Rebuilding the BlackBerry brand

’s senior executives discuss the progress of their to rebuild the company and their brand, and where they are going on the road ahead.

, BlackBerry’s Executive Chairman and CEO

BlackBerry has come back a long way over the last three years, rebuilding itself from the maker of highly secure cell phones to the provider of highly secure software and for cell phones — among other devices. The company’s senior leadership acknowledges that they still have some distance to go to complete their turnaround. But looking forward, they see more opportunities on the landscape than dangers, and think that they are now in a much better position to take the next step forward.

John Chen, BlackBerry’s Executive Chairman and CEO, said that the issue when he took over was whether the company would survive at all.

“That was investors’ main worry — whether we would survive,” he said. “Some of them bet on us just because we were a cheap enough stock. I think that question is off the table now. The company is in very reasonable shape. We have a good ability to manage our balance sheets, and have lots of assets. I said previously that we would grow 10 to 15 per cent this year, and I still maintain we will do that. Now, to move the stock price to the next level, it’s all about continued revenue growth. I have no illusions about that.”

Chen said that BlackBerry is committed to a strategy to deliver solid long-term growth, even at the expense of making short-term windfalls to raise revenues.

“You can always get revenue by doing a bad deal,” he said. “If I’m willing to sell something worth $100 million for $50 million, I can raise revenues to make a quarter. But that has no sustainability, and you set yourself up for failure. It was a great thing to win a deal with Delphi [providing the software for self driving cars through BlackBerry QNX], but when will we see revenues from it? It will be multiple years — maybe 18 months if we are lucky, when they roll it out to their customers. But then those revenues will be repeatable over time.”

Chen said that the transition out of the low-margin hardware business is nearly complete.

“We still have a little bit of hardware — 16 million, not much left to drop really,” he said. “That business is being transitioned to licensing other manufacturers, and to royalty payments which are high margin. So we are still in the phone business, but in a different way.”

He also indicated that he expects a very healthy ratio of services to software, and to avoid the pitfall of declining services revenues in sectors like unified communications, when they transitioned from hardware-centric to software-centric models.

“The services component around software will have to be much bigger than hardware,” he stated. “The number one security breach cause at any company is from within. Part of that can be addressed with employee education processes, but part of it is also how the systems are architected together. To address these issues long-term, enterprises will have to rearchitect their application architectures and accessibility through the network or mobile infrastructures or both. That carries a lot of services.”

Chen said that much of BlackBerry’s recent growth has been driven by EMEA.

“The U.S. is likely the next area for strong growth because we are strong in regulated industries. Canada is always good because we are a Canadian company, although the size of the market limits it as a percentage of our business. In Canada, we will always have a very steady business, and a lot of people are very supportive of the brand. Some people from Toronto hate the brand though. The Globe and Mail comes to mind. I’ve been here for four years, and never had one good article from the Globe and Mail.”

Chen said that in the last nine months, BlackBerry has been hiring many people in Asia-Pacific.

“We see a lot of opportunity there,” he said. “For example, we are going into Indonesia in three different ways: with OEM partners; with BBM [service] in consumer, and we are now starting to work with the SIs that provide mobility security solutions to the government.”

Marty Beard, BlackBerry’s Chief Operating Officer, remarked how BlackBerry has been able to pivot the brand away from the declining hardware business.

Marty Beard, BlackBerry’s Chief Operating Officer

“When we had our first security summit four years ago, the questions were almost exclusively about devices,” he said. “Today there was one question which tangentially referenced it. It’s amazing because BlackBerry had such a strong brand as a device manufacturer. It’s possible that the partners we have licensed to make devices could lead to there being more BlackBerry branded devices in the future, and we are pushing very hard to sell them. But when we got out of the manufacturing, inventory and selling of devices ourselves, our balance sheet went up.”

The BlackBerry brand remains a major positive, Beard said.

“It is still one of the most recognizable brands in the world — even if it has been beat up a bit,” he said. “It’s like a political campaign. If you keep saying the same thing over and over, eventually the market will get it — if you get the results. So far, we have done all that, but there is still a long way to go.”

Beard said that the strategic objective here is to associate the BlackBerry brand with the broad security stack.

“We want BlackBerry to be recognized as an essential part of the enterprise stack necessary to secure business – in the same way Oracle is associated with databases and Salesforce is with CRM. That kind of association is the goal, and we believe that it is what is needed. It still has a long way to go, however.”

Ultimately, Beard said that they want the BlackBerry Secure branding to be the equivalent of the successful Intel Inside branding that company began in the 1990s.

“We can’t just say it ourselves though,” he acknowledged. We want to have Gartner and IDC saying it.”

BlackBerry enjoys competitive advantages in the [Enterprise Mobility Management] space, said Adam Enterkin, who runs Americas Enterprise Sales at BlackBerry.

“EMM has evolved very slowly because the enterprise chose EMM solutions for different use cases — here, access to certain elements there,” Enterkin said. “That turned into the creation of different siloed technologies. Our [2015] acquisition and integration created a single platform that enables any mobile strategy. That’s a major differentiator no other EMM provider has. It has made a difference how we compete in the market for large customers, because they are tired of managing different technologies for different use cases.”

As an example, Enterkin referred to large global banks, who are quite likely to have a BYOD strategy, a lockdown strategy for regulated users, and a separate tablet strategy for their executives.

“That could mean managing three strategies across 40 countries,” he said. “Consolidating THAT into a single platform really resonates with larger organizations.”

The Good acquisition was seen by analysts at the time as a sound one, providing BlackBerry could execute it successfully, and Chen said the record since indicated that they have.

“It was a very necessary thing to do to show commitment to the EMM software market,” Chen stated. “It has been more work integrating these two together than we originally expected, but we would do it again. At the time, we were struggling to get on our feet, and Good was struggling themselves. We were two sinking animals trying to help each other. We got it done and are now in good shape.”

“Good really helped us grow around the apps focus — messaging, voice and text — which had not been our strength,” Beard said.

Still, Chen emphasized that BlackBerry’s goal isn’t to become known simply as a strong EMM provider.

“EMM is a lousy market,” he said. “We are in endpoint management and the IoT world.”

Chen said that the will drive BlackBerry growth — but that this is still more of a mid-term factor.

“I think that cybersecurity services will grow the fastest in the immediate term,” he said. “IoT appliances will be the next wave of growth – in the next 3-5 years.”

Beard emphasized how BlackBerry’s EMM and IoT strategies are highly complementary.

“EMM expands the market, and those two things are complementing each other,” he said. “We are talking about more in that way.”

John Wall SVP and GM of BlackBerry QNX

John Wall, the SVP and GM of BlackBerry QNX, BlackBerry’s OS for the embedded market, emphasized that BlackBerry is already in this market broadly, in devices ranging from toasters and washing machines to fleet company vehicles.

“With autonomous cars, we are not building the brain, like Google or Uber,” he said. “We build the platform that they run on. So both Google and Uber are our customers.”

Wall said they expect the autonomous vehicle market to show strength where there is a direct commercial application.

“The first autonomous vehicles on the road will be trucks, and airport shuttles — because there are financial incentives to do that,” he said. “Private cars will be the last, because the motive is safety, not financials.”

All of these changes have meant massive transition for the company. Chen stressed.

“We shifted from a B2C model to a B2B model,” he said. “That’s a humungous shift. We shifted from a telco channel to going to enterprises. That’s another major shift.” Chen made the transition to a much broader channel strategy the theme of his opening keynote address at the conference.

“In doing all this, the major difficulty, has been with our own infrastructure, the people,” he said. “We shifted compensation philosophies, hiring process, all the metrics of the company, even the narrative. It was difficult. We lost some very good people. Every time you lose good people committed to the company, it’s painful. It was the right thing to happen, but it still hurts.”

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