BlackBerry banks on BES 10 to reverse its fortune
By Goh Thean Eu January 24, 2014
- After a slow start, momentum for BES 10 picks up
- Company admits challenges ahead, need to execute
LOSS-making smartphone maker BlackBerry Ltd believes its BlackBerry Enterprise Service 10 (BES 10) platform could be one of the keys to turn its fortune around.
“BES 10 is really continuing from what BES 5 did. Probably one of the biggest differences is that we didn’t have access to managing devices other than BlackBerry in the past. There’s never been an option for secure connectivity to non-BlackBerry devices,” said director of its Enterprise Solutions (Asia Pacific) Ian Gardner (pic).
“Now, we can do it within the BlackBerry environment. So, this poses a new opportunity for us,” he said during a media briefing in Kuala Lumpur on Wednesday (Jan 22).
BlackBerry, formerly known as Research In Motion, has been struggling financially. For the nine months ended Nov 30, 2013, the company suffered a net loss of US$5.45 billion, versus a US$744 million net loss in the same period a year ago, filings to the Securities and Exchange Commission (SEC) revealed.
“The unfavourable increase in net loss is also attributable to a decrease in the company’s gross margin, partially offset by a reduction in operating expenditures and an increase in the recovery of income taxes.
“The decrease in the company's consolidated gross margin in the third quarter of fiscal 2014 was primarily attributable to decreases in service revenue and the number of devices for which revenue was recognised compared with the third quarter of fiscal 2013,” BlackBerry said in its filing to the SEC.
During the period under review, revenue also declined by almost 30% to US$5.84 billion, against US$8.4 billion a year ago. The decline was partly driven by lower hardware and device sales, the company said.
“The company believes that the significant decrease in hardware revenue and device sales over the prior fiscal year was primarily attributable to decreased demand and lower sell-through for the company's new devices, due to the maturing smartphone market and very intense competition,” added BlackBerry in the SEC filing.
Slow start, but picking up
The BES 10, launched early last year, had experienced a slow start, the company acknowledged at its KL briefing.
“However, momentum is growing and growing. Take-up has been fantastic so far, it started to grow about the middle of last year,” Gardner claimed.
He said that Australia, where BlackBerry has a strong foothold in the enterprise market, is seeing encouraging response.
“Malaysia, for us, is always balanced. We are quite good in terms of the consumer space, but also good in terms of financial institutions and government.
“So, lots of discussions are going on, lots of customers are already in the process of migrating. But it takes a while for all the devices to move across,” he added.
Gardner said that the company has been experiencing increasing penetration in BES 10, with more than 30,000 commercial and test servers installed to date, up from 25,000 in September 2013. He also believes that the company remains the mobile device management leader with a global enterprise customer base exceeding 80,000 customers.
To ensure that the demand for BES 10 continues to grow, Gardner has a two-prong strategy. First is to convince existing customers on the BES 5 platform to migrate to the new platform. The second is to tap into the Android and iOS markets, as the BES 10 platform now can serve most Android and iOS devices.
He also said that BES 10 for Window Mobile devices is likely to be available sometime this year.
With the increasing trend of Bring Your Own Devices (BYOD), Gardner said that enterprises would need to find a way to ensure secure connectivity for their employees regardless of the mobile devices they are using.
While Gardner may appear optimistic on the company’s outlook and potential, he reiterated that challenges remain and there were areas that needed to be improved.
“I’m super optimistic. I’m excited about things like the functionality we deliver.
“We still have challenges. No question about that. We have to, and need to, execute. That’s what we have been doing every day,” he said.
Gardner acknowledged that migrating existing BES 5 users as well as penetrating non-BlackBerry device users will take time.
“In any organisation, evaluation usually that takes three to four months. If it is a larger organisation, it can take six months.
“At the same time, you have the mobile fleet, which is usually on a two-year plan. So, we are in the second half of that two-year cycle,” he said.
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