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The Five Pillars of BlackBerry’s Turnaround

Steve Capelli, CFOBy Steve Capelli, Chief Financial Officer, BlackBerry

At one time, BlackBerry owned the smartphone market. We invented much of what the smartphone is today and we built one of the world’s most globally recognized brands. But as Apple and Google emerged as competitors, we didn’t move quickly enough, and we lost our lead. It was time for a turnaround.

Our board brought in John Chen, a successful turnaround CEO, and he developed a strategy for us to be a leader again by deploying the valuable assets we built in security, mobility, and productivity to the enterprise software market. But this meant pivoting from a hardware company to a software company – changing the entire infrastructure to support a new economic model. It meant a new strategy, one that enables us to provide a standard of security that manages the network of endpoints within the enterprise. The new strategy – and thus the pivot – rest on these five strategic pillars.

pillars, BlackBerry, turnaround

  1. Product Platform: Our software platform, BlackBerry Secure, is a comprehensive mobile-native approach to security that addresses the entire enterprise from endpoint to endpoint. It is both a product platform and a standard of security. Being BlackBerry Secure means enterprise-wide solutions that are informed by deep mobile security expertise and experience, continuous technical innovation, industry partnerships and academic collaborations, on-demand cyber-security expert services, and a point of view that recognizes vulnerability wherever it lies.
  1. Relevant Target Markets: Our expertise in mobility and security make the cybersecurity, automotive, and Enterprise of Things markets key to our success going forward. We intend to provide enterprises and governments with the highest standard of security, enabling them to be BlackBerry Secure.
  1. Efficient Go-To-Market: We have a licensing, developer, partner, and sales strategy befitting an enterprise software company. We now license our brand to select third-party manufacturers who build, distribute, market, and sell BlackBerry-branded smartphones. In addition, we license our handset operating system, applications, and security technology to OEMs and others seeking our software expertise. We are also aggressively building developer and partner programs for BlackBerry Secure, enabling our platform to be the epicenter of an enterprise endpoint security ecosystem and grow exponentially as a result. Lastly, we market BlackBerry Secure to enterprises and governments directly and through top-tier channel partners specializing in enterprise sales and cybersecurity.
  1. Operational Excellence: As we shift the economic model of the company from hardware to software, we are reconfiguring ourselves from the inside out to support enterprise software, adjusting our R&D, personnel, and operations to reflect the new business.
  1. Growth and Profitability: We now see growth coming from the software and services portfolio. We are experiencing software industry standard profit margins positively affecting our economics that over time will benefit our shareholders.

The strategy is starting to pay off. We recently received the highest score in 6 out of 6 use cases for Gartner’s Critical Capabilities for High Security Management report. In fact, all G7 governments and 15 of the G20 governments are BlackBerry Secure customers and so are an increasing number of enterprise companies concerned about cybersecurity. We’ve made a number of strategic acquisitions in the security space that add value to the BlackBerry Secure platform such as Good Technology, WatchDox, AtHoc, and Encription.

In addition, we’ve licensed our brand to third-party manufacturers such as TCL and BB Merah Putih to manufacture, distribute, market, and sell BlackBerry smartphones. We’re also accelerating the exponential growth in autonomous and connected vehicles by providing software and expertise to automotive industry leaders like Ford Motor. We’ve created a new developer program and recently held our first annual developer conference. We’ve also built a formidable enterprise sales team and a reseller channel program that is growing by leaps and bounds. In our most recent earnings announcement we reported record GAAP gross margin of 67%, driven by growth in software and services revenue.

We think our recent track record tells the story. We are leveraging our worldwide mobile security brand to achieve our new mission to secure the Enterprise of Things.

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