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BlackBerry’s Bold Move

Will our present hysteria over the issue of cyber security propel the tech company’s new business model?

For a little more than a year now, BlackBerry—once the ne plus ultra of smartphones—has, somewhat quietly (depending on how often you read your newspaper’s business section), been in the process of reinventing itself. While the company continues to release devices—its latest model, the DTEK60, recently debuted—it has taken bold strides away from producing the phones that made the brand a household name. Instead, it’s pursued, and continues to grow, a software-focused business model, specifically catered to corporations and government agencies, built upon its long-regarded best-in-class security technology (loyalists will surely remember the furor, earlier this year, over President Obama’s decision to swap his federally-issued BlackBerry for another brand).

Fortune has reported that, on a June 2015 earnings call, CEO John Chen said of this fiscally-minded pivot, “Number one, we have reduced our spending in hardware…number two, we moved some hardware resources to our software and our [Internet of Things] effort.” The executive went on to say he hoped to take “about $100 to $200 million dollars spent on hardware and divert that into software.” Time will tell whether this move proves to be successful; BlackBerry is just the latest on a long list of tech companies that have made similar shifts. Take IBM, for instance, which in 2005, discontinued producing its once ubiquitous PCs in an evolution of its own software and services-first business model. While the years since have certainly seen their share of gains, the overall strategy seems in no way a sure bet: in July, Fortune reported IBM’s quarterly revenue was down for the seventeenth time in a row.

But to simply assume BlackBerry is destined to a similar fate is to discount the cultural climate in which its renewed focus is unfolding. When executives first revealed their plans, they couldn’t have known just how pressing concerns over our personal and national privacy would become. Fear of cyber vulnerability is at an all time high. The most fundamental of American political processes—our presidential election—has been accused of falling susceptible to hackers. And it could be argued that both of this year’s presidential candidates’ campaigns rose and fell, simultaneously, on the issue of email security. 

Whether these very real political and societal concerns will actually have an impact on BlackBerry’s profitability is far from evident, at least in terms of fiscal reports. But that the company could recognize the end of one era (as Chen put it when talking his company’s shift earlier this fall: “The right question ought to be, ‘What took you so long?’”), and look inward to reclaim a reputation as the best in what it provides—and maybe make all of us a little safer in the process—is nothing to sneeze at. Yes, revenue is at the core of these decisions. But if achieving financial success also means making our hyper-connected world a tad more secure, then who’s to argue? After all, our First Amendment right to the freedom of speech is only as secure as those networks through which we communicate—not the devices that support them. 

Image courtesy of Reuters.