What’s BlackBerry Ltd (BBRY)’s Future?

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BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) has announced that it would receive a $1 billion investment from Fairfax Financial Holdings Ltd (TSE:FFH) and other investors, representing the conclusion of its process of seeking strategic alternatives for taking the company forward. Fairfax Financial Holdings Ltd (TSE:FFH) had wanted to acquire BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) outright, but with the deadline looming today it looks like it fell short of raising the necessary funds, so this represents plan B. Ovum’s Chief Telecoms analyst, Jan Dawson, has the following comments:

What's BlackBerry Ltd (BBRY)'s Future?

“The appointment of enterprise software veteran John Chen, former CEO of Sybase, as chairman and interim CEO of BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) suggests that Fairfax Financial Holdings Ltd (TSE:FFH) and others see the company’s future in software rather than devices. This makes sense in light of BlackBerry’s sputtering device shipments over the past few months, but it’s still not clear where that growth will come from.

BlackBerry’s future in software?

“BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB)’s new investors seem to see its future in software, which means using BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) servers as the core of a broader enterprise device management platform, but this generates very little revenue for the company today. Though it’s achieved some traction with enterprises upgrading their BlackBerry servers, it has failed to sell many BlackBerry 10 devices, and this looks unlikely to change. This ultimately harms the unique selling point of BlackBerry server products leaving the door open to replacement by rivals that are better able to support the more  popular Apple Inc. (NASDAQ:AAPL) and Android devices.

BBM has had a good couple of weeks

“At the same time, it’s also too much to expect BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB)’s other software investments to ramp up fast enough to secure its long-term survival and return to growth. QNX, whose main value was providing an OS for its devices, currently generates less than $100 million a year. Equally, BlackBerry Messenger has had a good couple of weeks of downloads as a cross-platform messaging option, but continues to trail other similar messaging apps significantly.

“Fairfax’s investment will buy the company some time, which it badly needs, but the company needs a new strategy more than ever. If Fairfax had taken the company private, it could have kept that strategy to itself. But with BlackBerry remaining a public company, Chen and Fairfax Chairman and CEO Prem Watsa need to start communicating that new strategy very soon to inspire confidence in a turnaround.”

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