Chris Farrer is preparing to place a big order for smartphones. That used to be a simple task for the manager of telecommunications at Ritchie Bros. Auctioneers: buy more BlackBerrys to run on the firm’s BlackBerry server. This time it’s different.
Like other organizations around the world, the Vancouver-based company has embraced a more flexible approach to putting mobile devices in the hands of employees. It recently dropped BlackBerry Ltd. in favour of U.S. mobile communications firm Fiberlink Communications to manage the auction company’s devices. Employees can now pick any smartphone they like.
For most, that means no more BlackBerry handsets. About 60 per cent of Ritchie’s 800 employees are expected to trade in their BlackBerrys in the next two years to go with Apple iPhones, while 30 per cent plan to go with Android devices. The few remaining will stick with their BlackBerrys.
“We find there’s more value in allowing our employees choice,” Mr. Farrer says. “I think it’s more positive that there’s competition.”
With revenues in freefall and suitors circling the company, BlackBerry is pulling back from the consumer smartphone market and refocusing on its roots in wireless communications for companies and other organizations. Fairfax Financial chief Prem Watsa, leading the investment firm’s plan to acquire BlackBerry for $4.7-billion (U.S.), says the company has clear advantages in the business market.
In returning to its corporate base, BlackBerry has pinned its hopes on people like Mr. Farrer – information technology decision makers in business and government that have long relied on BlackBerry for secure mobile communications.
But BlackBerry faces huge challenges as it tries to reassert its dominance in the business world. Interviews with more than two dozen IT executives, competitors, analysts and BlackBerry insiders reveal a fast-changing market where competitors are rapidly eating into the company’s core customer base. BlackBerry acknowledged the threat this month, disclosing in a regulatory filing that it is struggling to convince customers to upgrade to its latest software platform.
According to technology research firm IDC, BlackBerry’s share of mobile devices shipped to enterprise customers globally has collapsed to just 9.7 per cent so far this year from 41.5 per cent in 2010, while the combined share of Apple and Samsung has more than tripled to 67.2 per cent. Even some of its most stalwart customers – governments, banks and pension funds – are letting employees use devices other than BlackBerrys. Many customers are ordering fewer BlackBerrys than in the past. Some are abandoning the platform outright.
“It’s the hottest topic in the country,” says Brian Blumenthal, director of IT with H&R Real Estate Investment Trust. “Everybody is telling a different story” about their plans for mobile devices. “That’s a significant change from three years ago, when it was ‘BlackBerry, BlackBerry, BlackBerry.’ ”
The enterprise market is the heart of BlackBerry’s business. The company generates revenue in this area in a number of ways: corporate and government customers purchase handsets, sometimes by the thousands; big clients pay for technical support, fees to enable extra levels of security and a per-device licence fee. At the centre of this is the BlackBerry Enterprise Server (BES), which allows IT departments to manage devices connected to their corporate networks.
But rivals in the “mobile device management” industry are increasingly picking away at BlackBerry’s long-standing advantages in security and reliability.
“Almost all of our customers have said … ‘I don’t want to manage three different platforms. I’ll consolidate down to one, and take BlackBerry out of the mix,’” said Alan Dabbiere, chairman of AirWatch LLC. The company has about 9,000 enterprise customers, a small fraction of BlackBerry’s roughly 250,000 customers, but it’s growing fast. Others are waiting to upgrade their BES until BlackBerry is in better shape. Research firm Gartner has advised its enterprise customers to make contingency plans.
For its part, BlackBerry says it has a solid plan to prosper in the enterprise market.
“It’s a very exciting moment for us,” Stephen Bates, the new head of BlackBerry’s enterprise business, says during an interview this week. Mr. Bates, who previously led the firm’s European unit, is at least the fourth executive to head the enterprise unit in the past two years – a period of stagnation and erosion for what was once the bedrock of the BlackBerry franchise.