BlackBerry, the End of BYOD, and Why the Microsoft Surface Duo May Be Perfectly Timed

Image credit Microsoft

Earlier this week I was at an event at the New York Stock Exchange put on by BlackBerry’s CEO, John Chen. I’ve known John for several years, and he is one of my favorite CEOs to visit because he just tells it like it is. A lot of folks when they become CEOs seem to get a stick up their butts and feel they must act like they were on the wrong side of a Stepford experiment. John is just himself and it is damned refreshing. He had Bryan Moynihan, the CEO of Bank of America, on stage with him and they just chatted. And when people just chat, as opposed to reading (gag me with a spoon) prepared statements or read scripts, they’ll say interesting things.

Now if you realize that Bank of America is arguably, and by some margin, the most powerful bank in the US, what Bryan Moynihan says carries weight. The fact that Bank of America trusts BlackBerry for security was very powerful and speaks favorably about the work John and his team are doing, but he said several interesting things. One was that while pundits are warning of a recession, none of the major players are betting on a recession—suggesting the related worries are mostly unfounded. Recession isn’t a topic for this publication but two additional things he said were. First. that Bank of America was pulling back from BYOD, and second that they needed a business focused smartphone solution.

Let’s talk about both in turn.

BYOD

We, and by “we” I mean analysts, have been big promoters of BYOD for some time now, but apparently it really isn’t working well according to Bryan. The reason is that when you add a whole bunch of variety in terms of hardware you massively increase the complexity of the solution which, when it comes to securing the result, is problematic. This is on top of the recognized service and support issues we already knew were problematic.

This extra complexity makes it far more difficult to assure a security solution will work, whether we are talking antimalware, authentication, or trust. And banks have all of these as priorities. But now with state-level hostile players like North Korea in the mix this complexity is simply no longer practical because it makes a breach more likely and anything that makes a breach more likely is on a short list to be eliminated. As a result, Bank of America is moving back to an operating plan where employees again get company provided hardware and are required to use it for business.

The drivers for BYOD remain in terms of being able to acquire employees in a tight market and that means the firm will still need to provide attractive and current hardware or they will have problems with employee acquisition. Bank of America, given its size and market power, is a trend maker not only for the banking industry but for industry in general particularly when it comes to security. That’s arguably a good deal of the reason BlackBerry had them on stage but that also means they’ll be followed in other ways and I spent some time talking to other IT folks in the audience and they seemed to agree with Bryan’s position. So, I think, this was an early indicator that BYOD is likely to decline in popularity if not become obsolete.

Business Smartphone

The other thing Bryan implied, and he is a BlackBerry user, is that the market needs another business focused phone. I’ve been hearing this from financial institutions, government accounts, and some law offices for some time—that they really miss the days when BlackBerry was in the phone business. They want something they can trust and informally they will often say that they don’t trust Apple’s security by obscurity policy and consumer phones running Android just seem too risky.

This dovetails with what Microsoft likely heard from their customer advisory panel (they have one of the strongest panels in the industry) that drove their creation of the Surface Duo. This phone was created to be the next business-oriented phone and reverse the mistake that largely drove Microsoft, Palm, and BlackBerry out of the market. A significant part of the market wants a business phone again.

It strikes me that BlackBerry could partner with a firm like say Motorola or HTC to create such a phone as a business alternative to Apple to provide another alternative path but, right now, Microsoft is the best positioned to take advantage of this unmet need.

Wrapping Up

You learn a lot from people when they aren’t scripted, and I found the discussions between John Chen and Bryan Moynihan fascinating. I’d been hearing rumblings that BYOD was losing favor, but this is the first time I’d heard any CEO, let alone one of Bryan’s stature, effectively say it was no longer a viable policy. But I’ve often thought that the smartphone industry that dominated before Apple entered the market massively screwed up first by not taking Apple seriously and recognizing there was a market for a consumer focuses smartphone, but also in not fighting harder to preserve the business market for smartphones. That market should be more like PCs, meaning a significant part should be focused on business not entertainment and it currently isn’t. Just like there was a huge unmet opportunity for Apple to step in and address the consumer market that was unmet, there is a huge opportunity for someone else to address the business segment that was wrongly abandoned.

It reminds be a bit about the IBM mainframe which was supposedly killed in the 1980s but remains one of the most lucrative platforms for IBM today because they reversed course and reinvested in it. I think there is a big opportunity for someone to step in and reestablish that market and, right now, only Microsoft is stepping up. I think Bryan was suggesting BlackBerry should as well. We’ll see. The company is still named after the phone after all, and that could turn out to be prophetic.

Rob Enderle: As President and Principal Analyst of the Enderle Group, Rob provides regional and global companies with guidance in how to create credible dialogue with the market, target customer needs, create new business opportunities, anticipate technology changes, select vendors and products, and practice zero dollar marketing. For over 20 years Rob has worked for and with companies like Microsoft, HP, IBM, Dell, Toshiba, Gateway, Sony, USAA, Texas Instruments, AMD, Intel, Credit Suisse First Boston, ROLM, and Siemens.

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  • And the next day, Bank of America downgraded $BB Blackberry with $6 price target. Probably waiting until after Brian presented. Would seem to be capturing trends to drive greater valuation, but not happening.