So, there’s been lots of posts here recently about the IBM/Apple enterprise cooperation announcement.
But elsewhere, the mainstream talking-heads that make the most noise about such things tend to spend more time rationalizing their existing biases than truly analyzing the facts in front of them.
So while it’s true that the Apple/IBM alliance represents a definite potential threat to certain BlackBerry businesses, a contrarian by the name of Brian Nichols posting at Motley Fool points-out that BlackBerry, as a diversified provider, is not the one truly endangered by such a partnership. The companies that really have to worry about it include MobileIron (and others like Good Tech, etc.) which focus entirely on EMM/MDM/etc.
Yes, BlackBerry has a large EMM business (larger than their top 3 competitors combined, at this point), but they also have their famous hardware business, a very large marketshare in the automobile infotainment industry, a growing presence in the embedded OS business including medical products, consumer products, military and industrial products etc, a top global messaging platform with BBM, a new “Internet of Things” initiative they have named “Project Ion”, and so on.
In fact, Mr. Nichols asserts that it is exactly that diversity that makes the company a more attractive buyout target. And while I’m not personally pushing for any buyouts, I’m just glad I’m not in MobileIron’s position right now as Brian makes clear…
Is The Apple and IBM Partnership A Blessing In Disguise For BlackBerry?
BlackBerry and MobileIron shares are both falling lower after Apple and IBM announced a partnership to tackle the enterprise solutions market. This initiative includes a focus on mobile device management , or MDM, a key industry for BlackBerry and MobileIron.
However, looking at the implications of this deal, one of the two companies will likely benefit.
What’s this deal mean?
Essentially, Apple’s deal with IBM means more iPads, iPhones, and Macs in the workplace. IBM already has an enormous enterprise customer base that uses the company for both infrastructure and software. However, hardware and on-premise IT has been a weak spot for IBM in recent quarters, with the stock declining by more than 20% in its last quarter as cheaper cloud solutions have become preferable.
However, by using Apple products and pre-installing enterprise-specific applications, IBM will not only have a higher likelihood of retaining current customers, but Apple will sell a lot more devices in this segment. Until now, Apple has largely been considered a consumer brand, but this deal puts it on the map with a company that’s mainly enterprise. Hence, it’s a great marriage for both parties.
How does this affect BlackBerry and MobileIron?
While BlackBerry’s hardware is well known as being enterprise-friendly, the company’s transition from hardware to software might leave many investors wondering why shares are being hit so hard following this news. Yet, in reality, the weakness in shares of BlackBerry and MobileIron has little to do with Apple’s hardware penetrating the enterprise market, but rather the partnership’s focus on MDM. As part of the arrangement, IBM’s cloud services will be optimized with Apple’s iOS. The companies will target certain markets, one of which includes MDM, or the management and security of mobile devices and applications.
During BlackBerry’s last quarter, it created nearly $600 million, or over 60%, of total revenue from software and services. In this segment, MDM is a big piece of the equation and is expected to become even more important in the years ahead. Therefore, it’s easy to see why investors were so spooked at the thought of IBM and Apple focusing on MDM.
In regard to MobileIron, it focuses solely on MDM, growing revenue 158% last year to $105.6 million in this segment. The company, like BlackBerry, has benefited from the rise of enterprise demand on mobile devices, as the need for secure networks and applications has risen. However, investors now appear worried that IBM and Apple will steal much of its market share in this enterprise space.
Here’s the catch
While this news may look bad for MobileIron and BlackBerry, it might actually be a blessing in disguise, at least for the latter.MobileIron has no operational edge or other segments to protect it from the rise of larger competitors. Therefore, its stock losses and concerns could be very real. However, BlackBerry remains highly diversified with a large hardware business, a messaging platform with 100 million users that will be used with mobile payments, and a big data initiative called Project Ion that creates services from analytics. Plus, BlackBerry has $3.1 billion of cash and a patent portfolio worth billions, meaning the company has more than just MDM.
Diversification is what protects companies from sudden forays from competitors, whether they are successful or not and John Chen knows this. That’s why BlackBerry is the sum of it’s parts, not a one trick pony.
Source: Motley Fool