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BlackBerry analysis: Android OS for enterprise customers?

The release of the new BlackBerry Priv at the end of last year caused a sudden burst of interest in BlackBerry phones again. The company popped me over a review copy and it is indeed an impressive device. This is because it blends the standard Android smartphone ease-of-use with a full pull-out keyboard. It also has BBM, the BlackBerry hub, extensive battery life and improved security.

This is for “uncompromising users who want the apps ecosystem to help them stay productive and engaged in their personal lives, and the security and productivity they demand at work,” clarifies Patrick Murtha, Director of BlackBerry Product Realisation: Priv.

“Combined with BlackBerry's support of Android for Work on our BES12 platform, the new device offers best-in-class security for enterprise customers.”

What does this mean for BlackBerry business device adoption?

“I don’t believe that the move to Android OS with the Priv phone will turn out to be a game changer for BlackBerry,” says Boris Metodiev, Research Manager, Mobile and Connected Devices at 451 Research. “There are not many people left that require a physical keyboard anymore. The market has moved on, everyone is already used to having an onscreen keyboard, and unfortunately for BlackBerry, one of the main differentiation factors of its devices now seems outdated.”

“Don’t get me wrong,” he adds, “the Priv is a great device - I just don’t think that strategically it is the right one. There are just too many reasons why it is not going to sell in the volumes BlackBerry hopes for.”

Vinay Gupta, Senior Analyst at a leading global research and advisory firm takes a similar stance: “BlackBerry with its master stroke of providing Android OS, with its famed security services, can be considered as a positive move. However, encouraging wider enterprise adoption will be a challenge in short term. This appears to be too little too late kind of scenario for BlackBerry.”

So, what about a general move to Android?

Since CEO, John Chen, said at CES this year that no devices powered by its own BB10 operating system will be released in 2016, many pundits believe BlackBerry plans is to ditch its own operating system altogether.

Damian Tay, Senior Director of APAC Product Management even told The Economic Times to a flurry of media attention: “The Priv device is essentially our transition to Android ecosystem.”

However, this is not the party line. And Murtha of BlackBerry tells us: “We know that our customer base still demands the top notch security and productivity benefits of BlackBerry 10, and as a result BlackBerry remains committed to the BB10 operating system.”

He adds that the next update, “10.3.3, will be certified for NIAP compliance, which means BB10 will have passed the strictest government-grade security certifications. This achievement will enable us to further support our government and regulated customers who use BB10 devices and demand the highest levels of security.”

But should BlackBerry ditch its own OS entirely?

“If we talk of BlackBerry 10 (BB10) software, it makes perfect sense to jettison it now,” says Senior Analyst, Gupta. “For its fiscal quarter ending August 2015 BlackBerry sold 800,000 devices, a third of what was sold a previous year. With such reduced device sale, it becomes irrational for developers to develop apps for them. Low app availability again becomes a dissatisfaction point for BlackBerry customers.”

This is “easier said than done” though, he adds, as “most of BlackBerry’s traditional customers still root for its devices.”

According to CEO John Chen, “If our plan of doing the BlackBerry Android implementation works well and the security is accepted, of course we could replace or merge” the BlackBerry OS side of the business. “This indicates that the company itself has plans to take the bitter pill depending upon the results of its new launch,” suggests Gupta.

“I think that BlackBerry should ditch its hardware business entirely,” says Metodiev of 451 Research, uncompromisingly.

“Making devices is all about margins and you need high volumes to be profitable,” he clarifies. “BlackBerry continues to lose money from making devices and at one point it will become unsustainable. The company should concentrate in what is good at – mobile security and device management services.”

What about the all-important issue of security?

Gupta points to a 2014 report [PDF] by Symantec which shows iOS is a preferred choice for enterprise owned devices whereas Android dominates “employee liable” (i.e., BYOD) devices at work.

“Understandably,” he says “iOS is enterprise favourite due to Apple’s tighter version control and higher perceived security, all of which is virtually absent in Android open platform”. This point is highlighted by a recent Cambridge University study [PDF] which found that 87% of Android devices are not secure.

Metodiev of 451 Research seconds this. “Android is considered the least secure OS compared to iOS, BB and Windows, and although BlackBerry assures everyone that has taken measures to improve that, I don’t see many enterprise users switching because the device is now Android.

“That makes the Priv a commodity consumer device that is much more expensive than competitors’ offerings of the same class.”

Gupta agrees that given the price point [around US$699] it seems unlikely that employees, paying themselves, will choose to adopt it.

“Given the fact that volume of employee liable phones are way higher than corporate liable phones (an approximately 60:40 ratio), device price may play a major role if BlackBerry wishes to return back from being a fringe player [in the enterprise device space],” he adds.

Is there anything else to say about BlackBerry in the enterprise space?

“We will continue to deliver on our device roadmap for the year, offering devices to meet the varying needs of our users around the world,” says Murtha of BlackBerry. “We also continue to invest in BlackBerry 10 in 2016.”

Metodiev of 451 Research is not so positive. “After the disappointing sales of the Passport device and similar expectations for the Priv device, BlackBerry will find itself out of ideas,” he suggests.

“It seems like the company is shifting too wildly between completely different approaches, hoping that something eventually will stick. If that doesn’t happen, the company will be forced to abandon making smartphones. Probably not in 2016, but in the next few years.”

Gupta concludes that while the hardware side may not be looking too great: “BlackBerry is still a very strong player in the software side of business”.

This final point is also stressed by Murtha who says BlackBerry is “committed to growing” this side of things: 

“We are investing strategically in acquisitions to add to our software portfolio and specifically to enhance security, privacy and IoT – which helps us extend our cross-platform capabilities and offer greater value to customers.”

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