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Snowden Is BlackBerry Ltd (BBRY)’s Biggest Ally

When Obama won the U.S. presidency, it seemed the man could nearly walk on water. Now, he just continues to sink. And while Obama’s (lack of) popularity is a battle he’s losing on numerous fronts, Edward Snowden continues to bring the man down with weekly revelations. But when it comes to Snowden, Obama’s bane is BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB)’s boon. Quite simply, the NSA seems unable to crack BlackBerry’s security and has found itself with a niche market to build on now that John Chen has taken over as BlackBerry’s Executive Chair & CEO.

BlackBerry security

Based on the revelations that German Chancellor Angela Merkel’s phone was being tapped by the NSA, at least until she switched to a BlackBerry Z10, the German government will no longer allow government employees to use iPhones. BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) is the gold standard in security and while so far only Germany has adopted these measures, expect one or all of the these countries – Russia, Mexico, Brazil, and France – to look to Germany’s decision.

The German government purchased nearly 40,000 secure BlackBerry Z10 smartphones a few months ago, including one for Merkel. eWeek reported that the Z10s in use by the German government included a Secusmart encryption engine installed via a micro SD card, that takes advantage of BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB)’s Balance feature.

Secusmart CEO Hans-Christoph Quelle seems to know that he has a great product when combined with BlackBerry’s Z10. “Theoretically, it would take 149 billion years to crack this code based on today’s technical standards, even with the use of special computers. The universe itself isn’t even that old. That’ll definitely keep the USA busy for awhile,” Quelle was quoted as saying recently.

Niche CEO John Chen

BlackBerry has enjoyed some recent success with the release and overwhelming uptake of BBM for both Android and iOS. They’ve even just recently begun to monetize the messaging platform. John Chen knows niche markets. When he took the reins as CEO of Sybase, he inherited a company that was hemorrhaging money, and failing to compete with Oracle Corporation (NYSE:ORCL) and International Business Machines Corp. (NYSE:IBM). Rather than try to compete, he focused on niche markets before selling the company for $5.8 billion.

It’s conceivable that Chen will simply deemphasize BlackBerry’s handset market and run with what is working – security and BBM – while looking at other areas to go forward to advance these recent gains.