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BlackBerry has a future, but it’s not in handsets

Lily Cole contemplates BlackBerry options. Matt Crossick/PA

The news that BlackBerry is considering “strategic alternatives”, including a possible sale, will come as no surprise to anyone who has followed its decline in recent years. Once a smartphone pioneer, BlackBerry now has just 3% of the global market. But even if its phones will never catch up with the iPhone or Android options, all is not lost for BlackBerry as a company.

Few people put much faith in BlackBerry these days, partly because the smartphone industry seems to live off radical innovation, and BlackBerry is not delivering it. The story thus goes that investors should ignore firms that have few major novelties up their sleeve. BlackBerry seems a case in point.

This is but a crude reading of events. Samsung, for instance, has done very well for itself in the smartphone era through improving and perfecting technologies pioneered elsewhere, using essentially the same strategy Nokia so successfully applied in the feature-phone era. Even in high-tech industries with rapid product redundancy, this kind of incremental innovation is the bread and butter activity for most firms.

Firms still in the game, that is. For there is one context in which more radical initiatives are rightly called for: firms that find themselves in continuous gradual decline, riding out the wave of bygone technology generations, and having failed to switch in time to the successor generation.

Nokia is typically seen in this light, having long underestimated the disruptive potential of operating systems open for third-party app developments. Another is BlackBerry. Among other things, it did not really look beyond its classic Qwerty keyboard, even as touchscreens emerged as the dominant design.

As the extent of the damage became more and more visible, both firms instigated turn-around programmes. They focused - mistakenly - on catching up. Nokia tied itself to Microsoft, which belatedly tried to mimic an Apple-esque app ecosystem, and staked its fortune on me-too smartphones, the Lumias.

BlackBerry brought out the Q10/Z10 and a new version of its operating system. These products are of decent build but cannot disguise the fact that competitors are already much further down the learning curve, with sizable brand followings. BlackBerry and Nokia/Microsoft also seem to want to wish away the current winner-takes-all phenomenon in smartphone operating systems.

The inconvenient truth is that 11th-hour turn-around initiatives should concentrate on innovating outside established trajectories. Trying to beat new market leaders at their own game is futile. What is needed is a move to a less contested space, where laggards can again start to create a momentum. Ideally, such moves leverage some company-specific strength. For BlackBerry, this new space might be mobile device management, banking on its enterprise server advantage.

BlackBerry’s Enterprise Server (BES) is the main reason why the company has not yet crashed and burned as badly as it could have. Business clients have hesitated to abandon the secure working environment and efficient integration that BES offers, even if the BlackBerry handset experience was lagging.

Some recent activities show that the company could be going in this direction. Most notably is the release of the Secure Work Space app that allows iOS and Android users to benefit from BES. BlackBerry Balance should be extended to non-BlackBerry devices too. Firms are increasingly device-agnostic, but their security needs remain. It is in this new area of mobile device management, including mobile app management and secure connectivity, that BlackBerry’s greatest prospects lie.

In due course, there will be other parties interested in this field, including mobile operators that are ogling the device management needs arising from the bring-your-own-device (BYOD) trend. And newer firms such as MobileIron and AirWatch are starting to attack. But at least the rules of the game for this emerging market are not yet established. BlackBerrry’s server platform might allow it to put some distance between itself and followers, building a leadership position once again.

Revamping devices not only presents a gargantuan uphill battle for RIM in the medium term, it may also be a misguided strategic direction in the long run. Bear in mind that handsets are becoming increasingly similar, no matter how much marketeers struggle to have you think differently. The dominant design of a rectangular touchscreen will increasingly serve as a window to a 4G cloud, nothing more. Users will be able to access most apps from most phones, either because Android becomes the dominant platform or because the next generation of html coding will decouple access to applications from operating systems (which, by the way, could also run in the cloud).

So why would consumers pay a premium for any one device if all devices are equally capable of connecting to the net? Beyond screen quality and maybe battery life, there is little that will set a future Samsung or Apple phone apart from others.

Providing device-agnostic services to corporate clients thus may hold the greater potential for BlackBerry. Its management might not normally be courageous enough to abandon its former mainstay in devices, but a new strategic investor could provide the necessary jolt.

Another former industry casualty, Siemens’ mobile device unit, was not fortunate enough to retain an advantage like BlackBerry’s BES, and thus was bought at scrap value and bled dry. BlackBerry still offers investors a reasonable shot at success in a new market and should not be written off.

An earlier version of this article was published by Troy Media.

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