BlackBerry must get rid of its BB 10 operating system, which is the hub for its highly secure mobile ecosystem, and should focus on Google’s Android instead. This bold advice comes from Scotia Capital analyst Daniel Chan.
Why move away from BB 10?
BlackBerry CEO John Chen, in his almost two years at the company, has transformed the Canadian firm from a struggling smartphone maker to a relevant player in software for enterprises. To expand its non-hardware segment, the firm has made several acquisitions, with the latest being the $425-million takeover of Good Technology. Acquiring Good not only helps BlackBerry hit its goal of $500 million in software revenue by March 2016 but also sidelines one major rival in the programming business, says Bloomberg
Despite the transition toward software, hardware still represents 40% of the Canadian firm’s revenue. And BlackBerry did say long ago that an in-house OS helps it ensure a top-class security for which the firm is known for.
Chen has made some important decisions to revamp BlackBerry’s device business, including outsourcing manufacturing and development to overcome the problem of inventory buildups, which has troubled the Canadian firm in the past also, says Chan. Chen even allowed access to a number of Android apps via the Amazon AppStore. Despite all these moves, BlackBerry’s market share has continued to drop
Benefits to BlackBerry
Presently around two-thirds of the firm’s research and development costs is directed towards hardware. And if BlackBerry discontinues its OS, it could save $266 million per year, notes Chan, adding that it would lead to almost 1,400 jobs cut.
“While BB10, in our opinion, is technologically superior to many mobile platforms, it has failed to generate the recovery BlackBerry had hoped for and continues to be the primary source of losses for the company,” Chan said.
More importantly, a shift to a new OS will allow BlackBerry devices to access all Android apps, thus giving one less reason to retail consumers to move away from BlackBerry. An easy-to-use device could help the Canadian firm hit its goal of 10 million device sales, the analyst says.
BlackBerry could “differentiate itself” from other vendors by focusing on the enterprise market. Apart from boosting hardware revenue, Android adoption could help the Canadian firm to “significantly reduce costs in its Devices business and lower the breakeven revenue level,” notes Chan.
However, Chan accepts that balancing security will be the most challenging task.