Analysis

BlackBerry prepares for software-only future

Cliff Saran

John Chen (pictured), the man who turned Sybase around, is now at the helm of ailing mobile device company Blackberry. Can he do it again?

When Chen took over Sybase in 1997, the enterprise software company was facing difficult times, with its market share being eroded at the top end by Oracle and at the bottom by Microsoft.

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Sybase not only survived these difficult times, but under Chen’s leadership was sold to SAP for $5.8bn in 2010.

Key to his success was identifying an untapped opportunity within Sybase’s portfolio – that of mobile data.

It all began in 1995 when Sybase acquired software tools company Powersoft, which had previously bought a mobile database developer called Watcom in 1994. The Watcom software became the foundation on which Sybase, with Chen at the helm, forged ahead in 2000 into the uncharted waters of mobile data in the enterprise.

Clearly the BlackBerry board is holding out for Chen to repeat his previous success. Thorsten Heins will step down as CEO, and Chen will serve as interim CEO until a suitable replacement is found.

Barbara Stymiest, chair of the BlackBerry board, said: “I am pleased that John Chen, a distinguished and proven leader in the technology industry, has agreed to serve as BlackBerry’s executive chairman.” 

His role will involve leading the strategic direction, strategic relationships and organisational goals of BlackBerry.

Software and services

“Given what has happened to BlackBerry over the past six months, Thorsten Heins had to leave," said Gartner research director Roberta Cozza. "Under his tenure as CEO, the company introduced things too late and it saw very little uptake of BB10 devices.”

Cozza said there is a lot of uncertainty over how Chen will take Blackberry forward

"Given Chen’s background in software and the enterprise, it would make more sense for BlackBerry to focus on wireless applications and services rather than hardware," she said.

This is already starting to happen, at least in the consumer market, with the availability of Blackberry Messenger (BBM) on iOS and Android.

Enterprise smartphone

Cozza expects BlackBerry will make a strategic change in direction to become a services and application business. "As a hardware supplier, BlackBerry’s future looks very bleak. Its share is declining and under pressure from a consumer perspective," he said.

BlackBerry’s unique selling point used to be secure push email for enterprises. It still has a strong presence in enterprises where security is paramount, but its demise mirrors Dell and HP’s challenges in the PC business. All three companies have struggled with the advent of bring your own device (BYOD).

Industry commentators have even suggested that BlackBerry would make a good fit for Dell, which is no longer in the smartphone business. The PC makers are selling Windows desktops, laptops and tablets alongside Android devices. Neither currently sell smartphones.

The jury is out as to how Microsoft’s acquisition of Nokia’s handset business will pan out, but both Dell and HP have multi-platform strategies, so there may be an opportunity for Chen to offload the device business to a major PC manufacturer. 

Given Michael’s Dell’s recent comments about the freedom to act without shareholder approval, Dell is perhaps in the best place to take over the BlackBerry device business should Chen wish to sell it. 

Analyst 451 Group expects the BlackBerry device business to be worth just $400m, should a buyer not be found quickly.

Mobile device management

As the BYOD trend pans out, the three main contenders in the smartphone operating system (OS) market will be Android, iOS and Windows Phone, which leaves little room for BlackBerry devices. 

But experts say BlackBerry will hinge on BlackBerry Enterprise Server (BES) and device integration. Spanish bank NCG Banco has recently adopted BlackBerry software for mobile device management (MDM).

With Chen steering the company, it would seem that BlackBerry will soon be looking to shelve its device business to focus on software and services

“The capabilities and ease of use of BlackBerry Enterprise Service 10 (BES10) will allow us to effectively apply our new mobile strategy, which includes more personalised management, improved efficiency and reduction of costs,” said José Manuel Valiño Blanco, assistant general manager of systems at NCG Banco. "The BlackBerry solution provides the necessary flexibility that an IT department needs to support a mobile environment."

BlackBerry’s Secure Work Space software provides a container, which the company says can simplify the management of all devices from its single console within BlackBerry Enterprise Service 10. Secure Work Space is available for iOS and Android.

In a report entitled BlackBerry should step away from its hardware business, 451 Group research director Chris Hazelton noted that focusing on the software market, in particular the enterprise mobility management market, brings BlackBerry squarely in the sights of players such as AirWatch, Citrix, Fiberlink, Fixmo, Good Technology, SAP and MobileIron. 

“As the market moves forward with a focus on applications, BlackBerry may need to acquire technology – a driver for the rumoured acquisition of OpenPeak,” he said.

With Chen steering the company, it would seem that BlackBerry will soon be looking to shelve its device business to focus on software and services. 

Chen will need to convince the company’s enterprise customers that BlackBerry is still the best software for secure mobile data. Along with rival third-party MDM software, Microsoft is clearly not standing still, as there are MDM capabilities in Windows Server 2012 R2.


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