John Chen, Blackberry

BlackBerry open letter to customers is long on clichés

BlackBerry CEO John Chen. Image: Blackberry

4 December 2013

An “open letter” from BlackBerry’s interim CEO, John Chen, to “enterprise customers and partners” is filled with wishful thinking, unfounded promises and a wealth of clichés. But without actions, the reassuring words, if anything, underline BlackBerry’s precarious future.

The letter essentially reiterates points that Chen has made earlier since being named Thorsten Heins’ replacement after the collapse in sales of the new BlackBerry 10 smart phones. Heins also had made many of the same points during his tenure as CEO.

“The segments they have highlighted are the same segments they have had, so it signals that they believe that there is upside in all of them,” says Ken Dulaney, vice president of mobile at Gartner. “The market will of course vote on that.”

Another Gartner analyst warned in September, in light of the pending shakeup in BlackBerry management and the possible sale of the company, that enterprise customers should be weighing alternatives.

“Gartner recommends that our [BlackBerry enterprise] clients take no more than six months to consider and implement alternatives to BlackBerry,” Gartner analyst Bill Menezes was quoted as saying. “We’re emphasizing that all clients should immediately ensure they have backup mobile data management plans and are at least testing alternative devices to BlackBerry.”

In his open letter, Chen begins by promising to “set the story straight” in contrast to “a lot of noise in the marketplace” and attempts by rivals to lure away BlackBerry’s enterprise customer base, which is key to the company’s resurrection plan.

“Our for sale’ sign has been taken down and we are here to stay,” Chen asserts. His basis: the billion-dollar investment in BlackBerry by Canada’s Fairfax Financial and other investors. This, he tells readers, is a “vote of confidence in the future of BlackBerry.” Others may see it as simply a bet, in the hope that their previous investments in BlackBerry eventually will be recoverable.

“The investments you’ve made in BlackBerry infrastructure are secure,” Chen says. That may depend on what one means by “secure.” Some number of enterprise customers are phasing out their BlackBerry infrastructure as Android and, especially, iOS devices become vastly more widely deployed than BlackBerry devices. Others are simply maintaining older versions of the BlackBerry Enterprise Server to support the remaining BlackBerry handsets.

It is not yet clear how aggressively existing customers are upgrading to the renamed BlackBerry Enterprise Services 10, with new code to support other operating systems, such as iOS and Android, and a battery of improvements that are designed to make BES10 a linchpin for enterprise mobility security and management. Depending on the costs of the upgrade, enterprises may foresee three years of use on a depreciation schedule. Nothing in such an upgrade commits these customers to BlackBerry’s future.

“Our competitors want you to think that BES only manages BlackBerry devices, and that we are somehow more expensive than other MDSs,” Chen says. “This is false.”

BlackBerry has been saying in public and to customers — for well over a year that it would provide software to manage non-BlackBerry devices. And it has done so in BES10. But Chen’s assertion is a straw man argument. The issue is not about whether BlackBerry manages non-BlackBerry devices. The issue is how well it does so, given a wealth of other mature software products designed to do the same thing.

“We understand the realities of the enterprise mobility market better than anyone, and we’re in the game for the long term,” Chen declares.

If BlackBerry truly understood those realities better than anyone, Chen would not be the third CEO in less than three years and would not have to write an “open letter” in the first place.

Chen makes four factual claims but does not support them. First he says that “our EMM [enterprise mobile management] customer base is much larger than any of the other vendors in the Gartner Magic Quadrant for Mobile Device Management and it is growing.” It is not clear what Chen means by this: if he is asserting that BlackBerry still has a long list of big and medium-sized companies with enterprise BES licenses, and at least some BlackBerry devices in use, then he’s correct. But so what? His appeal to BlackBerry’s historical success obscures the fact that today “enterprise mobility” no longer means simply Microsoft Windows laptops and BlackBerry smart phones.

Secondly, he says: “We manage more mobile devices than any other vendor. Period.” Presumably there is some factual basis for his claim, but he does not back it up. The real question is whether those mobile devices being managed largely are BlackBerry legacy devices.

Chen goes on to assert that BlackBerry “moves more secure mobile data than anyone else” without defining those terms or explaining how he measures the amount of secure data moved by any of these vendors — and that “we have substantial cash and are not a small VC-backed pure play’ MDM vendor” with, he implies, an uncertain future. Quite apart from what “substantial” means in the multi-faceted mobile market, one reason BlackBerry has cash is because of the slash-and-burn cost-cutting, including layoffs, imposed over the past two years. It’s certainly not the result of massive purchases of BlackBerry smart phones.

Chen’s final point is about “security.”  He tells readers that “security is paramount.” That sounds like an unarguable point. Except that mobile security for devices, users, data, and backend corporate networks and applications has become a more finely grained discipline compared to traditional wire-line networks protected by four brick walls and a guard in reception.

“We have more certifications from government agencies than any other vendor and we’re the only EMM vendor and handset maker to receive the Department of Defence Authority to Operate’ certification,” Chen says. The implication seems to be that if the DoD “certifies” BlackBerry, every other enterprise should trust that as an endorsement, and choose BlackBerry to get the same level of security. Except that the vast majority of companies simply don’t need DoD-level security. And considering how easily Edward Snowden stole secrets from the National Security Agency, maybe we should question the value of all those government agency “certifications.”

“Governments, global corporations and organizations that will not compromise on security continue to choose and trust BlackBerry,” Chen says. To some degree, this is true, though the probably unintentional implication is that if you are not trusting BlackBerry, then you are compromising your security.

Mobile security for many enterprises is a matter of degree, increasingly depending on an employee’s role or job, and role-based permissions and security enforcement.

Chen reiterates that BlackBerry is “more than just a device company.” It is central asset, he suggests, as BES10 is a foundation for enterprise mobility that encompasses devices with different operating systems, as well as the still-emerging area of mobile application management.

But put that way, it is clear that BlackBerry is just as new to the current mobile market as its “small VC-funded” rivals. Multiple operating systems, large numbers of devices, different device types, mobile apps, and mobile data are all emerging challenges for the enterprise. In many of these areas, BlackBerry has only its incumbency to tout as an advantage.’ Enterprise customers will want to see more than that.

“John Chen is a strong leader but I think he needs more time, probably six months, to really know where to take this company,” says Gartner’s Dulaney. “So any announcements at this stage are really efforts to quiet the customer base and not to have them panic to move off. I don’t think we know very much from this letter at this point.”

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