Does BlackBerry have a chance at a comeback, or will the company fall further to become the next great Canadian tragedy?
Time will tell, but thanks to its new-found strength in apps, impressive devices, e-mail superiority, unwavering commitment to security and strong position to benefit from the growing world of connected devices, I believe it has a fighting chance.
In the flurry of noise, it's easy to lose perspective of the subtle repositioning of BlackBerry as an Android device. The recent arrival of the Amazon App store is the catalyst that will address concerns about the availability of common apps.
Mark Twain famously said that history does not repeat itself but it sure does rhyme. The arrival of the Amazon App store preloaded on each Passport and Classic device is reminiscent in certain respects of the historic August, 1997, deal that saw Microsoft Corp. invest $150-million (U.S.) to save Apple Inc. from bankruptcy, and even more importantly, promised a working version of Microsoft Office for the Apple operating system.
This subtle development ended up having significant ramifications as it removed a critical barrier to user adoption and heralded the true comeback of Apple.
(Microsoft exited its position in Apple in 2003. Had it held its ownership, today that stake would be worth over $30-billion.)
The more obvious evidence of a resurgent BlackBerry can be seen in the device user reviews of the Passport and recently launched Classic.
Online reviews in Canada are quite strong with most comments at Best Buy, Future Shop, Telus, Rogers and Bell rating the device five out of five stars. Both devices only recently launched in the United States at AT&T on Feb. 20.
Interestingly, the biggest complaint is lack of supply. Despite management repositioning the company toward software, a winning product cycle is upon us.
Meanwhile, Amazon has officially taken the lead as consumer content curator for BlackBerry users. It makes perfect sense when you consider the massive effort it takes to gather content from music, television, film and now applications – each industry with its unique dynamics creating a very complex task to manage.
Yet the company's own app store, BlackBerry World, persists as a niche as the certification authority for applications that won't steal from you or your network. Certification from BlackBerry Guardian, which checks apps for malicious software of privacy concerns, will be a stamp of approval and this will be worthy of the minimal effort for serious enterprise app makers.
The Amazon and BlackBerry brands together have a nice synergy when it comes to consumer and enterprise applications' credibility. BlackBerry is not compelled to do a deal with Apple because users can bring their iTunes content over to their BlackBerrys, although apps are not transferable.
We live increasingly in a 140-character, Snapchat, WhatsApp, BBM quick-messaging society. But among the best-paying users, a legion of executives, bankers, lawyers, accountants, venture capitalists and government leaders universally agree that e-mail is the common language of business.
While it's obvious that the keyboard is an archaic user interface system, the more important focal point among loyal users is the importance of messaging. In this area, BlackBerry reigns king of all devices.
The BlackBerry e-mail system is consistently rated the best of all its competitors. And it is a well-chosen aspect of software to have technical and brand leadership.
The BlackBerry system is so secure that sovereign nations have asked carriers to combine the device with Microsoft software as a backdoor to get access to PIN messages, which would otherwise be completely anonymous.
The embarrassing 2011 launch of the PlayBook tablet without an e-mail client was partly due to the difficulty the company had in modifying its own hyper-secure system to send the same messages to more than one device.
With messaging systems exposed to government eavesdropping, BlackBerry on-device encryption is a big deal. If the information is not encrypted on the device, it's not really secure.
The Internet of Things (IoT), or the proliferation of connected devices, will bring a geometric increase in the complexity of the network. Cisco is predicting an expansion from 10 billion devices presently connected to the Internet to 50 billion connections within the next several years.
Many of the new connections will be machine or sensor-based. This presents a new complexity of network management. In particular, if mobile enterprise software is a security risk, then IoT network security concerns are much worse.
IoT will be a security nightmare and BlackBerry is positioned to secure all smart devices connected to the network. I expect its massive network operating centre will resurface as the cloud services platform to the IoT network, including competing smartphone players.
A solid product cycle is a precursor to increasing sales. Yet restricted supply and a shift in device revenue recognition adds some risk to the current quarter.
At the same time, overall revenue quality is increasing as enterprise recurring revenue grows as a portion of sales.
Opinions are generally negative as seen by the increasing short interest as a percentage of daily volume. And for good reason. In the first quarter of 2009, BlackBerry enjoyed 55.3-per-cent U.S. market share. Over the past six years, this market share has eroded to a paltry 0.4 per cent worldwide, based on IDC data.
Revenue at its peak includes $4.5-billion in device revenue per quarter – now the expectation is a tenth of that number.
While expectations are low, it's also easier to impress, and the company is no longer expected to go bankrupt. I expect quotes calling for the death of the company will soon be replaced with comparisons to other Android vendors.
BlackBerry is now hitting software targets and the dramatic shift in leadership has been well received by analysts. While regulatory hurdles persist, management is no longer an impediment to a sale of all or part of the business.
Once the company stabilizes its decline and is viewed more optimistically, I expect we will better appreciate some of its prized assets.
Aspiring immigrants to Canada are told of how the BlackBerry is a made-in-Canada success story. Having survived to fight another day, we wait to see if the BlackBerry cycles back to relevance, or falls to the annals of lost opportunity, competing with the Avro Arrow as a symbol of wasted innovation leadership.
Ray Sharma is executive managing partner of venture capital firm Extreme Venture Partners.
Disclosure: The writer owns call options in BlackBerry Ltd.