BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) shares plunged 8.30% on Wednesday to $10.36 after International Business Machines Corp. (NYSE:IBM) signed an enterprise mobility deal with Apple Inc. (NASDAQ:AAPL). Enterprise sector has been the focus of BlackBerry since the beginning. And strengthening the company’s position in the enterprise market was a key part of BlackBerry CEO John Chen’s turnaround strategy.
Is IBM sidelining BlackBerry?
As soon as the ailing Canadian company started showing signs of a turnaround, the Apple-IBM deal came as one of the biggest threats to its enterprise stronghold. Apple devices are already popular in the consumer market. IBM will develop more than 100 enterprise solutions, including native apps, for the iDevices. The new apps will be for big data analysis, security, device management, supply and management services.
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The Armonk-based IT giant will also provide onsite support and service for Apple products to enterprise clients. UBS analysts Amitabh Passi and Eva Leung said in a research note that IBM and Apple both aim to become more relevant to enterprise customers with offerings like analytics, cloud, security and mobile. A number of recent acquisitions, such as Citrix-Zenprise and IBM-Fiberlink, put further competitive pressure on BlackBerry in the enterprise mobile management (EMM) business. The Waterloo-based company is now competing against well-established and much larger vendors.
BlackBerry’s ultimate success in enterprise remains questionable
The Canadian company is focusing on the regulated industries such as healthcare, government and financial. But BlackBerry’s ultimate success is still questionable. The biggest challenge for the Canadian company is to grow its revenues. The company has brought down its operating expenses by about 60% in the past 12 months. However, there is no sign of revenue growth.
BlackBerry has EMM, messaging and QNX, along with a CEO with exceptional track record in turnarounds. But the competition is fierce. Research firm Gartner says that IBM, VMware, Citrix, MobileIron appear like leaders for EMM. But BlackBerry has now become a niche player. The ailing Canadian company aims to generate $100 million from its BBM messaging service next year, but a clear roadmap to monetization is still not in place. QNX is a valuable asset, but it is a small contributor to the company’s total revenue, says UBS.
UBS analysts have a Neutral rating on the stock with $9 price target.