Company aims to focus on cheaper devices, enterprise services

When Sunil Lalvani took over as the Managing Director of BlackBerry’s India operations in May last year, the situation was very bleak. On the one hand, the company’s market share had plummeted to a new low in the smartphone segment — the much-awaited launch of devices based on the BlackBerry 10 operating system had failed to enthuse buyers due to high pricing; on the other hand, the global management of the beleaguered device maker was looking for investors, to salvage its operations.

Four-pillar strategy

A year later, BlackBerry is still struggling to get back its former glory. But one thing that has changed for Lalvani is that he now has a clear direction from the new management under Executive Chairman and global CEO John Chen. The plan of action, which Lalvani terms as the four-pillar strategy, revolves around laying emphasis on enterprise software and the services business and driving down costs so that the company can offer more affordable devices.

Specifically, the four pillars are: low-cost/low-priced devices, enterprise services and solutions, the QNX in-auto entertainment platform and rolling out an enterprise version of the Blackberry Messenger – eBBM.

“The difference between last year and now is that we have full clarity on the road ahead. On the devices side, for example, most of the products were manufactured in North America or Europe, where the labour cost was higher than, say, China. That’s why one of the first things the new leadership did was to make the process more efficient by moving manufacturing to Foxconn,” said Lalvani.

As a result of the partnership with Foxconn, announced at the Mobile World Congress in February, BlackBerry is looking to price new devices on its BB-10 operating system at around ₹12,000. Called Z3, the phone, designed primarily with Indonesian customers in mind, may just be the device BlackBerry needs to revive its fortunes in India.

“It will be attractive to go to India with the under-$200 phone. At least, we will be competitive. I know you can buy Android phones at less than $75 but given the features and security packed into our phone, we can be competitive below $200,” said Chairman and CEO Chen.

This comes even as BlackBerry has dropped the price of its top-end smartphone, Z10, running on the BB 10 operating system, to ₹17,990 under a special offer. This is more than 50 per cent lower than the price at which the device was launched a year ago.

The company is also launching a mid-end QWERTY smartphone (with a keypad) called Q20 that merges the power of BlackBerry 10 with the classic BlackBerry design and experience.

E-commerce platforms

To drive costs down further, Lalvani is toying with the idea of selling through e-commerce platforms. The initial response has been encouraging. “We sold the Z10 with the new price tag on ecommerce sites and we had a sell-out. We are encouraged by the model,” he says.

Analysts tracking the smartphone segment said that BlackBerry has much to do if it wants to catch up with rivals. “BlackBerry’s shares have dropped by more than 50 per cent in the fourth quarter compared with third quarter last year and its channel partners are also not happy. They have to work hard and should look at launching sub-₹10,000 handsets as a lot of Android phones are launching low-end devices,” said Manasi Yadav, Senior analyst – Phones and Tablets, at IDC India.

Faisal Kawoosa, Lead Telecom Analyst at CyberMedia Research, reckons that the handset maker should shake up the market through partnerships with Indian phone brands. “Partnering with Indian vendors such as Micromax or Karbonn, exclusively for India, could be an option worth trying. While these companies have showcased their great design and marketing skills, that’s something that would complement very well with BlackBerry. This could be a strategic controlled licensing model,” says Kawooza.

Enterprise segment

But more than the devices business, Lalvani is investing time and effort in leveraging BlackBerry’s existing strengths in the enterprise software segment. Backed by new products such as the BlackBerry Enterprise Service 12 (BES12) and an enterprise version of the BlackBerry Messenger (eBBM), Lalvani is chasing big corporates to offer a full mobile device management service suite.

With BES 12, for example, BlackBerry now has a platform that allows IT managers in a company to securely manage employees’ mobile devices irrespective of the make of the device. The company has set up an experience centre in Gurgaon and Mumbai, the first of its kind in the Asia-Pacific region, to allow potential customers to see what its new platform can do.

“A year ago you wouldn’t find a BlackBerry executive holding an iPhone for demos. Now we do,” says Lalvani, who wants to aggressively build on the existing BES customer base. BlackBerry currently had more than 1,000 BES10 customers and 2,000 customers on the older BES5 in India, as of December 2013. These include ITC Ltd, Indiabulls and Nishith Desai Associates. Globally, and in India, BlackBerry gets 60 per cent of its revenues from the enterprise business.

According to research firm IDC, the enterprise mobility market in India is forecast to grow at an annual rate of 63 per cent, from $394.3 million in 2012 to $1.8 billion by 2017.

QNX for auto segment

To tap into this market, BlackBerry is looking at a multi-pronged gameplan. One of the biggest pieces in this strategy is BlackBerry’s QNX platform for in-auto entertainment systems. “We are talking to a number of auto companies in the Indian market for QNX. We are also looking at the healthcare vertical,” says Lalvani.

BlackBerry acquired QNX Software Systems in early 2010. In addition to providing the underlying technology for the BlackBerry 10 software, which runs BlackBerry’s new smartphone range, this technology is also used at the core of systems that power nuclear reactors and military drones.

The other key product is the new eBBM, which offers secure and reliable real-time mobile messaging. While other instant messaging applications such as the normal BBM and WhatsApp run on the Internet, eBBM will be connected through BlackBerry’s private network, giving more security to corporate users.

“Enterprise IT devotion is a big differentiator for BlackBerry. Through such deals, BlackBerry will also focus more on emerging markets, where demand for both devices and enterprise services is growing,” says Sanchit Vir Gogia, Chief Analyst at Greyhound Research.

(This article was published on April 8, 2014)
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