t deny it.
In fact, BlackBerry has recently signalled a willingness to deal with law enforcement on encryption, with company CEO John Chen writing last year that “we reject the notion that tech companies should refuse reasonable, lawful access requests.”…
Crown prosecutors pulled out a variety of excuses as to why the information about the origin of the key, and the exact nature of BlackBerry’s cooperation with the RCMP, should remain strictly private.
Enterprise customers are immune to the particular technique used. Companies that set up their own servers also set their own encryption keys, so Blackberry’s master key won’t work. That’s thin comfort, though. Blackberry uses a proprietary encryption system that might or might not have deliberately designed weak spots.
Until now, the assumption was that it was secure. There’s never any guarantees when it comes to security, but there’s also never been any particular reason to doubt Blackberry’s integrity. Now there is, and that will scare away some security conscious customers, the very people Blackberry has worked so hard over the years to cultivate.
There’s nothing harder to build and easier to lose than a reputation.
Sometimes, you just have to drink the bong water.
Finally, Blackberry is generating some buzz. The Canadian company is preparing to make and bring to market an Android powered phone, according to the Crackberry.com website. It’s a necessary step, if the company has any hope of wringing value of out the ashes of its former empire.
Blackberry is still trying to find its way in the world. Historically, it’s had three core competencies: an operating system, hardware manufacturing, and a secure platform for enterprise software. Email is the most well known example of the latter, but Blackberry also has document handling and basic security capabilities too.
The company has long said that it want its enterprise software to run on other OSes, and Android is the best candidate for that. Apple is unlikely, to say the least, to let Blackberry into the iOS ecosystem in any meaningful way.
So to generate value from its enterprise platform, it has to get into the Android world. Making a handset that integrates the Blackberry enterprise platform with the Android OS is the logical way to demonstrate how well it works, and it lets Blackberry leverage its manufacturing core competency, or at least squeeze something out of it.
You can say that Blackberry is backing away from its own OS, but the reality is that it’s declining to follow its OS into oblivion. Exactly the same thing is going on at Microsoft now, where Android is getting more attention as the company tries to position itself as a cross platform service provider.
If there’s any value left in Blackberry, it’s in the enterprise platform and not the OS or handset manufacturing.
A Holden Caufield for the 21st century.
Hollywood’s latest excursion into geekdom is Mr. Robot, a new series on the USA Network. I only saw the first episode, but the memes and tropes presented have a certain ring of truth. One of the funniest was the observation that the fastest way to identify a techno-wanker is by the Blackberry he displays…
There he is, Terry Colby, the CTO. Even though he’s the head technology guy at one of the biggest companies in the world, he owns a Blackberry. So this is it right here. But also looks like he doesn’t see a terminal very often.
He’s not a techie. He’s a moron. An arrogant moron. The worst kind.
Tyrell Wellick. I’m Senior Vice President, Technology.
Elliot. Just a tech.
Don’t be so humble. You know, I started out exactly where you are, and to be honest, you know, my heart is still there. So I see you’re running Gnome. You know, I’m actually on KDE myself. I know this desktop environment is supposed to be better but you know what they say. Old habits they die hard.
An executive running Linux with…
Yeah, I know what you’re thinking. I’m an executive. I mean why am I even running Linux? Again old habits. It’s gonna be fun working with you. I should join the rest of the group. Bonsoir, Elliot.
But it’s not just the good guys who run Linux, or so it seems at this early stage in the storyline. Wellick is the evil new techno chief at Evil Corp, so maybe guys with ties who loudly lick their Linux chops should be viewed with suspicion. Or maybe just anyone who wears a tie.
Sometimes you get the best stuff at the very end.
Blackberry unveiled a new tablet device this week, called the Secutablet. With a price north of $2,000, it’s intended for a limited market but it does show that the company finally has a plausible long term survival strategy. It’s a change of direction for Blackberry, one that executives have talked about for the past three years. Instead of making devices and operating systems, they are focusing on their core competency – security – and leveraging the brand identity that goes along with it.
There doesn’t seem to be much in the Secutablet that comes from Blackberry itself. The device is made by Samsung (which is also integrating Blackberry technology into its enterprise products), the operating system appears to be Android (although that’s still to be confirmed) and the apps, or at least the secure shell that the apps run in, come from IBM. Presumably, the secret sauce that Blackberry adds to the mix is its secure telecoms system.
That system, and the proprietary technology it’s based on, is Blackberry’s crown jewel. If they’ve finally figured out how to usefully integrate it into the devices and operating systems that have won the battle of the marketplace, then it means Blackberry has a future, albeit one’s that’s greatly diminished from the days when it was the top dog of mobile data.
The Secutablet itself is a niche device that will appeal to people that need access to very secure documents and other data. It’s a media consumption device, because that’s what tablets do well. Think of it as a substitute for paper copies of documents. I’d bet that a key feature is that a document cannot leave a device that it’s sent to (or be intercepted en route, of course), preventing unauthorised sharing. That kind of network security is an additional protection on top of the encryption and access control that any tablet could support, and it’s Blackberry’s sole remaining competitive advantage.
Some form factors just work
The hot, new innovation from Blackberry last week is a small phone with a small, physical keyboard. Sound familiar? If not, Blackberry is helpfully calling it the Classic.
There is no shortage of people – Barack Obama and Arianna Huffington included – who like the 1990s Blackberry look. It offers unique functionality and the company’s new management is happy to provide it.
When I look at new products that catch on quickly, there’s a question I always ask myself: is the success due to designers offering consumers a genuinely new benefit, a way of meeting either a preexisting or completely new need? Or have they just identified a need without completely fulfilling it? In other words, is it a bridge product that’s merely the best that’s possible now?
The Apple Newton was a bridge product, one that identified the need and temporarily filled it until a truly useful solution was developed. So did the Palm Pilot. It’s starting to look like the iPad might go that way too. But the original Blackberry design still does what it was originally intended to do better than anything else, at least for some people. Messages, calls and contact and calendar info are accessible via a pocketable phone with a keyboard that many find comfortable.
The classic Blackberry is here to stay, just like the flip phone: it’s a convenient way of putting a limited set of important functions in a package that’s small, rugged and boasts a long battery life. Few people will make it their first choice, but many will love it as their second phone, the company phone they carry for their job or the one they stuff in a pocket on the weekend.
Blackberry will never regain its former glory, but by distilling the brand down into a solid niche it’s taking the penultimate step towards ensuring it will live on in the mobile ecosystem. The final – and necessary – move will come if and when it opens up to other operating systems.
The Blackberry Passport was unveiled this week. It would be a great product, if it ran the Android OS. It’s physically unique in a useful way. The phablet form factor makes it possible to do work on it, in the classic document-centric sense. The physical keyboard will suit some people better than virtual ones, even though the layout is less than intuitive. And it’s rugged, which makes it attractive to a wide range of users, particularly people who work on their feet or outside. So long as they have a big pocket to put it in.
Unfortunately, it runs Blackberry 10. Launching an oddball form factor into a big ecosystem will sometimes produce a hit product. Launching an oddball product into an oddball niche guarantees slow acceptance and low sales figures. Anyone who buys it has to be both comfortable with the size and other physical characteristics and with the Blackberry OS. Those are fractional markets, and when you multiply two fractions together you get an even smaller number.
Corporate IT managers may love it, but they have to respond to the BYOD desires of their internal customers. That leaves the government IT market, which taken on a world wide basis is probably big enough to keep it alive. But it won’t thrive.
Roll it out as an Android device and it’s both a platform for innovative apps for field work and ironic enough to be fashionable. With Blackberry 10, though, it’s the smart phone equivalent of a Ford Taurus with the government fleet trim package: bland, work-focused and designed to look like whoever bought it was primarily worried about not getting fired.
I was dead, but I got better.
Blackberry is salvaging something out the wreckage of its mobile phone business, by porting its BBM chat service – formerly Blackberry Messenger – to the iOS and Android platforms. And it’s claiming a fair amount of success. According to a spokesman at this evening’s Showstoppers CES press, Blackberry has doubled its BBM user count – going from 40 to 80 million users worldwide – in the two months or so since it launched its iPhone and Android apps.
In the coming weeks, Blackberry plans to add a Skype-like voice service, where BBM users can talk to each other for free over the Internet. BBM’s selling proposition is that it’s secure – Blackberry still boasts a solid reputation and technology on that count – and verifiable. The service lets users know when messages have been delivered and read.
There’s no charge for either the app or the service, and Blackberry isn’t generating any other revenue with it yet. But it does have plans to eventually monetise its user base through advertising, likely via sponsored messages.
BBM is being run as a separate business. Blackberry’s new CEO has reorganised the company into four independent units: messaging, machine-to-machine services, back end enterprise services (which is also cross-platform) and its once dominant smart phone business, which now has fewer customers than BBM.
Blackberry will be an emaciated shell, but it won’t die. The hardware business will shamble along, likely for years, with slow-to-change government customers, and the other three units can usefully cherry pick Blackberry’s deep base of proprietary technology. Going forward, survival is success.
The familiar scent of Blackberries.
Wall Street investors seem happy to take what Fairfax Financial Holdings is offering for Blackberry and let the dwindling mobile phone company waft away in the wind. Subtract out the cash that Blackberry is holding, and the net sale price is about $2 billion, a sad end to a psychedelic slide that began at $83 billion five years ago.
Like Microsoft’s purchase of Nokia, Fairfax’s offer seems to be based on the chemically impaired notion that Blackberry isn’t in the final stages of a terminal crash. Fairfax head Prem Watsa babbled about “execution of a long term strategy” in a press release but, according to the San Jose Mercury News, he’s a fan of Blackberry’s two biggest and most recent flops, its new CEO and operating system…
Watsa is likely to keep current CEO Thorsten Heins in the job. He said in April that he’s a big supporter of Heins and has called his promotion the right decision. He also said he’s excited about the company’s new BlackBerry 10 operating system.
Watsa has a reputation as a savvy investor, so he might just be blowing smoke to keep the headquarter troops in Waterloo, Ontario from coming down with the shakes. There are three ways to suck $2 billion in value out of the deal: 1. sell off Blackberry’s intellectual property, 2. milk its remaining 50 million customers for whatever they’re worth and 3. try to turn it into a much smaller mobile and IT services company, providing security and backend support to other platforms.
But as it stands, Blackberry isn’t even worth stems and seeds anymore. Without a thorough corporate detox, Watsa will be just licking the ashtray.
It was a lot bigger before I took a hit.
In the week when Apple is giving its new iPhone a final bath in unicorn tears and Samsung begins a campaign to put a mobile phone on every wrist, Blackberry went on sale. And for rolling a big fat one for shareholders, CEO Thorsten Heins will get $56 million.
He’d already pretty much given up on phones. Blackberry can’t sell much of anything to anyone who isn’t already using their devices. And that group is getting smaller all the time.
Strategically, Blackberry has two assets: its intellectual property and a list of customers that trust it as a secure platform. That’s valuable to a mobile phone maker like Samsung that needs IP leverage and is looking for ways to maintain growth. Adding Blackberry’s vertical markets is a good way to do it. Blackberry has the same appeal to Apple or Google or an up and coming Asian manufacturer.
If the buyer isn’t one of the big guys, there’s room in the security sector for Blackberry’s technology. Even though it’s a fire sale strategy for Blackberry, it’s a possible path for a security middleware company to enter the mobile telecommunications space. If the operating system can be unbundled and the essential bits integrated into Android or iOS or even a new OS contender, then the buyer could hang onto at least a share of existing subscriber revenue by providing highly secure communications as an independent back-end service.
Although the obligatory words were spoken about building a market for Blackberry’s current offerings, it’s clear they’re throwing in the towel. That’s good news for shareholders who can finally hope for something better than just drinking more of Thorsten’s bong water.
It used to be bigger.
Combined, Samsung and Apple are selling about half the world’s smart phones, with 30% and 19% market share respectively in 2012 according to IDC. Much of Samsung’s growth from 19% in 2011 came out of HTC’s hide. Its share was cut in half over same period, dropping below 5% and putting it more or less in a tie with Nokia and Blackberry.
At least it was still in the top five then. Now, the most recent quarterly figures for 2013 have LG, Huawei and ZTE pulling ahead, with HTC (and Nokia and Blackberry) dropping further into commodity class. Judging by its latest competitive move, it’s destined to stay there.
This week, HTC previewed the HTC One Mini, a smaller version of its flagship phone. It’s a nice enough addition to the product range. Some consumers will like the size and feel of it. But its impact on HTC’s market position will be minimal. The HTC One Mini doesn’t offer anything new that might otherwise make it significant. Trading a smaller form factor for lower performance specs and price is pretty ordinary.
The mobile handset market is dividing into genuine consumer brands – Apple and Samsung in the lead – and generics. HTC’s problem is that it’s landing in the generic space. Older brands – Nokia and Blackberry – are still recognised, but not bought. HTC never climbed to that height, and its current marketing efforts are swamped by Samsung’s media saturation campaign and Apple’s reality distortion field.
A few tweaks to its product mix won’t build the brand identity it needs even to just get back into the top five.