Blackberry – Audible Corporate Relief?

CIOs across the world breathed a huge, collective sigh of relief this week.  Blackberry, the company that makes, ummm, Blackberries, finally produced a new device.

Ok, so the new device hardly deserves the tag “innovative” but it is a pretty good match for last year’s devices from Apple and Samsung.  Blackberry’s previous range was, by comparison, a pretty good match for the ZX81.  A chasm has, perhaps, been leapt.

CIOs will now hope that the clamour for sexy, touch screen, do everything devices from other companies will go away so that they can capitalise further on their not insubstantial investment in infrastructure, licences and whatnot for the existing devices.  Why would they want to go out and spend more (new) money on infrastructure and licences to support devices from other manufacturers when they can just give these shiny new gadgets to their road warriors?

There is, of course, much to ask of this new device.  Will the work/play mode work as well as it’s suggested?  Will the new device be as secure as the old one, or have the Indians and the Saudis already made a play for a backdoor? Will BB be able to issue over the air updates or will corporates be stuck with a tested, accredited version of the same software (and the same functions) a year from now? Now that they’ve released the Q10 and the Z10 have BB shot themselves in the foot, needing to wait a year before they can release the Q11 and the Z11?  Or will they go for the R, S and T10 sooner? How will consumers know the difference beyond keyboard or no keyboard? Is it backward to name a device “10” in 2013?  If email was the BB killer app in 1999 and BBM in 2005, what is 2013’s equivalent – and does anyone care?  Is it enough to be “as good as” the competition?

CIOs that do breathe a sigh of relief won’t be able to relax for long though.  Blackberry, like Nokia, is clearly fighting it out for third place (with less than 4% of the market) and it’s a long way up from where they are.  A family of phones and tablets is what is needed, all working together, coupled with file stores, a huge range of apps and new capabilities dropped in regularly.

The pressure on corporates to accommodate multiple devices and to provide secure, easy to use environments across all of them won’t let up. One size won’t fit all and nor should it.

BB has yet to complete the leap of the chasm.  Instead, they are still in the air, legs furiously spinning.  I wish them luck getting to the other side.

Mobile Monopoly #RIM

Governments don’t like monopolies.  Except when they have no choice (at which point they usually, but not always, bring in constricting regulation).  Windows on the desktop might be considered an example where governments have had little or no choice. Today, though, there is a real option of moving to a Bring Your Own Device model though I think this is still rare in government (even the Government Digital Service which is perhaps the most relaxed about these kinds of things still buys Macs for its staff).

There is, though, a complete monopoly in the mobile world.  Every single central government department that wants to allow on the move access to email supports only one device, a Blackberry.  This is because, today, it’s the only device that is accredited to run at Restricted (otherwise known as IL3) level.  All central government departments (and many that connect to those) run at this level, mostly because they connect to the GSI which kind of forces you there.  That said, most emails sent and received to or from these devices are, of course, not about important matters of state – doubtless 20% are about what’s for lunch, a further 20% about whether the squash court is free, 40% about information that is already subject to FoI and the remaining 20% might be considered to be sensitive in some way, thought perhaps only a quarter of that is truly restricted.

If you’re curious about IL3, for something to be classified at that level it needs to demonstrate any one of the following:

– Risk to an individual’s personal safety or liberty
– Minor loss of confidence in government
– Make it more difficult to maintain the operational effectiveness or security of UK or allied forces
– Cause embarrasssment to diplomatic relations
– Disadvantage a major UK company
– Damage unique intelligence operations
– Hinder the detection or impede the investigation of low level crime

You can see, I think, how hard they are to assess for any given email and so perhaps understand why it’s easier for everything to be classified as restricted rather than to assess any individual mail.

The Blackberry has achieved the hallowed status of IL3 because Research In Motion (RIM), the parent company, actively focused on it – and then ran away with it whilst everyone else just watched.  It was a genius move made all the more astonishing as they then failed to capitalise on it and offer more services – after all, their servers were on the inside of the government firewall; you couldn’t ask for a better position.  They would have gone through a lengthy process of review and certification, submitted their code for review, agreed to provide tools that disabled the camera, Bluetooth, web browsing and pretty much everything that actually made the device useful.  And so they monopolised the market – in the UK, the USA and, I imagine, pretty much everywhere.  Even though all of the emails wing their sweet way to Canada and back, no state is worried because the encryption is all at the device end (hence the panic when nations such as the UAE and India asked to be able to see emails composed on Blackberries).

RIM is now facing all sorts of problems (how fast it has come – in 2007 I certainly didn’t see the big switch.  Within weeks it may look nothing like it does now.  It could, perhaps, be owned by a Chinese company such as Huawei (something that would probably not bother the British or the Canadians but would certainly both the US government), it could be broken up into several pieces (with its patents going one way, its BBM service another and its hardware division being offered on eBay).  RIM claim to be readying a new operating system (and hardware device ranger) based on an operating system that has never previously been used on mobile devices (the Playbook excepted, though I think that really doesn’t count) and that lacks a comprehensive set of published APIs that developers could access so as to speed production of applications.  They announced only the other day that this new release would be much delayed – certainly into 2013.  It’s easy to speculate that it will never see the light of day because RIM, by then, will realise that they just can’t catch up with iOS6 or Jelly Bean or whatever is on the market by the time they do think they’re done.

So with RIM fading (and perhaps already finished as I’ve written before), it must be time for government to open up to alternatives – potentially ones that would allow even greater productivity rather than shutting down all of the interesting features in today’s mobile devices.  After all, the Blackberry has been ensconced in this monopoly position for nearly 10 years – a time in which the mobile market has turned itself inside out perhaps 3 or even 4 times.

UK government is now doing one thing that could blast this market right open – looking at moving away from the current IL0 to IL6 to a far simpler model.


Some have entirely misunderstood what this move is about and labelled it has halving the number of impact levels.  In fact – and this is by no means confirmed yet but it looks that way – within the next few weeks we will see guidelines published that move much of Government’s day to day traffic (perhaps as much as the 95% I suggest above) to a new level of accreditation which would be roughly equivalent to IL2.  Suddenly, vast numbers of new entrants could bring products to market (collaboration, email, social networks, project planning tools etc) and a new set of mobile devices would be eligible for government use, including Apple, Android and Windows.  This change in impact levels need not reduce security or increase the risk of data loss – devices would still be protected with various types of management software and could be wiped remotely (with plenty of choices available on the market).

At the same time, I hear talk that other device manufacturers are investing in the accreditation process to bring their device security up to the current IL3 level – not a daft move given that other countries or are not as progressive as the UK are also monopolised by Blackberry and would like alternatives.

Surely it is then a short step away from Windows pervasively on the desktop to other computers, whether they be iPads, Macs, Linux or whatever?

Nokia / Research In Motion Update

I wanted to take another look at how Nokia and RIMM are doing.  The graph below shows their stock prices compared over the last 3 years – the candlesticks are RIMM, the brown line Nokia.  I’ve annotated the chart with just a few key events – Nokia in orange, RIMM in black (of course), Apple in green.
The two stocks have largely tracked each other over the period, with both down about 85%.  That’s a staggering loss of value:
In December 2007, Nokia was worth $150bn and RIMM worth $64bn
In June 2012, Nokia is worth $9.8bn and RIMM is valued at $5bn.
That’s $199bn of value gone in less than 5 years (though Facebook is certainly trying to make a dent in that value loss over as little as 4 weeks)
I wrote up my “prescription” for Nokia in March last year, not long Stephen Elop had made the decision to go with Windows. I didn’t write a similar prescription for RIMM.
From here, I see Nokia surviving – without Nokia, Microsoft’s mobile strategy is dead in the water. Maybe Microsoft will buy them or, more likely, maybe they will keep pumping money into them to help them deliver.  The Lumia is a good first effort (though they should have thrown them away and started again as I suggested), but it it’s far from enough when compared with the latest Galaxy from Samsung or the iPhone 4S let alone what’s coming next.  They still need to do more – get rid of NSN, embed new features in their phones, make some smart acquisitions, cut more people (sadly) and so on – but it’s achievable.
But RIMM is, I think, done.  They have no one to save them.  They are still to get their product transition going to the new o/s (and Nokia is down over half since even starting that process).  Microsoft, Nokia and all of the other rumoured buyers won’t step in for RIMM – they don’t want blackberries.  Perhaps a PE company will step in and run the company for cash, but that would be a lot like buying Nokia’s Symbian business – it’s declining fast, faster than most (including me) expected.  To turn them around from here, even with the relatively large cash pile that they have, just doesn’t seem likely.

As Went Nokia ($NOK), So Goes $RIMM

It’s about 7 months since I last wrote about Nokia.  Since then I’ve been transfixed by the total slamming that Research in Motion (aka RIMM aka the maker of Blackberries) has had.  The graph below compares Nokia and RIMM over the last 5 years.  Whilst RIMM largely outperformed NOK, the last year has been brutal for them.
Zooming in and Looking at year to date, NOK has outperformed RIMM (not that you’d have wanted money in either of them).  RIMM is down around 70% this year.  What a stunning fall from grace. The latest fall was triggered by a write-off of their planned iPad competitor, the Playbook. The write-off amount is staggering, at $485m, suggesting that RIMM had pre-bought many hundreds of thousands of units (it’s probable that it was more than that, and that there are actually millions of the things sitting, gathering dust, in a warehouse or two), expecting them to sell by the truck load – that would seem to go against the long since in vogue “Just In Time” manufacturing process.  It’s also possible, I suppose, that this isn’t a write-off of just inventory but actually a write-off of the entire product.  RIMM’s results are out soon and we’ll perhaps find out then.
Nokia has new product with its Windows Phone-based Lumia range; new blackberries are on the horizon and RIMM, like Nokia, has also to execute an operating system shift (moving to QNX).  Such moves are fraught with risk, especially in a world where your corporate customers have already been hit by email outages.  Making QNX work – keeping old apps working, making the UI consistent enough (but allowing new capabilities to feature highly), zeroing in on the bugs and getting the security accreditation right (for the many government customers) will all be hugely challenging.  And remember, the Playbook is powered by QNX.  Uhoh.
My guess is that RIMM won’t pull it off and further falls are on the way (although they will be interrupted by rallies as the market hopes that the tide has turned).  So where does that leave RIMM?  An acquisition target? It’s hard to see an industry player stepping up, but private equity houses have plenty of money now.  Bankrupt?  That seems unlikely too – they are still selling millions of devices, and it’s a long way to zero.  A CEO change?   That seems likely before either of the above – new CEO cleans house, reverses some wrongs and tries to get it all back together.
Rumour has it that RIMM will name their new operating system “X”.  It might mark the spot.  But I think the spot is quite a lot lower than it is today.