BlackBerry should sell its phone unit and focus on enterprise software

BlackBerry is not a very well-liked company on the stock market. Its stock is hovering near yearly lows. This works out well for the company from an employee compensation perspective. The company is buying back shares for employee share purchase purposes. The company’s turnaround plan entails growing software revenue and selling devices profitably.

Despite innovative designs and a niche market for secure devices and a physical keyboard, BlackBerry might be better off either selling the devices unit or building a joint venture with a bigger firm. The company already cut operational costs related to hardware. It offset manufacturing some of the devices with Foxconn, and has a joint development agreement with Compal and Wistron, two Taiwanese firms. To accelerate sales, BlackBerry needs significant boosts in ad spend. The company’s biggest problem is that few customers are pitched (through advertising) the reliability and productivity offered from the BlackBerry 10 phone as a viable alternative to Android and Apple’s iPhone.


Samsung is frequently mentioned as the company that would buy BlackBerry. Samsung’s motivation for taking over the devices unit would accelerate its move into the enterprise market. The Korean conglomerate would need BlackBerry to guarantee support and development for the operating system. This would position Samsung as a device supplier for security in the enterprise.

The MDM (mobile device management) market is crowded. VMWare, Citrix,  Microsoft, IBM, Apple, and MobileIron are only some of the firms that offer MDM solutions. BES 12, the enterprise mobility software solution, already supports secure device management for Android and Apple devices. Samsung’s ownership of the devices unit would improve the company’s profitability in smart phones. Apple earns most of the profit in smart phones, even though Samsung has a bigger global market share. More recently, Samsung cut the prices of its S6 and S6 Edge, due to weaker than expected sales.

Samsung Knox
(Image: Samsung Knox).

Weak sales for Samsung’s Galaxy are due partly to the company removing an SD card slot and making it impossible for owners to remove the battery. Even so, diversifying the lineup of smart phone products through the acquisition of BlackBerry’s devices unit would make even more sense. Samsung could further cut down the number of Android variants, focusing only on the Galaxy, Edge, and Note. On the enterprise side, the Passport and Classic would appeal to the mobile worker. Samsung could probably end development of touchscreen-only devices, since that would overlap with the existing Samsung lineup.

Free from its devices unit, BlackBerry would run more efficiently as it focused on enterprise software. Its acquisition of WatchDox will broaden the feature list in the company’s offerings. Software quality for BlackBerry’s add-ons would improve. BBM is less refined than before. Although BBM Protected is a nice feature, BlackBerry cluttered the core, free app with extra features. The navigation is also less simplistic than it once was. This will delay BlackBerry’s goal in making $100 million from the division.


In the automotive sector, BlackBerry may concentrate its efforts on the QNX software. The hacker breach of Fiat Chrysler’s Jeep should remind the world the importance of security in software used in cars.

For now, BlackBerry is committed to selling and developing phones. This means consumers and business will only get incremental design updates. The Passport Silver Edition is nice. Passport as a mainstream device would be nicer, for both BlackBerry and its new owner.

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Jim Love, Chief Content Officer, IT World Canada
Chris Lau
Chris Lau
In search for alpha. Telecom, media, technology. Social media. Financial Markets. Real-Estate Agent. Seeking Alpha Contributor. Toronto, Ontario ·

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