BlackBerry’s ‘Open Letter’ Misses Some Key Points

BlackBerry 10.

BlackBerry is acknowledging its current crisis in an open letter scheduled to appear in many newspapers this week.

“You can continue to count on BlackBerry,” that letter insists. “We have substantial cash on hand and a balance sheet that is debt free.” The company is restructuring, it continued, “with a goal to cut our expenses by 50 percent in order to run a very efficient, customer-oriented organization.” (In the meantime, the company continues to bleed cash—something the letter doesn’t state.)

As part of this attempt to “set the record straight,” the letter goes on to make the following points: that BlackBerry 10 is a “best in class productivity tool,” that BlackBerry devices and backend infrastructure offer “best in class security,” that its BlackBerry Enterprise Service 10 server platform is gaining customers, and that BlackBerry Messenger remains the best option for mobile communications.

BlackBerry 10 is certainly a polished operating system—BlackBerry spent years developing the underlying software, and did its level best to release something capable of competing against Google Android and Apple’s iOS. But even the best features in the world are useless if nobody buys the devices that run them—and nobody’s buying BlackBerry 10 devices.

That lack of sales recently forced BlackBerry to take a $960 million write-down on unsold inventory. Over the past three years, according to research firm Gartner, BlackBerry’s share of the overall smartphone market has collapsed from 55.3 percent to 2.7 percent. While BlackBerry 10 is comparable to the operating systems built by Google and Apple, it doesn’t boast anything so unique it would make iPhone and Android users abandon their devices en masse.

A similar issue plagues BlackBerry’s security. At one point in time, BlackBerry really did represent the best in mobile security. But nothing in technology stays static for very long, and both Apple and Google, with an eye on business users’ loyalty and dollars, have worked diligently to boost their respective operating systems’ security (which is why security-conscious organizations such as the Department of Defense now allow iPhones and some Android devices onto their networks). It’s also possible—although obviously not confirmed by the U.S. government—that the NSA has cracked BlackBerry security along with that of all the other smartphones on the market. In other words, while BlackBerry is secure, it’s not the only game in town—and certainly not the sort of competitive differentiator that could persuade a major enterprise to abandon a BYOD policy in favor of returning to BlackBerry’s fold.

BlackBerry also uses the open letter to promote BlackBerry Messenger as the best-in-class mobile social network, and the platform does have a lot of happy users; but as the company itself acknowledges, it’s not the only option (by far) for those who want to swap messages. Indeed, by porting BBM to iOS and Android, BlackBerry removed a competitive differentiator from its own portfolio in favor of a broader customer base.

But BlackBerry’s self-defense may soon become a moot point: A recent Bloomberg report suggested that the company could end up sold for parts.

In September, a consortium led by financial-holding company Fairfax Financial indicated that it would acquire BlackBerry for $4.7 billion. That announcement came on the heels of BlackBerry’s Board of Directors announcing that the search for a potential acquirer was underway. According to Bloomberg, however, Fairfax Financial may prove unable to scrape together all those billions, and companies approached as potential acquirers—including Cisco and SAP—are reportedly interested only in some parts of BlackBerry’s business.


Image: BlackBerry