BlackBerry Enterprise Picks Up Steam
May 21 2013, 03:27 | 16 comments | about: BBRY
Disclosure: I am long BBRY. (More...)
BlackBerry Live in Orlando Florida has ended successfully with many announcements being made. BlackBerry's (BBRY) new marketing slogan "keep moving" also seems to apply as their new internal mission statement. New products and features are being released on a regular basis, with their enterprise services taking the limelight.
New Enterprise features released
This week BlackBerry Enterprise Service 10.1 was released and is available for download. This upgrade is free for BlackBerry Enterprise 10 customers, and BlackBerry Enterprise Server 5 customers can upgrade their client access licenses free of charge for the remainder of 2013. Additionally BES 4 customers can upgrade to BES 5, saving the $995 upgrade fee.
The new features in BES 10.1 are:
Regulated-level EMM - This feature is an extended set of policy settings and controls that restricts the new BlackBerry 10 devices for work only. This setting is optional.
Upgrade simplification - The upgrade process has been improved and now allows BES 5 customers to upgrade to the current version with no firewall changes.
Android / iOS support - The ability to manage iOS and Android devices has been implemented. Earlier BlackBerry models and BlackBerry Playbook tablets are now supportable under BES 10.
Dashboard - Managing a large amount of devices in a corporate infrastructure can be challenging, and the new dashboard graphical view containing statistical information meets this need. Some areas that can be overseen graphically are device deployment, device compliant status and application deployment.
High Availability - A requirement in a live corporate environment is redundancy and BlackBerry has included the similar BES 5 high availability active / passive failover feature.
While not a feature but equally as important is support. BlackBerry is now including BlackBerry Care support with its standard offering. This support is offered 12 hours a day, 5 days a week on a telephone and online basis. It could be argued that including support as standard may decrease BlackBerry's service revenue, but by providing basic support more companies are likely to adopt BES10. The revenue from support will materialize in the 7x24 environments and will have a higher gross margin.
I have contacted BlackBerry's corporate sales department to get an estimate on the monthly reoccurring revenue, but was surprised to be put through to a voice mail message explain BlackBerry will return my phone call in two days' time. At the time of this article, it has been 1 full business day without a response. This also includes an email request that was sent at the same time of the voice mail. Why is this important? It illustrates either BlackBerry is either falling apart and disorganized, or they are overwhelmed with sales especially with last year's cost cutting layoffs. I feel the latter is more likely as much effort with success has gone into the launch of BB10.
BES 10 servers installed
According to BlackBerry, there have been 12,000 BES 10 server installations conducted by customers globally. While it is difficult to ascertain the number of users to be supported by each server, a conservative estimate would be 100 users. This is based on the fact that according to BlackBerry, the scaled down discontinued BlackBerry express server could handle from 75 users to a maximum of 2,000 users. Since this is the express version, fewer users would likely negate the need for a BlackBerry server.
The number of users on the 12,000 servers would likely be 1.2 million users and can be used to estimate revenue.
Client Access Licenses @ $99
Smartphone upgrades @ $420 ASP 50% uptake
Server Support Advantage $1500
$119M
$252M
$18M
This overly conservative estimate would bring in $389 million in the first year. While not overly a large sum, these are based on server installations that already have been conducted and form a solid foundation for further growth. If this was a start-up company, this data would be a large positive catalyst.
Future releases
Another update is planned for late June 2013 which will extend the security capabilities. These new features will include the data-at-rest and data-in-transit security capabilities. BlackBerry Secure workspace for iOS and Android platforms will be released dependent on Apple app store and Google Play approval.
BBM Channels
BlackBerry Messenger has been updated to be more Facebook (FB) and Twitter like with a feature called BBM Channels. This ecosystem is BlackBerry's attempt to capture the social networking phenomenon, although I feel the focus is on the monetization of social networking from the corporate perspective. This product is still in beta testing and will likely be available later this summer.
Flurry Analytics
BBM and BBM channels are all about user data and this is where Flurry Analytics comes in. This third party vendor will be releasing a developer's tool by the end of Q2. This software will allow developers to improve monetization and retention strategies by establishing performance benchmarks and providing customer insights.
What does this all mean?
BlackBerry is finally releasing all their technological advancements and attempting to get BES10 fully deployed globally. It is apparent that there is a "push" to get BlackBerry products to market before all the features are ready. While I am not concerned about the stability and security of the core products, the feature set rollout will be gradual. BlackBerry is nearly up to full steam and by this fall BlackBerry Enterprise Service 10 should be chugging along. Revenue from the enterprise services will increase for the third and fourth quarters of this fiscal year.
This further supports the hypothesis that BlackBerry's share price will continue to increase gradually over the next year.
