BlackBerry plea to customers: Stay with us

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BlackBerry Ltd.'s new leader made a forceful plea to its largest customers to stick with the company, despite growing evidence that competitors are eating away at what was once the smartphone maker's most dominant market position.

"Our 'for sale' sign has been taken down and we are here to stay," John Chen, the company's new executive chairman and interim chief executive, said in the letter to customers Monday, one month after Fairfax Financial Holdings Ltd. led a $1-billion recapitalization of the firm and brought the veteran tech executive aboard.

"Reports of our death are greatly exaggerated," Mr. Chen added.

The letter hit many of the same notes as a missive released under former CEO Thorsten Heins in mid-October when the company was for sale. As in the previous letter, it laid out that BlackBerry's key strategic thrust is to manage fleets of smartphones for its corporate and government, or "enterprise," customers – whether they are BlackBerrys or other devices.

But Mr. Chen's letter had more of an air of urgency, following reports that several upstart rivals have picked off many of the company's large clients. "We understand the realities of the enterprise mobility market better than anyone, and we're in the game for the long term," Mr. Chen said.

He noted that BlackBerry has more enterprise customers, more devices deployed on their networks and greater security. "We have substantial cash and are not a small [venture capital]-backed 'pure play' [multidevice management] player seeking additional funds every year."

Mr. Chen's letter "suggests that VC-backed upstarts are snatching enterprise customers away from the company," said Neeraj Monga, an analyst with Veritas Investment Research. Independent analyst Jack Gold called the letter "a good move," and said the company "needs to set the agenda on customers' thoughts, not let it be set by the many competitors who are claiming BlackBerry is dead and are picking at [its] customers."

BlackBerry dominated the enterprise market for close to a decade, managing phones for customers via BlackBerry servers installed on their premises, but its position began to slide in 2010 when Apple released both its iPad tablet and the fourth iteration of its iPhone smartphone. The tablet became popular as a workplace tool, enabling employees to carry binders-worth of documents in a handy medium, while the iPhone 4 was the first mobile device that could be run effectively from a company's server.

Many employers began letting its customers bring their own devices to work and enabled them to work on their networks, a move that saved them money and also appealed to employees who didn't want to manage multiple devices. When many of BlackBerry's 250,000 enterprise customers asked if it could adapt its offering to also manage increasingly popular Apple and Android devices, BlackBerry began to develop such a service offering, but it was delayed until this year.

Meanwhile, several upstarts, including AirWatch LLC, filled the void by offering device management to enterprise customers for their growing ranks of Apple and Android users. Despite continuing concerns that rival devices aren't as secure as BlackBerrys, large customers began abandoning BlackBerry altogether.

The company said in a recent filing that enterprise customers have been switching to its new BlackBerry 10 enterprise platform at a "slower than anticipated rate." A recent survey by Yankee Group also found that 11 per cent of information technology decision-makers preferred BlackBerry, well behind Android (45 per cent) and Apple (39 per cent).

That gap is likely to grow after Samsung Electronics, the world's largest maker of Android-based phones, introduced key new security features to its phones this fall to appeal to enterprise users. "There was a perception Android might not be secure because it's an open-source system," Dr. Injong Rhee, Samsung senior vice president and head of technology strategy said in a recent interview. "We went back to the drawing board and added security features to all layers. We are a very strong brand in the consumer market. [Customers] would like to have the same experience in enterprise."