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BlackBerry touts enterprise software sales

Matt Hamblen | June 24, 2015
BlackBerry's revenues from licensing software and technology to enterprises have become a bright spot in the company's continuing financial recovery.

Given recent acquisitions, including WatchDox, Chen said BlackBerry is trying to cover all bases for enterprises. "We could one day envision doing it all in one platform and I don't think anybody could compete with us," he said. WatchDox provides secure enterprise file sync-and-share software to allow users to protect, share and work with their files on Android, iOS, Windows Phone, BlackBerry and PC platforms.

Hardware still BlackBerry's biggest revenue source

While software was a high point for BlackBerry, the biggest source of revenue is still hardware, which comprised 40 percent of the $658 million in the first quarter. Services accounted for 38 percent, and software and technology licensing made up 21 percent.

The hardware revenue was based on sales of about 1.1 million BlackBerry smartphones, with an average selling price of $240.

BlackBerry recently entered into joint development and manufacturing agreements with Wistron Corp. and Compal Electronics, in addition to an existing manufacturing partnership with Foxconn. The new agreements are designed to reduce time-to-market for new devices and leverage economies of scale.

Even so, hardware has been a consistently sore subject for BlackBerry. For the new BlackBerry Leap smartphone, with a 5-in. touchscreen, it is "too early to tell" how the market will respond, Chen said. "Some people really love it and some are not so crazy about it," Chen conceded.

Meanwhile, the earlier BlackBerry Passport with its touchscreen and physical keyboard has been "selling steady," he said. "People still buy it...We have to bring the awareness of these devices up."

Chen emphasized, again, a stronger reliance on software over hardware. "We're not overly concerned" with hardware, Chen said. "More of our focus at the company right now is on expanding the distribution for software, and we're excited with selling software through carriers and once it's online, that's good leverage."

He predicted profitability for BlackBerry in the second half of the current fiscal year, partly with greater emphasis on software. "We do need to remove $100 million to $200 million in spending in hardware and divert it to software."

Analysts react

Three analysts were generally upbeat about BlackBerry's first-quarter showing in software.

"Certainly, the BlackBerry turnaround is not complete," said Jack Gold, an analyst at J. Gold Associates. "Their aggressive target for software sales for the fiscal year may not be met, but they are moving in that direction. All in all, I'd say the progress they are making is slower than many had hoped for, but they are making progress nonetheless in moving from a primarily hardware-focused company of a few years ago to a software-focused one..."

Gold said he was pleased BlackBerry is close to slightly positive cash flow. "The predictions of their imminent demise are overstated. If you have money in the bank and are at or near profitability, you can stay in business for a significant time."


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