Should BlackBerry Transition To Software Business?

The hardware business of the company has significantly collapsed and the firm should take measures to sustain the company's existence

Shares of BlackBerry faltered after the company announced its earnings last week. The company reported loss, which was slightly better than what analysts had previously expected. However, it substantially shied away from the projected sales devices.

There was a time when BlackBerry handsets enjoyed strong monopoly among the enterprise users. However, after Android-powered devices and Apple iPhone improved their apps for enterprise and strengthened their overall security, the fine line between professional and personal devices narrowed which consequently led Android and iOS to step into the enterprise market. The new arrivals negatively influenced BlackBerry’s shares and they declined to 0.2% from 20% between 2009 and 2015 fourth quarters.

In late 2013, when the current CEO John Chen took the charge of the smartphone maker he immediately realized that a prompt shift of business is pivotal for the company’s survival. Under the leadership of the new CEO, the Waterloo, Ontario based firm introduced cheaper devices, slashed down the annual number of the BB devices released, and at the end of 2015 brought in the strategic change of launching the first ever Android operated smartphone, dubbed as PRIV.

In the upcoming future, the company is likely to release the cheaper Android handsets having the price tag of $350 however the decision has been met with a lot of doubts and skepticism relating to the viability of the device in an already saturated market of powerful and cheap Android devices.

Through the last quarter’s conference call, the CEO opined that in order to meet the “break even” point, the Canadian firm ought to sell around three million handsets at an average price of $300 in the fiscal year 2017 – which has been commenced on March 1. I

n financial terms, it can be said that the company has to increase the smartphone revenue to $900 million by next year by simultaneously growing the revenue of $870 million in the current fiscal year. This initiative is apparently hard to achieve however, it might allow the company to grow its software business.

There are four chief elements which are likely to trigger the growth of the company’s software business: BlackBerry Enterprise Service (BES) – which controls the handsets across various platforms; BlackBerry Messenger (BBM) – a popular and secured messaging app majorly popular among enterprise users; Good Technology –a cellphone management vendor it had acquired last year for an amount of $425 million; and QNX – an operating system which controls most of the connected cars in the world.

During the last quarter, the smartphone maker released a tracking platform for the devices relating to Internet of Things in addition to five “secure enterprise mobility management suites” which conveniently integrate Good Technologies, a cybersecurity consulting service that assists the consumer in risk mitigation and assessment, and BlackBerry.

Through these services the BlackBerry strengthened its unshakable position in enterprise security and emerged from a worn out smartphone producer to a provider of such software which assist companies in controlling the Android, BB10, Windows, and iOS devices. Through these services, the company will be able to generate higher revenue for the smartphone maker.