Another Step in John Chen’s Diversification Strategy

BlackBerry-Logo

In a previous post UTB contributor emstardeluxe wrote about BlackBerry Technology Solutions, a newly created division within BlackBerry led by Dr Sandeep Chennakeshu, with the following suite of portfolios under his responsibility:

  • QNX embedded software
  • Project Ion (the Internet of Things)
  • Cryptography applications
  • Antenna tuning
  • BlackBerry’s patent portfolio.

Diversify

This announcement comes as no surprise, as one of the key components of CEO John Chen’s turnaround strategies since his arrival nearly 10 months ago has been to diversify BlackBerry’s operation’s into separate business units.  Each of these units: handsets, enterprise mobility management (BES), QNX and BBM, has their own budget and mandate.  There are several benefits achieved through implementing this strategy:

  • A reduction in the dependence of handset sales as a revenue stream.  For many years, BlackBerry’s viability as a company was almost solely based on the number of handsets it could sell. This was a risky proposition in an environment with so many competitors.
  • It allows each of these units to separately focus on its growth, sustainability, and profitability, without the distraction of other business operations.
  • By being separate, each of Blackberry’s units of operations can be more easily analyzed and evaluated on its own merits.
  • It will also help to erase the perception among many analysts and others in the mainstream, business and technology media that BlackBerry is solely a handset maker.  This is very important as BlackBerry’s current situation with a low market share among smartphone manufactures does not necessarily mean that the company is doomed and cannot be profitable and thrive.  It was this perception that kept some customers away from BlackBerry.

EggsInOneBasket

One fact that cannot be ignored is that in North America and other industrialized countries, the growth in new smartphone sales is on the decline as the market becomes saturated.   Both Apple and Samsung have seen a reduction in the sales of their new devices  and if this trend continues, it could be problematic for Apple as they are very heavily dependent on new iPhone sales as a percentage of their revenue.

So I see this strategy as an intelligent move by CEO John Chen, as it’s never a good idea for a company to have all its eggs in one basket.  It also allows for initiatives such as Project Ion, NantHealth, and the new QNX operating system for automotive safety to get the attention and funding that they need to become successful in their own right and to eventually contribute a larger share of BlackBerry’s revenue.

web99

Web99 enjoys tech and has tried smartphones on all the major platforms. Out of all devices he has tried, BlackBerry10 best fulfills his needs.

Top