Blackberry. The No Hype Problem

Know that the right decision at the wrong time is still the wrong decision.

John Chen, Blackberry CEO.

In his post on LinkedIn Mr. Chen confirms what we already stated in our previous article. Blackberry's future will be niche. Businesses and security. Not consumers and devices.

Rational, Maybe. It's definitely not sexy and certainly not exciting. What I do know is that while there is potential in data security and device management unlike before Blackberry won't start as the market leader. Let's see how it plays out in a year or two.

The concern I have on the enterprise front is that the previous business model isn't viable anymore. Blackberry's real cash cow in the past was the subscriptions that both the users and the networks had to pay to route data and messages via BB's network. BB did the security and had the compression technology that allowed data to reach the end users. Thus they made those dumb devices "smart." However, with network bandwidth no longer a concern and the handheld devices getting more capabilities by the day there are no more dumb devices and hence no need for a middleman.

What this says is that on the enterprise front BB has no competitive advantage since everyone can make smart devices secure. For example, IT departmetns can setup their Microsoft Exchange servers and configure the phones to pull mail directly from behind the corporate firewall without going through Blackberry. This wasn't the case before because the devices didn't have the processing power and the data plans were too expensive. Today the realities on the ground are different. Without the need to route through the man in the middle that massive recurring revenue and pile of cash to invest goes away. If this plan is to succeed Blackberry needs to find a way to become as critical to the security stack as it was when it was needed to ensure those messages got delivered.

Mr. Chen, do not to suffer from the same hubris as your predecessors. The trick is to realize when it's more than hype. Remember, the touchscreens did kill the keyboard because RIM didn't believe in the hype.

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