Nothing sparks a heated debate quite like the mobile platform business.  It’s not like it’s hard to understand why either.  With some of the largest companies in the world seemingly competing directly for consumer smartphone market share (billions of devices being sold every year) the highly personal nature of such devices combined with the segregated ecosystem approach, never before has mankind had such a universal subject of differentiation fueled by the connected nature of such devices on a global scale.

Of course, BlackBerry has been doing this from the start.

The top two players in the mobile platform game have been releasing their own hardware for a while now; Google seems committed to its self-branded Nexus phones, and of course Apple is heading into its 8th year with the iPhone. The competition has recently become much more direct, with Microsoft now releasing its own Windows Phone 8.1 devices, and might even be more so in the future with Samsung’s efforts to move away from Android as much it possibly can with Tizen.  Of course, BlackBerry has been doing this from the start.

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When it comes to just consumer platforms though, the ones to beat are Google and Android.  The emergence of Android and iOS have completely dominated the market, now with a combined 96.4% of the market share, as BlackBerry has been left with only 0.5% of the platform market share alongside Windows Phone with just 2.5% according to IDC.  An extra 0.7% is attributed to other platforms which have been omitted from the figure below.

 

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Fig 1: Smartphone Operating System market share of the top in Q2 2014 according to IDC’s smartphone vendor market share analysis.  Other platforms are omitted (~0.7%).

In reality, BlackBerry’s business in the process of transforming from a hardware dominated business model to one that is primarily a services and software business. 

This is in large part to the huge number of manufacturers using Google’s platform.  These comparisons seem to conclude that BlackBerry is finished as a company, yet this assertion is based on the belief that BlackBerry’s entire business is based on smartphone sales.

In reality, BlackBerry’s business in the process of transforming from a hardware dominated business model to one that is primarily a services and software business.  The transition is easily visible below.

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Fig 2: BlackBerry/RIM year-over-year revenue split from fiscal Q2 for 2008-2015. Source: BlackBerry Financial Documents.

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As the rapid innovation in consumer smartphone software is finally slowing down, BlackBerry is leading the way when it comes to innovation in the enterprise space. 

BlackBerry’s CEO John Chen has repeatedly made clear that he is focusing on BlackBerry’s traditional domain of expertise: enterprise, government, and business solutions.  Mr. Chen also expects revenue from software to really gain steam.  This isn’t just talk either.  New software like BBM Meetings, Enterprise Identity, VPN Authentication, Project IonBlackBerry Blend, ability to utilize BES 12 to manage QNX enabled devices like cars, nuclear power plants, thermostats and more, and potential licensing deals with other companies are all possible new, lucrative revenue streams for BlackBerry.  As the rapid innovation in consumer smartphone software is finally slowing down, BlackBerry is leading the way when it comes to innovation in the enterprise space.  This is a market that Google and Apple have yet to adequately tackle.

…BlackBerry is now re-positioning itself to gain from the success of Apple and Google regardless of BlackBerry’s position in the consumer smartphone business.

This transition is real and it’s happening at an increasing rate as BlackBerry’s consumer hardware business is expected to become a niche market for the short term.  While Google is taking over the mobile world with its operating system, and Apple maintaining its significant position as an end-to-end smartphone ecosystem provider, BlackBerry is now re-positioning itself to gain from the success of Apple and Google regardless of BlackBerry’s position in the consumer smartphone business.  Even Samsung, who easily doubles Apple in smartphone sales volume, has now partnered with BlackBerry for their KNOX and BES 12 solutions, respectively.  Both parties have realized that it is mutually beneficial to partner with each other as BlackBerry is taking advantage of Samsung’s success to accelerate BES 12 deployment.

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Fig 3: Screenshot of BlackBerry Enterprise Software website, highlighting their goals and focus in mobile. Source: BlackBerry Enterprise Software page.

From its roots in creating the first enterprise mobility solutions, to its expansion into the world of consumer smartphones, and finally its return to solidify its position in enterprise, BlackBerry has now come full circle.  BlackBerry doesn’t need to beat tech titans like Apple and Google to succeed anymore.  On the contrary, it will stand to gain as corporate IT departments increasingly search for a secure multi-platform solution that BlackBerry is happy to provide.

Under the previous leadership of Thorsten Heins, BlackBerry was still trying to compete with Apple and Google directly with hardware like the Z10, Q10 and the Q5; all the while developing the foundations for its new software and services for multi-platform device management.  This new breed of BlackBerry smartphones were quite good as a first step towards developing the BlackBerry 10 platform, but the high expectations of the management in the hardware business were misplaced. To quote the late Steve Jobs in 2010:

“We’ve now passed RIM. And I don’t see them catching up with us in the foreseeable future. They must move beyond their area of strength and comfort, into the unfamiliar territory of trying to become a software platform company. I think it’s going to be a challenge for them to create a competitive platform and to convince developers to create apps for yet a third software platform after iOS and Android.” -Steve Jobs, 2010.

Looking back, he was absolutely right about BlackBerry having to become mainly a software platform company, but it wasn’t clear just what market they should compete in.  BlackBerry never designed their phones to be media consuming, game playing, and photo sharing powerhouses. Once Apple and Google stepped in, it was only a matter of time until the consumer market would turn away from BlackBerry.  Yet, this shouldn’t be seen as a blow to the heart of BlackBerry.  The definition of “platform” is very different for enterprise and consumers, and software isn’t as unfamiliar to BlackBerry as Mr. Jobs has asserted.  The consumer space, which can be seen as temporary yet incredibly lucrative digression for BlackBerry, was really Apple coming into its own.

Fortunately for BlackBerry, the market has never looked more promising.

It wasn’t until John Chen was appointed CEO, that BlackBerry really found itself.  Mr. Chen brought a fresh perspective to a company desperate to understand its true purpose, and also was the first one who saw the writing on the wall as a boon for BlackBerry.  The mobile device management business, the backbone of the internet of things, mobile communications software, and mobile enterprise devices are huge markets that are now new horizons for BlackBerry, still far out of reach for Apple and Google.  In this race, BlackBerry is out in front, and won’t need to beat the other tech giants at their own games.  BlackBerry’s true calling is, and has always been, the business and enterprise market for software and services.  Fortunately for BlackBerry, the market has never looked more promising.