John Chen, BlackBerry’s CEO, continues to impress with solid results as reflected in their latest financial report. If the firm was just more visible it would likely do even better. But, despite the fact that the firm isn’t well known for what it now does, it is doing impressively well. With Software and Services growing at 10 percent (at the high end of outlook) GAAP and liquidity of around $1B, the firm continues to do impressively well for a company many think died out years ago.
Where the company appears to be doing particularly well is in the <href=”#4522a3f33463″>Federal Government and Financial Services, two areas that have security as predominant in terms of priority and where a security firm like BlackBerry can truly shine. Projected growth is in the 23 percent to 27 percent range for the year suggesting this company is expected to fully strengthen.
Let’s talk about why the firm is doing so well of late.
Focus
One of the things hurting Apple and helping BlackBerry is focus. Apple, who under Steve Jobs, was the poster child for focus last decade, has begun a massive effort to diversify and has shifted from doing one or two things very well to a bunch of things most of which aren’t very successful. BlackBerry, in contrast, has largely remained focused on their QNX platform which is targeted at focused OS solutions like automotive and nuclear power, on an IoT pivot from what was MDM (Mobile Device Management), and, of course, security.
What focus does for a company is it allows management to understand the challenges before it, become familiar with the options, and execute more sharply. In effect, focus directly results in better execution because the related efforts are comparatively well resourced. When you don’t have focus, executives tend to be operating blind more often because they lack the experience needed to understand the related problems and milestones and they have to constantly cover up this lack of experience or face replacement. This is a mess that BlackBerry doesn’t seem to have and thus has been able, and based on forecast, will continue to be able to use to their advantage.
Marketing
The one downside to BlackBerry is marketing. The firm is still largely perceived as a smartphone vendor which is far from what they do these days. Yes, they still have a phone and I actually use it, but it is a very small part of their business today and not at all who they are. However, having a phone forced a ton of marketing, making the brand a household name but a name tied to wrong product set for today.
This means that much of their upside is limited to who the firm can directly reach or reach through sales partners and neither channel is enough to reach their potential market for security products and platforms.
With more visibility, I believe, the firm could be vastly more successful but (and this was similar to the problem IBM had when it spun out the IBM PC Company) it is limited by its legacy image and lack of marketing reach effectively reducing the number of companies considering BlackBerry for a solution.
It is my belief that were BlackBerry to ramp up a decent image program talking about their successes they could significantly expand their sales pipeline and these admittedly good numbers could become far better.
Wrapping Up
BlackBerry is doing impressively well given their lack of image marketing to get people to understand they are a very different company. I think this means that this company has significant upside should they more aggressively change their image and do broad demand generation work and the only downside to them not doing this is reduced growth which, today, is still pretty impressive.
BlackBerry remains a lesson on how to physically pivot a company to a new market and why marketing and focus are so important. I’m thinking it is a lesson more companies should learn. John Chen, and his team, continue to do an impressive job.
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Even if they changed the name to XYZ they would do much better. Tradtional Blackberry has been such a monumental failure that average person upon hearing the name just turns and walks away. Very strange that the management does not appear to see it.
I agree they have a brand problem but the brand tests positive which means it has equity. If it tested negative then moving to a new brand would be a more obvious solution. Recreating a global brand costs something like $30M right now and that would come right off the bottom line so I understand why they likely won’t do this.
The only ones not impressed by another beat with the help of IP while core business is shrinking are investors and therefore BB stock will be dead money for another five years unless John Chen and the whole BOD resign to be be replaced with people who know how to execute