BlackBerry is a company that has a unique primary focus on business buyers; a class of buyer most cell phone companies either don’t focus on anymore or, as Samsung is demonstrating, are struggling to engage. This focus during the recession was a problem because as business fortunes fell, their willingness to buy user technology like phones fell as well, which accelerated buying behavior from businesses to users.
However, with the upswing in smartphone malware, which has been particularly onerous on the Android platform, and the stock market in the U.S. hitting record highs, an increasing number of businesses are looking for an alternative they can trust. But while BlackBerry, then Research In Motion, stood alone on focus, unfortunately it also stood alone as unprofitable.
Even with this huge impediment holding it back, BlackBerry returned to significant profitability this quarter and, with the help of its increased marketing funding, should be able to accelerate back into what remains of the business buyer market.
Let’s talk about why BlackBerry may be a better choice for business, what the firm must also do, and why profitability is important.
We saw this in a very pronounced way back when Windows 95 came to market. Here was a platform designed almost exclusively for consumers and it came into businesses initially like a hot knife through butter. And it did a ton of damage.
I was a young analyst and I was so excited about this platform that I put it on my CEO’s notebook computer and turned it into a brick. This is one of about 10 times during that year that I nearly got fired (I think I was working for a record). But the worst was at Intel where a tech put Windows 95 on a machine that was managing a huge processor fabrication line and it crashed the line, doing millions in damage.
These kinds of problems were happening all over the world, leading to companies banning the OS but users brought it in anyway, and this likely more than anything else forced a huge focus on developing PC management products. Eventually, Microsoft recreated OS/2 in Windows NT, a business-focused platform and while it never again got the huge lines that Windows 95 enjoyed, it also didn’t get the massive crashes. In fact Windows XP, the most refined version of that first OS/2-based product, was so popular with businesses that many refuse to replace it.
Unlike consumers who often gravitate to the most attractive and most popular item being primarily motivated by perceived status, business buyers in the mid- to enterprise space are concerned about capabilities of the company providing the technology and are more concerned with reliability than beauty. For a buyer of a business solution, the financial viability of a company speaks to its ability to execute. Not only does a purchasing manager not want to have to sue a supplier for an inability to execute, he or she absolutely doesn’t want to be in a position to collect from a bankrupt entity.
Adding to this: Were a company to fail that had demonstrated poor financial performance, the person authorizing the purchase could appear negligent, which, when it appears in an employment jacket, can be a career, if not job, killer.
This means that even if BlackBerry had the better solution, if the company still appeared to be trending to failure, they’d still avoid it. And this likely accelerated the moves companies were making to allow employees to buy their own phones; with BlackBerry in financial distress, they were left without a valid argument for a different path.
This is why it is so important that BlackBerry demonstrate that it can again generate a profit; financial results like the ones just reported take the cloud off the company and return the firm to the approved list of vendors.
First, now that it is out of the woods, it needs to increase marketing, reminding buyers the company can be trusted to provide a better business solution. It also needs to at least be neutral with users and showcase features that are uniquely theirs. BlackBerry clearly needs to continue to be profitable, but it also has to address its historic users, have an iPhone alternative and have a Samsung alternative. Currently, in market, it has the first two, but Samsung is pushing the technology edge and is opening up the large-screen segment. But Samsung is also is the most vulnerable, due to Android uncertainty and its failing relationship with Google. So I think BlackBerry needs a bit more device variety, particularly in the 5-inch + screen-size class of phablets.
BlackBerry is actually back. Its financial performance reflects that it has crossed back over into being a profitable company, but it will need a few quarters like this before many companies will trust it again. If it does that, it should see strong growth, particularly if Apple continues to weaken and Android continues to be unacceptably, from a business standpoint, unsecure.
BlackBerry was helped by the general market upswing and a reimagined platform that is better able to bridge the needs of business and employees, coupled with a line targeting iPhone and historic BlackBerry fans. It now needs to focus a bit on the even stronger Samsung opportunity and showcase it can grow to its potential again. It’s going to be hard, certainly, but not nearly as hard as what they just accomplished. Welcome back BlackBerry!