In media accounts and the public’s perception, BlackBerry’s image has plummeted from one of the most reliable phones for business to being seen as simply outdated. But the September 2016 decision to permanently leave hardware production behind indicates a conscious pivot by new CEO John Chen toward software and brand licensing. As a company, BlackBerry has moved away from the mass consumer smartphone market and toward niche markets with its product offerings. The transition in the marketing and public messaging has accomplished its goals, as media outlets have mostly abandoned the narrative of the “outdated BlackBerry” and begun to look toward the company’s existing assets and future software potential.
The overarching message is clear: BlackBerry is successfully reinventing itself as a high-value enterprise services provider while moving away from the saturated general consumers’ market. The key factors emphasized during this transition are the strong leadership of CEO John Chen, BlackBerry’s emphasis on safety and security, and the brand’s experience and existing software platforms’ value in providing enterprise services.
According to a recent CNET article penned by Roger Cheng, reviving the BlackBerry brand “is the mobile equivalent of chasing unicorns…a Sisyphean task that’s gotten only more mythical with time.” The prestigious business phone brand, which was synonymous with professionalism and security in the mid-2000s, has struggled in recent years to deal with once-emerging and now-established competitors in the smartphone market – competitors like Apple and Samsung. BlackBerry was once the second-largest provider of smartphones – eight years ago roughly one out of every five phones was a BlackBerry. Today two-fifths of that same market is jointly controlled by Apple and Samsung.
According to an article in Business Insider, 2016 fourth-quarter results indicate that BlackBerry has a share that represents less than 1% of the global phone market. After revenue began to dwindle after fiscal year 2011, former CEO Thorsten Heins attempted to right the ship by continuing to improve BlackBerry’s operating system and devices, including the BlackBerry 10 OS, the Z10, and the 2010 Playbook tablet. Ultimately, the revamp proved largely unsuccessful and new leadership took over after Heins left the company in 2013.
BlackBerry’s transition to software in search of new revenue is a shift in marketing that seeks to change public perception. Current CEO John Chen, architect behind the Sybase turnaround, took over from Heins in November of 2013 and has showcased a greater willingness to adapt to the changing market by emphasizing BlackBerry’s existing assets: brand reputation, security, and licensing. Drawing on his previous experiences in the fields of hardware and software, Chen recognized the importance of specialization. After a few early hardware attempts were highlighted by similar failures like the Z3 and Priv phone with an Android operating system, Chen made the difficult decision to finally abandon hardware production in 2016 and officially pivot to software. Since that pivot, device revenue accounts for less than half of BlackBerry’s revenue, and sales of Chen’s software acquisitions are helping to close the gap: Company software sales rose from $494 million in the previous fiscal year to $640 million in December 2016. As the CEO says: “BlackBerry is no longer just about the smartphone, but the smart in the phone.”
In Rob Enderle’s article, he points out that Chen’s ability to make difficult decisions, his dedication to company transparency, and his sense of loyalty make him an attractive public figure in representing BlackBerry. Upon his arrival, Chen proved his commitment to transparency and promised to desert BlackBerry’s smartphone production if it continued down its unprofitable path. When the time came to make the unpopular decision, Chen did not hesitate to follow through.
In 2016, the company stopped producing its own hardware, choosing instead to license its brand to companies like Foxconn, Optiemus Infracom, and TCL to produce the new wave of BlackBerry phones. Now in the fourth year of his tenure, the current CEO is seeking to “stabilize the company, return to our core strength in enterprise and security, and maximize efficiencies.” Chen has made himself visible and accountable and, as a result, the new CEO has become the capable face of BlackBerry’s transition to software.
The concept of turning security into safety is a message that BlackBerry has successfully conveyed over the past six months. BlackBerry’s software has been known for its security since its heyday as the quintessential business phone. In light of international developments highlighted by the Sony email hack, security has never been more relevant or important. As Chen points out, the BlackBerry is the only phone trusted by the U.S. Department of Defense, as well as all seven of the world’s G7 participant governments. In fact, BlackBerry was one of the few networks that remained usable directly after the 9/11 attacks.
Building on its existing reputation as an industry leader in security, BlackBerry is attempting to market its new software as the standard in encryption and security. The software development kit scheduled for release this month will include tools for “building chat apps, video and voice calling, secure file sharing and sending out push notifications to mobile phones,” and it will be sold on a subscription basis.
Although Twilio, Bandwidth, and Nexmo offer many of these same services, BlackBerry’s distinguishes itself with its safety and brand superiority. In addition to opening up additional secure messaging and file-sharing technology for developers to use in constructing apps, BlackBerry offers its popular BBM messaging system as a safe and efficient alternative to instant office communication. In essence, BlackBerry’s pitch is simple: You feel safe when you use their secure products.
The final piece of the strategy is centered around BlackBerry’s existing software resources and past experience in smartphone technology. As the company’s focus has shifted to developing software for enterprises and licensing hardware to divest from the general consumer market, the functional potential of the company’s existing enterprise technologies like QNX, AtHoc, and Radar have continued to grow in niche markets. As Enderle points out in his piece, QNX is an important automotive platform dominating its market. AtHoc is an extremely useful tool in communicating and alerting during disasters, and Radar has the potential to be used to prevent future crime.
BlackBerry is also demonstrating its superiority with its mobile health social media network, which makes collaboration among medical professionals exponentially easier. The public safety software and health care reference architecture have both been extremely helpful in saving lives by facilitating ease of communication and collaboration in terms of public safety. According to COO Marty Beard, “We are constantly innovating and looking for ways to leverage our legacy and expertise in secure mobility to solve real business problems.”
In the end, successfully pivoting from hardware to software will require time to convince the public. But the new avenues the firm has opened in its strategy and software development are off to a promising start. With its strong leadership, its focus on security at a time when security is a growing concern, and its reliance on existing software programs and expertise, BlackBerry is beginning the difficult but necessary transformation from consumer hardware to enterprise software provider.