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BlackBerry is pivoting from phones to enterprise software

Head salesman talks to el Reg about shift in strategy

Interview BlackBerry’s purchase of rival Good has begun to convince people it can make the big shift from phones to enterprise software. The company’s global sales chief Carl Wiese shared his view of the post-Snowden, post-Schrems landscape with The Register.

“On conference calls last year almost all of the questions from financial analysts would be about the phones. And when people said we wanted $500m revenue from software they were crazy,” Wiese told us. “Now we’ve made that target and half the questions are about enterprise software.”

That’s largely down to the $425m purchase of Good, and its 6,200 organisations. Yet the company still has a sizeable ($2.6bn) cash pile.

“The key is the eight successive quarters of positive cash flow,” says Wiese. “We’ve funded acquisitions out of cash.”

“We’ve got debt, but it’s friendly debt.” That’s a reference to BlackBerry’s owner, a consortium led by Fairfax Financial. The consortium stepped in at the end of 2013, BlackBerry’s annus horribilis. In January that year, the company optimistically launched a new platform, at huge expense, but was faced with massive write-downs. Fairfax itself has 10 per cent of the stock, and raised debentures. Chen has hinted he could use the cash to pay off the loans.

For now, the focus is on consolidating two similar companies which were bitter rivals for more than a decade. The plan is straightforward. It will use Good for software development, and fold Good’s proprietary secure network into BlackBerry’s network. The Good Dynamics SDK which already boasts commercial apps like Salesforce and Microsoft Dynamics in its catalogue, will become the focus for enterprise app development.

To this BlackBerry is gradually adding its own acquisitions. Such as the secure document system BlackBerry picked up, WatchDox, which can geofence documents: very handy if some employee leaves a thumb drive on a train. The “crisis squawker” (there’s no better description) AtHoc which provides crisis management for emergency services, is also swapping its HazMat suite for a white collar, and will be offered to enterprises. How so?

“For business emergencies,” says Wiese. “You can issue a recall for a car, but how many of your dealers have read that email? Or issue a warning over a dangerous medicine. You really need an instant response for that,” he explained. With European cities reacting to recent terror attacks, AtHoc’s original deployment case unfortunately is stronger than ever.

After the annus horribilis, BlackBerry’s incoming CEO John Chen, the Sybase turnaround artist, doubled down on “regulated industries” – such as finance and medicine, who were BlackBerry’s biggest companies. It’s taken time to rebuild a credible strategy, as the phone side imploded in a spectacular messy fashion. BlackBerry had risen on the strength of a bundle: when businesses bought BlackBerry email in the first half of the 2000s, they were buying network access, enterprise software, and a phone.

But the bundle was coming apart in several directions.

The rise of commodity consumer data packages, enterprise email standards, and BYOB, undermined the value of each portion of the bundle. Chen’s answer was to retrench and then look for areas where to rebuild. Security was the glue that bound various parts together.

Wasn’t BlackBerry frustrated, we wondered, that outside the regulated industries, so many potential customers still only paid lip service to security? In 2013 the head of the UK’s Government Digital Service told a US conference that public services had to put “usability ahead of security” – and the audience applauded. How many cyberhacks or Snowdens would did it take?

For BlackBerry the answer to reaching this market comes through carriers. ESBL, or ‘Enhanced SIM based licensing’, has been a long-time coming. This allows a smaller business to get “pay as you go” style monthly bills covering BlackBerry Enterprise Server-based services, data and phone minutes. It first appeared at the tail end of 2014, but the carriers are only just coming on board in significant numbers.

ESBL will cover Good apps and maybe eventually more of the BlackBerry suite, such as WatchDocs too.

Vodafone and EE offer ESBL in the UK, while Rogers and Telus are just launching in Canada. Getting China Mobile on board was a big win. BlackBerry is also trying to use BBM as a platform in emerging markets, having seen me-too clones seize the consumer market. You can now use BBM for mobile payments and expense tracking in India.

Wiese didn’t think his European customers were as exposed to the mass panic in business caused by the CJEU bombshell last year, which marked the end of Safe Harbour data transfers and a frantic scramble for a successor. European clients typically handle their own routing and bypass the BlackBerry NOCs to make a direct connection, he noted.

The Article 29 Working Party, the forum of EU member states’ data protection commissioners, still wants a few things tweaked with Safe Harbour 2.0, aka Privacy Shield. ®

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