Is Blackberry Going Android?

BlackBerry Ltd , which has been tight-lipped about its plans to make a mainstream Android smartphone, fueled more speculation about its plans this week when it scooped up two Android-related domain names.

Several blog posts in the last two days have noted that the Canadian handset maker bought the domain names “AndroidSecured.com” and “AndroidSecured.net” this week. That spurred more chatter that it intends to build a device powered by Google Inc’s  Android platform, which powers the vast majority of smartphones sold across the globe.

The purchase of the domain names is particularly interesting since BlackBerry Chief Executive John Chen has declined to confirm a June Reuters report that said the company was planning an Android phone.

Speculation that BlackBerry will embrace Android was also spurred this week by a Digitimes report that said the company plans to roll out several models of Android-based phones.

In the past three weeks, however, Chen has said at least twice that he would only build an Android phone if he can “secure Android”.

BlackBerry downplayed the significance of its domain name purchases in an email on Friday, saying: “BlackBerry frequently registers domain names to support the breadth of our cross-platform portfolio. Android is an important part of our cross-platform enterprise software strategy.”

Indeed, one of the domains, “AndroidSecured.com”, currently redirects users to a BlackBerry enterprise-focused site.

But that has not stopped a barrage of chatter on tech blogs about the purchases being part of BlackBerry’s plan to build its own secure Android, going beyond supporting existing Android phones on its BES12 device-management system. BES12 allows corporate and government clients to secure Android-, iOS-, Windows- and BlackBerry-powered devices on their networks.

Under the leadership of Chen, the Waterloo, Ontario-based company has been pivoting toward software and device management as its recent devices, powered by its BlackBerry 10 software, have failed to win mass appeal. Analysts and tech gurus believe a move to Android could give BlackBerry’s device arm a new lease on life.

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Will Blackberry Embrace Android?

BlackBerry Ltd’s move to embrace Android, although geared towards lifting revenue from its software and device management segment, could inadvertently give its device arm a new lease on life.

“From the standpoint of marketing, this is a great way for BlackBerry to get visibility. It really doesn’t hurt them much, and the upside is high,” said Rob Enderle, who runs technology consulting firm Enderle Group.

Enderle and other financial and tech analysts agree that the move by BlackBerry does present its own set of challenges as the company would have to support two platforms and potentially put some resources into marketing an Android device, but with little to lose most agree it comes with little downside.

“If Android has one significant weakness it is security and that’s just the thing that BlackBerry can fix, so it could play out pretty well and I am actually quite surprised that they did not try this sooner,” said Enderle, adding that BlackBerry has to deliver a compelling device in order for the gambit to work.

Reuters reported last week that BlackBerry was considering a move to test run Android on its upcoming slider device, as part of a bid to convince potential corporate and government clients that its device management system, BES12, is truly able of manage and secure not just BlackBerry devices, but also devices powered by Google’s Android, Apple’s iOS and Microsoft’s Windows operating system.

“In order for BES12 to succeed it has to be viewed by all as platform agnostic, and what better way to demonstrate that other than by doing it yourself,” said Ramon Llamas, an analyst with technology research firm IDC.

BlackBerry, which once dominated the smartphone market, has seen its market share drop to under 1 percent, as the iPhone and a slew of Android devices from Samsung have captured market share. John Chen, a turnaround expert brought in to fix its slide, is now pivoting BlackBerry to focus more on its well-regarded software and device management business.

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Blackberry Loss Shrinks

BlackBerry Ltd reported a smaller quarterly loss on Friday and is showing encouraging signals about its endangered smartphone business as well as its software and services sales, spurring a more than 4 percent jump in its shares.

The Canadian company, a smartphone pioneer pushed to the margins by Apple’s iPhone and devices running Google’s Android software, is now focusing more on software and services than on hardware as it works through a long turnaround.

On the services front, the company reported a huge number of conversions in its second quarter to its heavily promoted new device management platform. But BlackBerry’s hardware unit also offered hopeful news, posting an adjusted profit for the first time in five quarters, helped by lower manufacturing costs and strong demand for its low-end Z3 handsets in emerging markets.

“This is the first time in a long time that we have actually made money on hardware,” Chief Executive John Chen told reporters, while hinting at plans to unveil new phones at Mobile World Congress in Barcelona in 2015. “We think we can continue on that track, so hardware is no longer going to be a drag to the margin and the earnings.”

The Waterloo, Ontario-based company’s revenue in North America rose from the previous quarter, but sales slipped elsewhere. Its total revenue was down more than 40 percent from a year earlier.

“They’re taking all the right steps, which is great. It’s encouraging to see,” said BGC Partners analyst Colin Gillis. “Now we’ve got to see what Chen can do about the revenue decline.”

BlackBerry shares were up 5.2 percent at C$11.45 on the Toronto Stock Exchange and up 4.6 percent at $10.26 on Nasdaq.

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Apple-IBM Alliance Downplayed

IBM Corp’s recent move to team up with Apple Inc to sell iPhones and iPads loaded with corporate applications has excited investors in both companies, but two rivals say they are unfazed for now.

Top executives at Dell and BlackBerry Ltd scoffed at the threat posed by the alliance, arguing the tie-up is unlikely to derail the efforts of their own companies to re-invent themselves.

“I do not think that we take the Apple-IBM tie-up terribly seriously. I think it just made a good press release,” John Swainson, who heads Dell’s global software business, said in an interview with Reuters in Toronto last week.

PC maker Dell and smartphone maker BlackBerry are in the midst of reshaping their companies around software and services, as the needs of their big corporate clients morph.

Swainson, who spent over two decades in senior roles at IBM, said, “I have some trouble understanding how IBM reps are going to really help Apple very much in terms of introducing devices into their accounts. I mean candidly, they weren’t very good at doing it when it was IBM-logoed products, so I do not get how introducing Apple-logoed stuff is going to be much better.”

While conceding that Apple products hold more allure, Swainson said they lack the depth of security features that many large business clients like banks covet.

IBM and Apple could not immediately be reached for comment.

BlackBerry Chief Executive John Chen similarly downplayed the threat of the alliance in an interview with the Financial Times, likening the tie-up to when “two elephants start dancing.”

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BlackBerry And Amazon Team Up

BlackBerry Ltd has agreed to a licensing deal with Amazon.com Inc that will let the Canadian smartphone maker offer some 240,000 Android applications from Amazon’s app store on its lineup of BlackBerry 10 devices this fall.

The move allows the Waterloo, Ontario-based company to add a vast array of consumer-focused apps to its devices, while at the same time directing its own efforts toward developing enterprise and productivity applications.

Customers who own smartphones powered by its BlackBerry 10 operating system will now be able to access popular Android apps such as Groupon, Netflix, Pinterest, Minecraft and Candy Crush Saga on their BlackBerry devices this fall. Google Inc makes Android, the mobile operating system used in more than a billion phones and tablets.

The apps will become available after the Canadian smartphone maker rolls out the upgraded BlackBerry 10.3 operating system, the company said.

The move is the latest by the smartphone pioneer to streamline its focus as it attempts to reinvent itself under new Chief Executive Officer John Chen as BlackBerry phones have lost ground to Apple Inc’s iPhone and Samsung Electronics Co Ltd’s Galaxy devices.

Analysts saw the move as a step in the right direction, but are not sure whether it will help turn the tide for BlackBerry.

“While this will widen the BB10 app ecosystem, the consumer

smartphone environment still remains challenging,” Wells Fargo analyst Maynard Um said in a note to clients.

Um views the announcement as a positive for BlackBerry, but said “whether it stems consumer churn remains to be seen.”

Chen wants to remain a competitor in the smartphone segment, but is focused on making BlackBerry a dominant force in machine-to-machine communications. The company’s QNX software already is a mainstay in the automotive industry, powering electronic and other systems in a wide range of cars.

BlackBerry already works with hundreds of large enterprise clients, including corporations and government agencies, to manage and secure mobile devices on their internal networks.

Chen intends to build on those ties and BlackBerry’s security credentials to let these enterprise clients build and customize in-house corporate and productivity applications for their employees.

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Can BB Benefit From The WhatsApp Deal?

Facebook Inc’s awe-inspiring $19 billion bid for fast-growing mobile-messaging startup WhatsApp sent shares of BlackBerry Ltd surging after the closing bell as early as Wednesday, as investors were cheered by the lofty valuation for the messaging platform.

The deal sent shares in BlackBerry up as much as 9 percent in trading after the bell because it put a rough valuation metric around the smartphone maker’s own BlackBerry Messaging service.

BlackBerry Messaging, or BBM as it is more commonly known, was a pioneering mobile-messaging service, but its user base has failed to keep pace with that of WhatsApp, in part because BlackBerry had long refused to open the service to users on other platforms.

WhatsApp, with a user base of some 450 million, has grown rapidly. Its service works on Apple Inc’s iOS platform, Google Inc’s market-dominating Android operating system, along with devices powered by both the Windows and BlackBerry operating systems.

BBM remains popular, even though BlackBerry devices have waned in popularity. Late last year, the Waterloo, Ontario-based smartphone maker finally opened the messaging platform to users of iPhones and Android devices, and the service currently has over 80 million active users.

However, investors have attributed little value to the asset within the company. On Tuesday, Raymond James analyst Steven Li, in a note to clients, broke out a sum-of-parts valuation of the company and pegged the value of BBM at merely $240 million, or $3 per user.

Facebook’s valuation of WhatsApp translates into roughly $42 per user, and that could lead investors and analysts to rethink their valuation of the asset within BlackBerry.

BlackBerry has given no indication it is keen to sell the asset. While there has been some speculation that BlackBerry may seek to carve out the unit, or even sell it, the company’s new Chief Executive John Chen has so far said that BBM remains a core asset for the company.

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