Will embedded and middleware help save Blackberry

The financial news for Blackberry is potentially bad this week, as it has been for most of the past few years. Some analysts are predicting that the Canadian company will post losses of as much as 7 cents per share, though the consensus seems to be closer to 3 cents. If that happens, it'll be Blackberry's fourth quarter out of the last five to show a decline.

Blackberry, as most know, has been suffering through an ongoing and painful fall from grace for quite a while now. In part, that's because it's had an awfully long way to fall at its apex, Research in Motion was one of the most important technology companies on the planet, taking the business world by storm with its Blackberry handsets and doing at least as much as Apple which gets the lion's share of the credit these days to popularize the idea of a phone that did much more than make calls and send texts.

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But the iPhones and Androids of the world have won the handset wars pretty convincingly Good Technology's latest Mobility Index Report shows that 73% of the total new smartphone activations in the enterprise (Blackberry's historic stronghold) were iPhones, with Android accounting for all but 2% of the rest. Blackberry's hardware business is, in short, kaput.

Even some of the company's assets that still make money are in trouble, according to experts. Ken Dulaney, a vice president and distinguished analyst at Gartner Research, said that Blackberry Enterprise Server, the company's enterprise mobility management product, is not the industry leader it once was.

"It's doing well on a revenue basis ... probably among the top revenue generators, but that's mostly because there's a lot of older Blackberries that are out there. In terms of how it's doing on new devices, it's still coming up it doesn't have quite some of the features of other products today," he says. "But more important than the feature set, which I think they'll probably make up for in the coming months, is the fact that customers have already committed to one of the other MDM players they're committed to Airwatch or MobileIron or Good or whatever."

Moreover, those older Blackberry devices are on the way out, according to Dulaney which will rob BES of much of its install base.

Ken Dulaney, a vice president and distinguished analyst at Gartner Research

"Blackberry is still a hardware company, and the hardware company's not doing well. A lot of people call us up and tell us they're pulling the Blackberries out," he says.

Nevertheless, Blackberry is fighting hard to remain relevant in the EMM market notably with the recent announcement that BES would be compatible with Android for Work, Google's enterprise-focused mobile framework for security and management.

Stacy Crook, a research director for mobile enterprise research at IDC, says that while this isn't a game-changer on its own, it does send important signals to the market.

"The fact that BES is compatible with [Android for Work] is a good thing but many of their competitors are also supporting AfW, so I'm not sure it gives them a lot of specific competitive advantage," she says. "However, it does demonstrate that Blackberry is pursuing a cross-platform EMM strategy in earnest, which is critical in order to hold on to existing customers as well as future growth."

A bigger potential ace up Blackberry's sleeve, however, is a lightweight operating system called QNX (pronounced CUE-nix), which has quietly conquered the world of embedded technology and seems poised to become the foundation of large parts of the Internet of Things. QNX, whose origins stretch back to 1982, was acquired by Research In Motion in 2010. It's been particularly popular lately in the automotive industry, with Blackberry boasting earlier this year at CES that QNX now has 40 automotive partners, including the U.S. big three, Hunda, Acura, BMW, Porsche, Toyota and Volkswagen.

Frank Gillett, a vice president and principal analyst at Forrester Research, said that the big question is whether QNX is enough to carry Blackberry's foundering hardware operation, or if it's more likely that it'll have to be spun off into its own entity.

"There's not a lot of interdependency between QNX and the original Blackberry business, so the question is whether Blackberry creates enough synergy to keep those things stuck together or whether QNX gets pulled out of that," he said.


Jon Gold

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