BlackBerry's Next Hail Mary
Robert is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
BlackBerry's (NASDAQ: BBRY) BB10 launch has been disappointing. Last quarter, the company moved only 2.7 million BB10 handsets which was well below Wall Street's conservative expectations. Now many analysts are wondering if the company even has a future in mobile devices.
Could BlackBerry survive without its hardware business? It's a long shot - but it's possible. Here're three ways the company could reemerge if BB10 is a failure.
Could BlackBerry Messenger, or BBM, become the next Skype? According to ACI Research analyst Ed Zabitsky, that's not that far fetched. He's bullish on the company's prospects of becoming a cross platform web services company delivering voice, video, and texting.
Is that possible? Zabitsky points to the potential decline of Skype. Since Microsoft purchased the VoIP service for $8.5 billion in 2011, the company hasn't done much to cement its carrier relationships. This leaves the door open for BBM.
BBM currently has 66 million active users but there's incredible demand for the popular service elsewhere. In June a fake BBM application appeared in the Google Play store and garnered 100,000 downloads within 36 hours. Notably, that was with no advertisements or announcements. That shows there's big demand for BBM among Android users.
BlackBerry could monetize the free service through advertisements. The company is experimenting with a new service called BBM Channels which allows companies to connect with their customers and users to follow brands they like. BlackBerry wants to line your BBM message feed with advertisements akin to Twitter or Facebook (NASDAQ: FB). While the service is still in beta testing, several high profile names have already partnered with BlackBerry including the Goo Goo Dolls, Alicia Keys, and Mercedes Benz.
Could BBM represent a credible threat to Facebook? That's unlikely at this point. Facebook benefits from the network effect with 1.1 billion users worldwide. That's where advertisers are more likely to send their ad dollars unless BBM can grow in size quickly. But this service could become a mobile competitor that Facebook shareholders should keep their eyes on.
Mobile Device Management
Blackberry has always offered businesses the service of managing their network of BlackBerry phones. However, the latest generation of the company's enterprise services will allow businesses to manage all of their operating systems under one roof. The move is in response to the growing Bring-Your-Own-Device, or BYOD, trend that's taking over corporations.
Multi-platform services aren't revolutionary. Other companies offer the same product. But BlackBerry can tout its reputation for security as the main differentiator from the competition. Blackberry is already well positioned in the space. The company's enterprise service product, BES10, is already installed in 65% of Fortune 500 companies.
But if MDM represents the future of BlackBerry, it will be a much smaller company. According to Gartner mobile device management, or MDM, is only a $500 million industry. BlackBerry would need to corner the MDM market and grow it by a factor of eight just to replace its current annual service revenues. This issue doesn't even consider profitability.
There's huge licensing potential for QNX. The operating system is not only used to power BB10 devices but also air traffic control systems, surgical equipment, nuclear reactors and anywhere else where the cost of failure is high.
One big market for QNX could be the automotive industry. In June BlackBerry unveiled the QNX enabled Bentley Continental GT. Imagine a future where you can customize your vehicle's dashboard, enable third party apps, or your car sending you a diagnostic before a scheduled repair. That's all possible today on QNX.
QNX is already available in 30 million vehicles worldwide. With 82 million vehicles sales annually, the automotive industry is a massive market. QNX could power the next phase of its development.
But there's an even bigger opportunity here. CEO Thorsten Heins sees QNX as the top platform for the next phase of the mobile computing revolution. In his view, the industry is moving beyond smartphones and tablets. So while next year competitors are gunning to sell more handsets, BlackBerry is ready for the next big opportunity.
However, given the recent performance of the company's share price, investors find that vision a little too ambiguous.
Foolish bottom line
Of course new ventures aside, it's still too early to count BB10 out yet. The more popular keyboard enabled Q10 handset has just been released in the United States. Investors need a few more quarters to declare the launch officially dead.
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Robert Baillieul has no position in any stocks mentioned. The Motley Fool recommends Facebook. The Motley Fool owns shares of Facebook. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!