BlackBerry: 8 Ways It Can Be Saved

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Two years into John Chen's tenure as CEO of BlackBerry, the company remains on a knife's edge. In the wake of September's disappointing Q2 2016 earnings report, BlackBerry last month released its first Android-based smartphone, Priv, to mediocre reviews.

To make matters worse, the Priv arrives under the shadow of Chen's candid admission that BlackBerry may exit the handset business if the company doesn't turn a profit next year. Such frank sentiment isn't likely to build confidence in BlackBerry as an ongoing business.

There are some reasons to be hopeful. The company's acquisition of Good Technology expands its contact with business customers using Android and iOS phones and puts it in a position to sell security and document management services in addition to its other enterprise offerings. Its investment in NantHealth could help it make inroads in the healthcare market, where the company's QNX operating system might find uses in mission-critical IoT devices.

[How did BlackBerry lose its mojo? Read BlackBerry Doomed by First iPhone, Storm Failure.]

The company's recent decision to exit Pakistan rather than comply with a government order to help it monitor all BlackBerry Enterprise Service traffic in the country, highlights its willingness to put its customers first, at least when it comes to non-critical markets.

Troubled companies have been able to come back from the brink. Apple, of course, is the prime example, but it had the help of its major competitor, Microsoft, in 1997, in addition to a visionary leader. Apple, Google, Microsoft, and Samsung have shown no intention of being BlackBerry's white knight. Nothing yet suggests Chen can conjure the magic demonstrated by Jobs.

But, giving BlackBerry and Chen the benefit of the doubt, let's explore some possible roads to redemption.

Make great hardware.

Chen has suggested BlackBerry may give up hardware, a segment that represents 41% of the company's revenue. That would only accelerate the company's irrelevance, or at least its transformation into something other than a mobile device company. Companies that make only software depend on the forbearance of the major platform players. Once Apple, Google, or Microsoft decides to create software that duplicates the function of BlackBerry software, or to change the platform rules, BlackBerry could find itself shut out.

For example, consider how Apple forced Adobe to change its business model. Or try to guess why BlackBerry Messenger, available for Android and iOS, hasn't become the leading cross-platform secure messaging app. In part, it's because Apple promotes FaceTime, also known for security, through default installation. BlackBerry needs to make excellent hardware, even if only a small segment of devotees will overlook other issues in exchange for a physical keyboard. Unfortunately, its latest attempt to do so with the Priv appears to have fallen short.

Bet on Android.

With Microsoft still struggling to boost adoption of Windows Phone, it's clear that building marketshare with an alternative mobile operating system is an immense challenge. Android, by virtue of being free, open source, and backed by Google, has left no room for other mobile operating systems to take root. BlackBerry 10 OS, which lets users run Android apps, doesn't have a real reason for being. BlackBerry should commit fully to Android and adapt its business-oriented apps as soon as possible.

Bet on security.

Android doesn't have a great reputation for security. BlackBerry does. Although mobile security goes beyond device characteristics -- talking within earshot of the wrong person or a hidden microphone can undo the most sophisticated encryption -- BlackBerry can rely on its reputation for security as a marketing advantage at least. The company's decision to work with Google to bring BlackBerry Enterprise Server (BES) 12 to Android Lollipop shows it making some headway.

Bet on modularity.

Several modular phone projects are underway, including Google's Project Ara and Fairphone. If these succeed, they could disrupt how people buy and maintain their phones. BlackBerry could help evangelize the idea and develop secure hardware modules for enterprises. If it doesn't, some other company will. BlackBerry's strongest play may be to change the nature of the smartphone game.

Innovate with hardware.

Trying to manufacture handsets more efficiently than Apple or Samsung may not be possible without a huge investment in engineering and production resources. Instead, BlackBerry should look at ways to develop underutilized technology to alter the dynamics of the market. For example, it could advance peer-to-peer mesh networking, an idea that has been around for a long time, but hasn't been developed at scale. Think how appealing it would be to be able to buy a phone that didn't require cellular service.

Monetize patents.

BlackBerry is already exploring this option. It struck patent licensing deals with Cisco and another unnamed party over the summer. Presumably, there are other companies it could approach.

Find friends.

The list of old-guard enterprise companies left behind by the mobile revolution is long. BlackBerry would do well to find common ground with firms such as HP, IBM, Oracle, and SAP, to name a few.

Win in China.

Chen has said China isn't a priority, but he has explored relationships with Chinese companies such as Lenovo and Xiaomi. While a sale of BlackBerry to a Chinese firm might meet resistance from US regulators concerned about the security for US government customers, a more arm's length partnership might work. The real question, though, is whether strong security can exist in a market where the government demands access to, and control of, communications.

BlackBerry has a shot at a second act. All that remains is for Chen's aim to be true.

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