Could its new security focus juice up BlackBerry?

After buying security consultants Encription, BlackBerry’s attempt to reinvent itself is coming into focus

BlackBerry has bought Encription, a UK-based security consulting company, as it continues to step away from a focus on devices and endeavours to become a broader company with security software and services at its heart.

Last year, BlackBerry acquired Good Technology, a maker of secure device management software and with Encription it is extending its reach in security. Previous security acquisitions include Secusmart, AtHoc and WatchDox. The BlackBerry messaging service has long been feted for its security credentials and that ace could help it to prosper in a very different guise.

BlackBerry, then known as Research In Motion, had enormous success with push email devices in the Noughties but failed to make the transition as the likes of Apple, Samsung and Google touted touchscreen devices, backed by powerful app developer ecosystems. Today, BlackBerry has well under one per cent of the global market for smartphones.

BlackBerry is a fraction of its former size but still sizeable with a market cap of $3.8bn and $2.7bn in cash as of its last quarter. Revenues and device sales continue to fall sharply but there are at least signs that the Canadian company is stemming losses. The company is also successfully rebalancing with about 60% of revenues coming from software and services. Hardware still accounts for the rest but BlackBerry no longer ploughs a lone furrow as its recent PRIV smartphone runs on Android.

To get another perspective on BlackBerry’s security-first strategy I spoke to Robert Cattanach, a partner at the international law firm Dorsey & Whitney and a former US Department of Justice trial attorney.

“BlackBerry has a quality product but it’s just not resonating and it’s only a niche product, Cattanach told me by phone. “The challenge they have is how to make themselves relevant and their brand is synonymous with security. So the play I see is, if they can’t advance through their phone they can use that credibility in cybersecurity as a beachhead and they can go out to customers and say ‘we can do more’.”

Cattanach expects a significant upturn in security and governance as more buyers and regulators demand evidence that firms are doing their utmost to secure assets.

“It’s maybe not going to be a tsunami but it’s going to be a wave of people saying ‘tell us how good your cybersecurity is and how good your vendors’ security is’. It’s not good enough to say ‘got it covered’. This is a never-ending process. It’s an arms race. [Buying Encription] is the kind of thing BlackBerry has to do to reinvent itself. This tells me they’re looking in the right places; they’re not doubling down on their phone.”

BlackBerry’s turnaround bid is reminiscent of that of IBM which under Lou Gerstner who famously refashioned Big Blue by stressing cross-platform software and services and relaxing a previous focus on hardware and proprietary software. For now, few are suggesting BlackBerry is capable of that sort of turnaround but it might yet write itself a second act.


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