Blackberry Business Strategy Analysis

BlackBerry is “no longer just about the smartphone, but the smart in the phone.” (CEO, John S. Chen)

“A global leader in mobile communications, BlackBerry® revolutionized the mobile industry when it was introduced in 1999. Today, BlackBerry aims to inspire the success of our millions of customers around the world by continuously pushing the boundaries of mobile experiences. Founded in 1984 and based in Waterloo, Ontario, BlackBerry operates offices in North America, Europe, Asia Pacific and Latin America.” (Blackberry)

BlackBerry has recently repositioned itself as a software and services company under the leadership of current CEO, John S. Chen. After much analysis of their value chain, Blackberry announced in the fourth quarter of 2016 that it would be out-sourcing hardware development in order to focus on software development. BlackBerry now specializes in enterprise software and the Internet of Things. (“BlackBerry Limited”, 2017) Among the most tech savvy, the “internet of things” refers to the plethora of (predominately) wireless smart devices in use today. Jack Gold, founder and principal analyst of J. Gold Associates, asserts that as the mobile market advances, a new phase of innovation is on the horizon called the “Enterprise of Things”. Gold implores companies to begin, “formulating a strategy that looks at potential requirements for infrastructure and applications, as well as assessing line-of-business needs to enhance operations”. (Gold, 2014)

BlackBerry appears to be on trend to meet the needs that the EoT will bring. In their 2016 IR Summary, BlackBerry states their value proposition as follows: “We enable you to confidently mobilize your infrastructure to be most competitive in the new paradigm.” BlackBerry has long been associated with security as they deliver the “only end-to-end and secure mobility platform” consisting of enterprise solutions, technology solutions, secure messaging, and handsets. They also provide professional services such as, cybersecurity consulting, implementation services, and customer support. (“BlackBerry IR Summary “)

Through its many mergers, acquisitions, and repositioning, Blackberry has failed to solidify a formal vision and mission. An informal vision and mission statement appear in BlackBerry’s 2016 IR Summary.

OUR VISION: “A Connected World”.

OUR MISSION: “To be the world’s leading provider of end-to-end mobility solutions that are the most secure and trusted”.

Here the company missed an opportunity to clearly and succinctly communicate its goal(s), values, competitive environment, and competitive advantage to key stakeholders. While brief and bold, BlackBerry’s informal vision fails to inspire in its broad scope.

Operation Guidelines 

As with most publicly traded companies, BlackBerry recognizes the importance of setting in place a high standard of operational guidelines for their business. BlackBerry’s Code of Business Standards and Principles is one major tool the company has developed reiterating that all employees, officers, and contractors of the company must “not only comply with applicable laws, but must also engage in, and promote, honest and ethical conduct.” (BlackBerry EthicsLink) In a 68 slide presentation of these standards, BlackBerry covers six main topics: Acting with Integrity, Participating in an Ethical Culture, Performing with Integrity for BlackBerry, Treating Customers and Business Partners with Integrity, Respecting Colleagues, Acting with Honesty and Transparency for Investors, and Committing to Social Responsibility for the World. (Code of Business Standards and Principles)

On BlackBerry’s website, there are 5 pillars set forth as fundamental for operations within the company: Corporate Citizenship, Public Policy and Government Relations, Sustainability, Responsibility, and Supply Chain Ethics. Relating to their commitment to being good corporate citizens, the company states that “BlackBerry seeks to make a positive impact in [their] communities, engaging the talents and resources of [their] people and partners to harness the power of technology. [BlackBerry’s] Corporate Citizenship strategy focuses on investing in strategic charitable partnerships, supporting employee charitable endeavors through Proud2Be Programs, and inspiring tomorrow’s youth leaders through [their] partnership with Free the Children.” (Corporate Citizenship)

Regarding BlackBerry’s view on public policy and government relations, they state that “as one of the world’s leading communications technology companies with customers in more than 175 countries, BlackBerry actively participates in governmental proceedings, industry associations and technology standards bodies.” (Public Policy) BlackBerry not only adheres to the operating guidelines of their industry and governmental bodies, they also value the sustainment and their effect on the environment. Sustainability is extremely important as there is increased focus on the world’s renewable resources and the efforts big businesses make to lessen their carbon footprint. “BlackBerry is always on the lookout for sustainable innovations that meet the needs of the present without compromising the future. [Their] commitment to reducing [their] environmental impact is visible throughout the lifecycle of [their] products—from initial concept to final delivery.” (Sustainability at BlackBerry) Futhermore, the company highly values Responsibility as it is “committed to global sustainability by improving the economic, social and environmental impacts of [their] day-to-day operations. BlackBerry teams implement programs across the organization to identify, execute and measure sustainable initiatives.” (Responsibility at BlackBerry)

“BlackBerry is committed to ensuring that the management of [their] supply chain activities is socially and environmentally responsible. As a multinational company [they] recognize that [their] supply chain operations reach many parts of the globe and a diverse range of communities, each with their own culture and business norms. As a responsible organization, [BlackBerry] also recognize(s) that there are certain standards of employment and environmental performance that must be respected wherever [they] operate or have business relationships.” (Supply Chain and Ethics)  These guiding operating standards and principles ensure that BlackBerry’s Board of Directors, officers, employees, and contractors are all functioning in sync both the U.S. and internationally.

SITUATION ANALYSIS

External Environment 

The external environment can prove to be extremely complex as conditions are constantly, and sometimes rapidly, changing on a global scale.  Success and sustainability of a technology company such as BlackBerry can only be achieved if the company is aware of the various opportunities and threats that impact the external environment.  By understanding the forces that can be created by these external elements, a company will be more equipped to interpret, and more importantly, anticipate the direction that an industry is shifting toward.

In an effort to try and understand the external environment, the company must first understand the various trends within the environment; and then we can break down and study the various elements within the general, industry, and competitor environments.  Utilizing the techniques of environmental scanning, monitoring, forecasting, and assessing, BlackBerry has identified many of the latest industry trends which they have already begun shifting their focus toward.  By studying the latest trends within the technology environment, BlackBerry understands in today’s world that there is little to no opportunity for success to be achieved by solely focusing their efforts on the over-saturated market of electronic devices.  On the other hand, one of the globally known strengths that provides BlackBerry with the greatest opportunity in the current and future external environment is in the realm of security.  Fortunately, through the external environment analysis process, BlackBerry has already identified that the annual estimated cost of cyberattacks on a global scale are approximately $400 billion, half of the CEO population that represent high-ranking companies feel unprepared, and cybersecurity is an extremely high concern for the majority of corporate boards.  Needless to say, this evidence shows that the need for powerful security solutions has been identified as an extremely important global trend in today’s world.

General Environment

There are multiple dimensions that compose the general environment that can most certainly be of influence to a particular industry along with the companies within it.  These dimensions are grouped into “seven segments:  demographic, economic, political/legal, sociocultural, technological, global, and physical” (Hitt, Ireland, Hoskisson, 2015).  While these are external segments that are completely out of BlackBerry’s control, it is still extremely important that data within each segment is collected and understood in an effort to learn and account for the information to avoid any potential setbacks.

Demographic

As Blackberry was once highly focused within the market of device creation and management, the goal of today is to continue expanding and creating business value on a global scale.  With this new direction of business, it is extremely difficult to place a specific age, geographic distribution, ethnic mix, and income distribution measurement as the demographics have exploded globally with the development of the various professional and cybersecurity services that are now being offered to commercial customers as part of the “Enterprise of Things”.  With all sectors of business requiring the need of technology and security services, BlackBerry has been able to expand their reach much further than the traditional customer base to industries where software and infrastructure hold a primary importance.  Today, BlackBerry’s target market focuses on “current regulated enterprise markets” within government, financial services, healthcare, utilities, transportation, manufacturing, and oil and gas industries.  Translating this into numbers; as stated within “BlackBerry’s 2017 Analyst Summit”, there are an average of 10 million new “things” (devices, systems, etc.) that are added on a daily basis.  Currently, BlackBerry has a 20% share of the enterprise mobility market along with a dominant 50% share in the automotive embedded software market.  In 2016, there were 3.9 billion smartphones and 6.4 billion other connected systems and devices on a global scale.  Through the year 2020, it is projected that there will be 6.1 billion smartphones and 20.8 billion other connected systems and devices.  With this projected growth, the opportunity for future expansion is endless.

Economic

The global economy has seen significant struggles within the last few years.  While there are always signs that the economy is on its way up, consumers and businesses will still continue efforts to cut expenses and save money.  With this being the frequent case, BlackBerry’s smartphone market could most likely continue to see some challenges.  On the other hand, due to the fact that damage caused by todays cyberattacks are proving to be of great concern and potentially more costly than the cost of the actual solutions, great opportunities on the security side of BlackBerry’s business will continue to exist even in the most challenging economic times.  The difficulty for BlackBerry will be revealed as more competition with greater resources enter the market which could lead to a pricing battle and other various rivalry struggles.

Political/Legal

For BlackBerry, the Political/Legal environment produces a tremendous effect on the business.  One of BlackBerry’s core strengths resides within the large portfolio of patents that the company possesses.  Currently, BlackBerry has over 44,000 patents which lead to a variety of opportunities to engage in litigation as a result of patent infringements.  In addition to the defense of patents through litigation, BlackBerry also has the benefit from monetizing the patents that they possess through various licensing agreements with other companies.

Historically, issues have surfaced from a political standpoint within various foreign markets as it relates to cellular service.  The nature of BlackBerry’s business automatically creates an encryption of emails and messages that are sent by a BlackBerry and are routed through enterprise servers in North America.  While this particular security feature has historically been viewed as a positive in North America, the United Arab Emirates (UAE) along with other foreign nations dislike this process as they believe it handicaps their ability to monitor data sent by means of a BlackBerry device and opens them up to potential terrorist threats.  As a result of this, India and UAE proposed a threat to ban BlackBerry devices unless an alternative was established to allow for sufficient data monitoring.

Sociocultural

One of the main threats that companies face by being in the technology industry is the task of trying to keep up with all the rapid technological changes.  As BlackBerry has historically experienced, technology companies that are unable or unwilling to stay up to date with the latest trends are at significant risk for failure.  However, despite the fact that the industry changes so rapidly, consumer perceptions do not share the same quickness regarding change.  Given that BlackBerry’s previous business was predominantly a smartphone producing business that was eventually overshadowed by Apple and Samsung, today’s perception of the company largely remains the same.  As BlackBerry’s former President of Global Enterprise Services stated, “The misperception here is that Blackberry has a small user base that only caters to a narrow segment of the market with minimal productivity capabilities” (Sims, 2014).  However, despite the various misconceptions within today’s society that have skewed the true reality, under the leadership of CEO John Chen, BlackBerry is working to “help customers understand the facts amidst a sea of outdated assumptions and misperceptions” (Sims, 2014).

Technological

The importance of the technological segment predominantly relates to the identification and development of new products that fall in line with the newly anticipated technology trends.  With today’s threat of cyberattacks and the increased need for cybersecurity solutions,  BlackBerry has decided to focus less on participating within the overly saturated business of building actual devices, and focus more attention toward developing software to “secure, connect, mobilize, and make productive what it views as the ‘Enterprise of Things” (Marsh, Partridge, Castanon-Martinez, Incera, 2017).  This relates to providing technology and services that cater to the applications and software being utilized on a wide array of remote connected devices.

Global

The global segment of the general external environment is related to the company’s efforts to operate on a global scale in light of the ongoing challenges within the global economy.  As presented within the chart below, we can see the various streams of total revenue by region for the fiscal year ended FY 2017, which suggests that BlackBerry is actively competing within the foreign markets in addition to North America.  As time continues, BlackBerry will continue to target global expansions into both the consumer and corporate sectors of these foreign regions.

*Data retrieved from BlackBerry Q4 2017 Fiscal Results Press Release

Physical Environment

The physical environment segment is primarily associated with “Corporate Responsibility” as it relates to sustaining the worlds environment in an effort to allow for the generations of the future to not be compromised.  BlackBerry has stated that they are continuously in search of innovations that contribute toward sustainability.  With the overall goal of sustainability in mind, BlackBerry has created a “Lifecycle Sustainability” tracking process that follows the lifecycle of a product from the initial concept to the end of the products life to help in mitigating the environmental footprint.  Starting from the first stage of the lifecycle, BlackBerry ensures that sustainable materials are utilized in consideration of performance, durability, and most importantly, the environment.  The second stage is committed toward ensuring that the supply chain operation is efficient and managed in an environmentally and socially responsible way.  The third stage relates to the realization of new products that are compliant with ISO 14001 which seeks to reduce environmental impacts of new products.  The fourth and fifth stages are associated with the social and environmental responsibility related to packaging, distribution, and product use, whereas the final stage relates to the proper disposal of electronics that have reached the end of their useful life.  By adhering to these principles, BlackBerry believes that they are effectively doing their part to contribute to an uncompromised future.

Industry Environment

The industry environment consists of multiple elements that have a direct relationship and influence on a company’s actions and responses.  These elements are known as “Porter’s Five Forces” which consist of: “the treat of new entrants, the power of suppliers, the power of buyers, the threat of product substitutes, and the intensity of rivalry among competing firms” (Hitt, Ireland, Hoskisson, 2015).  The result of these forces can determine things such as the profitability of an industry along with whether or not an industry is attractive or unattractive to other potential entrants.  By knowing this information, company’s like BlackBerry become equipped to make certain educated decisions that are hopefully in the best interest of the organization and its stakeholders.

Threat of New Entrants

Since the creation of the initial BlackBerry smartphone, there have been a variety of other firms who have entered the market with the introduction of their own version of such a product.  While firms such as Apple and Samsung, who have nearly unlimited resources, essentially control an already saturated smartphone market, the threat of new entrants is likely very low.  Today, most customers have already selected their smartphone brand preference that they have become loyal to, and that alone makes the barrier to entry very high.  Additionally, without even considering the power available to the leaders of the industry to attack and destroy any new entrants, the amount of capital needed to enter the market, become a legitimate competitor, and keep up with the continuously evolving technology would be very extreme.

Since BlackBerry has shifted away from producing actual devices, today’s software, services, and security business offers a whole new threat of entrants that may differ slightly from the smartphone market.  In the current market, there is much attraction due to the fact that the market is less saturated and security is a hot topic among many CEO’s and other high-power leaders.  Despite this fact, the barrier to entry is considered to be high due to the length of time that it takes to develop differentiated products and technologies that can compete at the same level as those who have already gained the momentum of positive recognition.  Therefore, while the barrier to entry is considered to be high, the overall threat of entry is still considered to be moderate due to the fact that there is low market saturation and companies with high levels of resources possess the ability to force their way in.

Bargaining Power of Suppliers

Within the technology market, the bargaining power of the supplier for BlackBerry would be considered high due to high consumer demand.  While the initial thought would be that there are many suppliers in the market, which would typically result in driving down supplier bargaining power, the fact is that the operating system utilized within a BlackBerry device is known to have an increased level of uniqueness and complication, which limits the number of developers (suppliers) available, which drives the supplier bargain power up.  Additionally, another cause for the higher supplier bargaining power can be attributed to the ongoing diminishing market share that BlackBerry possesses.  As a result, BlackBerry is proportionately considered to be a smaller customer in comparison to larger companies like Apple or Samsung, therefore the product orders equate to a lower amount of the suppliers business.

Bargaining Power of Buyers

In the technology market, the buyers (customers) bargaining power is considered to be high due to the increased amount of new devices that are continuously introduced, along with the low switching costs that are involved.  With regard to smartphones and other electronic devices, it is simple and of low cost to the consumer to switch their brand preference at any time, and that increases the power of the buyer.

Threat of Substitute Products

The threat of product substitutes somewhat work hand in hand with the buyers bargaining power.  If the substitute product contains a level of quality that is greater than or equal to the current product, the price is lower than the current product, and the cost to switch is relatively low, then the threat of a consumer to substitute a product is high.  Another example of product substitution is identified when BlackBerry released the BlackBerry Storm device.  Due to the fact that BlackBerry was behind in the smartphone touchscreen technology, the company rushed to place the underdeveloped BlackBerry Storm product on the market.  Due to the various flaws and consumer frustration that were identified after the products release, the perceived quality was very low.  Therefore, due to the fact that the quality was lower than the iPhone and price points were similar, customers made the easy choice to substitute the BlackBerry product with the iPhone.  Additionally, product lifecycles in the technology industry are extremely short and the inability to keep up with these ever changing cycles will force consumers into product substitution.

Intensity of Rivalry among Competitors

Companies within the technology industry face extremely intense competition and rivalry due to the fact that those competing are consistently battling to increase their share of the market by improving products based on the current trends.  Also, legitimate technology competitors like Apple, Google, and Samsung are typically large companies that possess significant levels of resources that can be used at their disposal in an effort to steal shares of the market from each other.  As new technological trends continue, BlackBerry and other companies within the industry will continuously be pressured to create new and advanced products that meet the needs of consumers in a cost effective way.  Those who continue to satisfy the trends by continuously creating and improving will succeed, while those who do not will eventually be eliminated by the competition.

Competitor Analysis

The competitor analysis is a focus on the firms that compete directly within a given industry.  Within this analysis, the goal is to identify future objectives, the current strategy, assumptions of the future, and capabilities in comparison to competitors.

Smartphone Market

Today, BlackBerry does still have an operating system (OS) that participates in the smartphone market, however the small percentage of market share owned by BlackBerry is such a small fraction as compared to Android and iOS that it is almost not worth mentioning.  As of the 4^th quarter of 2016, Android and iOS owned the majority of the smartphone market share at an astounding 99.6%.  The total number of smartphones sold in the final quarter of 2016 was 432 million and 352 million of those utilized the Android operating system whereas 77 million utilized Apple’s iOS (Vincent, 2017).  Additionally, the total number of Windows phones sold were slightly over 1 million and BlackBerry, the previous leader in the smartphone market, only sold slightly more than 200,000.  The graph below illustrates the percentage of total market share owned by the various OS as of the final quarter of 2016:

*Data retrieved from Gartner 2016

With regard to the competitor analysis within the smartphone market, the data provided essentially speaks for itself in solidifying the statement that BlackBerry is no longer a threat to the competition.

Security and Mobility Services

Within the market of security, BlackBerry is much more of a threat to the competition.  With regard to the future objectives, BlackBerry will direct their efforts to the continuation of perfecting its full lifecycle of security and mobility services along with working to capture customers within new industries where software and infrastructure are imperative.  The need for these security and mobility services will be crucial on a global scale as more and more companies continue focusing their efforts toward transitioning to a digital form.

BlackBerry is a strong competitor in the security market as they are currently the only provider that possesses a full “end to end” lifecycle of services.  BlackBerry has been able to successfully leverage their vast expertise in security to create a certified solution that focuses on support and user experience satisfaction.  Because of BlackBerry’s ability to provide services that encapsulate the full lifecycle, they are more capable to support potential market changes that could occur as a result to competition.

As for the competitors, most firms only possess small portions of security expertise that do not fully encapsulate the entire cycle.  Because of this, competitors are at a disadvantage as they have to focus their strategies on individual services while relying on other outsourced solutions to support their final product.  This has resulted in additional complexity that leads to vulnerabilities, negative user experiences, and higher costs to the consumer.

As with any portion of the technology industry, competition is fierce and changes occur at a rapid pace; therefore, we have to assume that the future will contain high volatility.  In an effort to continue being a legitimate competitor in this industry of high volatility, BlackBerry will have to continue anticipating ongoing trends and leveraging their valuable strengths within security to continue strengthening their full lifecycle solution.  As a result, increased competitor rivalry will most likely occur, but that is always a valid expectation when competing at a superior level.

Internal Environment

Core Competencies

Security systems

“In 2002, RIM released the more commonly known smart-phone BlackBerry, which supports email, mobile telephony, text messaging, Internet faxing” (IEEE Computer and Reliability Societies, 2009, p. 67).  This device revolutionized business communications and over the next 6 years, subscribers grew to the point where “On 18 December 2008, RIM announced that the number of BlackBerry subscribers has reached approximately 21 million” (IEEE Computer and Reliability Societies, 2009, p. 67).  The BlackBerry wasn’t known only for its ability to transmit and receive voice and text, it was also renowned for its security features.  The device offered many security features including encryption of messages to and from the device “and users can password-protect the device with a fail-safe mode that wipes the content clean after 10 failed password attempts” (IEEE Computer and Reliability Societies, 2009, p. 68).  Coupled with this “security options available to IT administrators include the ability to disable message forwarding and attachment downloads, along with hundreds of other features that users can turn on or off via policy settings” (IEEE Computer and Reliability Societies, 2009, p. 68).  These features made the device extremely popular among financial services, healthcare and especially government.  In fact, the device is so trusted among government agencies that as of 2016 “Blackberry products are the sole products used by many in regulated industries, such as the United States’ Department of Defence which has only to date authorized, Blackberry devices for employee’s use” (Poh, 2016).

In order to capitalize on this reputation, BlackBerry has recently released the BlackBerry Enterprise Mobility Suite that “offers trusted end-to-end security and support for a wide range of devices, including iOS®, Android™, Samsung Knox™, Android™ for Work, Windows®, Mac OS®, and BlackBerry” (BlackBerry UEM – United States, 2017).  This service capitalizes on what have traditionally been one of BlackBerry’s core strengths and expands their products outside of what was once an extremely proprietary solution.

Communications

The strength of BlackBerry’s security features would have little significance without their ability to provide reliable communications and message transmissions.  In fact their messaging services are so trusted that they were chosen in a 2012 developmental study of adolescents.  For this study the researchers surmised that “text messaging may also provide important developmental opportunities for close communication with peers, micro-social planning, communicating about schoolwork, and exchanging information” (Underwood, Rosen, More, Ehrenreich, & Gentsch, 2012, p. 295).  In order to capture the adolescents messaging the 81 participants (which were 15 year old, 10th grade girls) were each provided with a BlackBerry that was configured to leverage the BlackBerry messaging service to store and allow for analyses of their communications.  This ability is unique to BlackBerry and could not have been accomplished privately and securely with Apple or Android devices due to their reliance on external messaging services.

BlackBerry has recognized the messaging service as a trusted core competency and have taken the step to launch “The Blackberry Messaging Service (“BBM”) on almost every mobile operating systems. There has been great reception here as more than 40 million users have signed on to use BBM” (Poh, 2016).  They have further extended this service via a new product AtHoc “Helps Ensure That Staff Members Are Where They Are Expected to Be, Performing What They Have Been Tasked to Accomplish” and offers a turnkey solution with a built-in process to “account for personnel during and after an emergency” (Crisis Communications – AtHoc by BlackBerry – United States, 2017).  This type of service can be critical within industries that employ highly dispersed personnel that operate in potentially hazardous conditions.  This technology has been adopted by organizations within the healthcare, defense, oil and gas and “is the first and only FedRAMP Authorized crisis communication service, used and trusted by 70% of US Federal Government employees” (Crisis Communications – AtHoc by BlackBerry – United States, 2017)

Financial Analysis – Measurements of the Company

The story of the rise and fall of BlackBerry is no secret as the device was once as famous as the celebrities and heads-of-state that carried it.  “In 2008 the company was valued at $83.4 billion, more than Merck, Goldman Sachs, or EBay; now it’s worth $3.4 billion, less than Wendy’s” (Gillette, Brady, Winter, & Miller, 2013).  Today BlackBerry has staged somewhat of a recovery with “positive free cash flow and positive adjusted EBITDA in each quarter of fiscal 2016” (BlackBerry Limited, 2017) on a shift away from the devices that made them famous to a software and services model.  In 2016, they successfully restructured some of their debt when they “Reduced leverage through the redemption of the Company’s outstanding 6% convertible debentures (the “6% Debentures”) through the issuance of $605 million aggregate principal amount of 3.75% convertible debentures of the Company (the “3.75% Debentures”) (the “Debenture Refinancing”)” (BlackBerry Limited, 2017) and they took steps to reduce outstanding shares and raise their stock price when “the Company repurchased for cancellation approximately 12.6 million common shares” (BlackBerry Limited, 2017), this repurchase still leaves 526,552 million shares outstanding.

The latest annual financial statement reveals a net loss of $1,206 million for FY ending February 28, 2017 compared to a net loss of $208 million for FY ending February 29, 2016 which amounts to a net loss increase of $998 million. 

On the surface this story isn’t positive, but when you consider that the majority of the losses constitute fees associated with the successful restructuring of outstanding debt, expenses related to employee termination benefits as well as costs associated with unsold devices (a business that they are migrating away from), the outlook is a bit more positive.

There is no doubt that BlackBerry has a long way to go if they are going to be a long-term net cash flow positive company, but with the shift towards software and services and away from the hyper-competitive device market, they have a real opportunity for success.

As you can see software and services realized a 99.6% increase in revenue from FY ending February 28, 2015 to February 29, 2016 as well as a 25.2% increase in revenue from FY ending February 29, 2016 to February 28, 2017.  That represents a 149.8% increase over a two year period.

Strengths, Weaknesses, Opportunities, and Threats (SWOT) Analysis

Strengths

1. Brand recognition
   • Most everyone in the business world has used, or in some way, shape, or form has been exposed to BlackBerry devices.  BlackBerry devices have been utilized in movies, television shows, and by many public figures over the years which has drastically contributed to the recognition of the BlackBerry brand.
2. Security leader
   • BlackBerry’s cornerstone has always revolved around security.  As a result of this strength, BlackBerry has gained the trust of the United States Government along with approximately 80% of the governments in the G20.  Additionally, an official endorsement of BlackBerry’s “AtHoc Crisis Communications Platform” recently came from the U.S. Army.  This particular platform protects more than 600,000 soldiers and personnel and delivers critical data during emergencies.
3. Strength in patents
   • With over 44,000 patents, BlackBerry possesses one of the largest portfolio of patents in the industry and is primarily geared toward wireless technology, secure communications, and “Internet of Things”.  BlackBerry’s strong portfolio of patents creates a strong asset that can produce opportunities and provide a key strategic advantage among competitors.
4. Leadership team
   • As John Chen is now over 3 years into the role of CEO, BlackBerry has been steadily improving.  Over the course of Chen’s tenure, BlackBerry has seen an increase in optimism as a result of improved margins and adjusted product strategies toward software and services.

Weaknesses

1. Historically slow to react to market changes
   • Prior to touch screen devices, BlackBerry was at the top of the smartphone market as their well-known “Qwerty” keyboard simplified instant messaging and email tasks.  As a strong believer in the “push-button” technology, BlackBerry sat and watched Apple and Android take over the market as the customer preference quickly shifted toward the touch screen device.
2. Diminished brand loyalty due to defective devices
   • At the time of the release of the “BlackBerry Storm”, the company was in a desperate push to compete with Apple by quickly releasing a device with a touch screen.  The result was overly negative due to an overwhelming number of complaints related to poor operation and other various defects.  This damaged the loyalty to the BlackBerry brand as millions of customers returned the BlackBerry device and switch to the iPhone.
3. Branding issues
   • Prior to Apple and Samsung’s market penetration, BlackBerry was a leading brand.  As a result of poor efforts to effectively market the brand, BlackBerry’s brand loyalty, brand awareness, and brand reputation rapidly declined.
4. Lack of resources for R&D
   • With a simple financial comparison of BlackBerry to Apple, for the fiscal years ended 2017, 2016, and 2015, BlackBerry saw a total revenue stream of $1.3, $2.2, and $3.3 billion, respectively as compared to Apple’s $215.6, $233.7, and $182.7 billion for the same years.  This leaves BlackBerry with only a fraction available to spend for research and development as compared to the cash availability of Apple.  BlackBerry’s research and development expenses were only $306, $469, and $711 million within FY17, FY16, and FY15, respectively as compared to Apple’s $10, $8.1, and $6 billion.

Opportunities

1. Enterprise of things
   • With increased awareness, concern, and cost caused by cyberattacks, BlackBerry should continue in its path to shift away from its weakness of producing smartphone devices and productively utilize its security strength to provide software and services that secure, mobilize, and connect personal and corporate devices.
2. Cloud services
   • The demand within the cloud based market offers an excellent opportunity as it is expected to continue along a steady growth trend through 2020 reaching an estimated value of approximately $240 billion.  Evidence shows that consumers are showing strong preference in utilizing cloud services for data storage and BlackBerry could benefit from this by focusing continued expansion into this area.
3. Increase in cyberattacks
   • While cyberattacks would typically be a threat in most cases, for BlackBerry an increase in this activity is actually a great opportunity as it creates a need for solutions that BlackBerry has the ability to provide.  With security continually becoming an increasing trend among investors, companies like BlackBerry expect to see related increases in stock value.
4. Licensing opportunities
   • The numerous patents that BlackBerry possesses creates the opportunity of entering into technology licensing agreements.  By utilizing these opportunities, BlackBerry gains the ability of monetizing its patents which could result in increased earnings and improved margins.

Threats

1. Evolving technology
   • Technology is one of the fastest changing elements of any industry.  While this is a global threat to all companies, the threat of technological change is especially important to companies like BlackBerry whose successes and failures reside within the tech industry.  As BlackBerry has historically experienced, technology companies that are unable or unwilling to stay up to date with the latest wants and needs are destined for complete failure.
2. Competitors
   • As BlackBerry has experienced with smartphones – as technology changes, competition will increase like seen with the penetration of Apple and Samsung within the smartphone market.  Likewise, as cyberattacks and the need for cybersecurity are on a rising trend, BlackBerry should anticipate the threat of increased global competition as companies who have greater resources, like Microsoft, Apple, and Google, try to steal a piece of the market share.
3. Market Saturation
   • Market saturation is a frightening threat as we have seen how quickly this effect has taken place within the smartphone market.  Saturation can be derived by changes in technology, increases in competition, or price and therefore continued product creation and improvement must be attained to have any possibility of achieving further growth.

References

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BlackBerry IR Summary [PowerPoint Presentation]. (2016, June). Retrieved June 13, 2017, from https://us.blackberry.com/content/dam/bbCompany/Desktop/Global/PDF/Investors/Documents/2017/IR_Summary_for_Q1-2017_20FINAL.pdf

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https://secure.ethicspoint.eu/domain/media/en/gui/100003/index.html

Code of Business Standards and Principles. (2015, December). Retrieved from

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