Last week Research In Motion announced three things:

  • It had renamed itself to BlackBerry
  • It would soon ship two new BlackBerry 10-compatible devices, the Q10 (with keyboard) and Z10 (touchscreen only)
  • It had shipped the new BlackBerry Enterprise Service, version 10

These three announcements, taken together, signaled the end of a long period of frustration for customers, employees and shareholders. After a wait of nearly three years, BlackBerry, indeed, delivered the goods. Reviewers of the Q10 and Z10 have generally been impressed; these are solid handsets. Ditto for the BlackBerry 10 operating system. BlackBerry Enterprise Service 10 includes updated software updated for managing BlackBerry 10 devices and PlayBooks (the BlackBerry Device Service); a new bundled, reskinned, version of the Ubitexx MDM software it acquired in 2011 for managing iOS and Android devices (now called the Universal Device Service); and, an updated version of the server software for routing data to older BlackBerry devices using the “classic” BlackBerry network infrastructure (BlackBerry Enterprise Server). BES 10 also includes an updated version of BlackBerry Enterprise Server Express (aka “the cheap one”) for customers who don’t need all of the power and complexity that the non-Express version offers.

At least one reviewer intoned that with its new offerings, enterprises now had a true BlackBerry BYOD (bring-your-own-device) solution. It seems that the wait may have been worth it.

Left unanswered, though, is the existential question of whether it matters.

Recitation of the facts make for lamentable reading. The company’s share of new handset sales in North America was just under 3% for the most recent quarter, down from 35% just five years ago. Apple came out of nowhere to become the US’ biggest handset maker, something BlackBerry had no answer for. The Android juggernaut, led by Samsung, seems poised to take most of the rest of the market, leaving BlackBerry and Microsoft-aligned handset makers such as Nokia to fight for the scraps. As reported by Asymco’s inimitable Horace Dediu, Apple and Samsung together accounted for 103% of the smartphone industry’s profits—a number greater than 100% because competitors (RIM and others) lost money. The question isn’t so much whether BlackBerry will suddenly exit the market—partial annuity business are nearly impossible to kill. The question is, can it continue to make products that it can sell at a profit?

The path to profitability starts with great products, which in ideal circumstances lead to a virtuous cycle of desire, demand, scale, continued cost decreases and increased pricing power. That assumes that the company executes well. It hasn’t in the past. The PlayBook, for example, contained the germ of a good idea but didn’t take root with buyers for lots of reasons. Among them, an asinine and insulting advertising campaign that failed to ignite interest. (Alternatively: “We’re the only tablet that delivers the whole Internet because we have Adobe Flash!” and, “Amateur Hour is Over,”). The PlayBook also initially omitted key features, such as the ability to do on its own the thing that BlackBerry customers prized most: get email.

BlackBerry also stubbornly clung to the idea that it needed to be a network provider, years after TCP/IP over cellular had become commonplace. What was once a compelling competitive advantage has turned into disadvantage: an extra cost for customers to bear, and a single point of failure. For context, see something I wrote on the Forrester analyst blog three years ago:

The BlackBerry was introduced in 1999 as a two-way pager on steroids. Back then, TCP/IP over GSM (and other wireless networks) was just a pipe dream. RIM implemented a system by which all traffic is collected from the mobile networks of the sender, funneled through RIM servers and then routed back onto the recipient’s mobile networks and pushed to the handset. In essence, RIM—rather than the Interwebs—provided the routing capabilities needed to ensure that mail and messages are delivered. That was necessary, and worked well, when Internet data plans were not universally available. It gave BlackBerry instant push e-mail and guaranteed delivery. And critically, it was a competitive advantage that no other wireless vendor had.

And then, last year, in the wake of the pervasive RIM network outages that swept the globe, I noted the following on the SilverSky (nee Perimeter E-Security) blog:

Data plans that provide TCP/IP over wireless carrier networks are now ubiquitous, nullifying a key RIM advantage. Moreover, push email protocols such as ActiveSync are licensed by the two Post-PC device leaders, Apple and Google. ActiveSync isn’t as good as BlackBerry push email, but it is good enough for most businesses. But in spite of the ubiquity of TCP/IP-over-wireless, RIM continues to do its own thing. Essentially, when you choose BlackBerry, you are making a bet that RIM’s reliability will be better than that of your wireless carrier’s data service. That might have been a safe assumption five years ago, but [with the recent outages] it isn’t any longer.

Fast-forward to last week’s announcements. BlackBerry has directly addressed the network issue with the new handsets in two ways. First, to BlackBerry’s great credit, they are allowing the new Q10 and Z10 devices to get email, calendars and contacts over ActiveSync, using regular carrier data networks. Even better, the BES management server appears to be able to communicate with BB 10-compatible handsets over the carrier data networks, too. In short: BlackBerry has signaled its intent to make the classic RIM data service—yesterday’s network—optional. The company has not played this up, for obvious reasons. But it’s a big win for customers. I’ve already gotten inquiries from several SilverSky customers who want to scrap their expensive data plans and use the new devices in ActiveSync-only configurations.

This sounds like good news, but is it too good to be true? Some early reviews suggest that BlackBerry’s ActiveSync feature support isn’t complete, with one reviewer finding himself unable to inviting people to meetings, for example. On the CrackBerry boards, many confused addicts can’t figure out whether a separate data plan really is needed for devices that are managed by BES. BlackBerry’s website and documents are maddeningly vague.

Worse, BlackBerry’s three administration components—BlackBerry Device Service, Universal Device Service, and BlackBerry Enterprise Server—are not well integrated. Well, they are “integrated” in the sense that the are all part of the “BlackBerry Enterprise Service” 10 family, and some user interface elements are shared. But administrators must read three different manuals. There’s also components called BlackBerry Management Studio, BlackBerry Mobile Fusion Studio and BlackBerry Enterprise Server Express, which have their own interfaces as well. Confused? Old-hand BES-heads probably aren’t. But suppose you are an enterprise CIO who considering, or has already purchased, a product from an MDM arriviste such as MobileIron, AirWatch of FiberLink. Would you “leap backwards” and consolidate everything with BlackBerry’s new services? You might, or you might decide that the company’s management tools still aren’t ready. Compared to the seductive “one-console, one-policy, all-device” visions that the arrivistes are painting, BlackBerry’s looks complex and parochial by comparison. Why suffer through Jackson Pollock when you can run away with a Renoir?

BlackBerry, then, has five challenges as I see it. It must:

  • Stanch the bleeding in its traditional customer base. The new Q10 and Z10 handsets and BB 10 operating system should ensure that wavering customers give the new products a long look. That’s step one. Continuing to keep up a rapid cadence for operating system upgrades, third party app availability and new handset models: that is step two. Step three will be convert existing customers as quickly as possible to the new operating system and server software, locking them in for another few product cycles.
  • Eliminate any perceived or actual dependencies on the classic RIM network. BlackBerry needs to show customers that the traditional RIM routing and transport service isn’t needed any more, and that it has fully embraced ActiveSync as an alternative mail protocol. It must do this to eliminate the notion that its products are expensive to operate in addition to stodgy (although the “stodgy” perception will be lessened by the new handsets). This will necessarily reduce network and BES revenues but will increase sales of handsets. It is, in effect, a form of cannibalization. BlackBerry executives need to adopt the same attitude the late Steve Jobs did when explaining to shareholders why Apple didn’t fear the prospect of iPads cannibalizing Mac revenues: “if you don’t cannibalize yourself, someone else will.”
  • Offer a compelling, unified alternative to MDM products. MDM vendors offer the promise of being able to define a single IT policy once, and apply it across all devices regardless of make or model. The reality is different, though; industry’s dirty secret is that most of the MDM products are focused almost exclusively on ActiveSync platforms, and iOS in particular. BlackBerry management features are usually paper-thin. That is partly because BlackBerry doesn’t offer good APIs, and partly because customers need help most with ActiveSync; the BlackBerrys they have are company-owned and well-managed. With focus, BlackBerry could offer a first-class management experience across all device types. But—and this is important—ActiveSync support can’t be half-assed.
  • Offer “something more” to CIOs. The preceding three recommendations will at best stabilize BlackBerry’s declining share of the enterprise mobility market. To grow it robustly, the company needs to offer something other handset makers and MDM vendors can’t. Some suggestions: (1) extend the “Balance” data labeling technology to iOS and Android; (2) introduce a bulletproof proxy platform that does for ActiveSync what BES did for RIM devices and what Blue Coat did for web security (think: attachment management and stripping; bandwidth management; content inspection; time and location controls; APIs third parties can use, etc); (3) unveil a cross-device, encrypted mobile cloud backup and sharing network (think: a more secure iCloud + DropBox on steroids). These might not be the right sorts of “something more”; but regardless, the focus should be on differentiating versus handset makers and MDM vendors.
  • Attract consumers again. Although BlackBerry likes to talk about its success in developing markets (Exhibit A: Nigeria), substantial revenue growth won’t come unless it can succeed in developed markets. Consumers, which substantially outnumber business customers, are the key. BlackBerry could do many things to increase its consumer share, ranging from incremental to radical. The most radical step would be ride the coattails of a consumer-friendly OS by shifting platforms yet again, to Android—or better—to Windows Phone. Less radical steps include building products that target demanding “prosumer” segments such as photography, design or programming; bribing popular app makers to develop to BlackBerry first; or… well, I’m at a bit of a loss here. BlackBerry will never be cool. But being seen as “reliable,” “fast” and “trustworthy” might be enough.

BlackBerry must do most—say, four out of five—of these things well in order to grow again. If the company does not, it will continue to shrink, slowly ceding shelf space to Apple and Samsung. It must make BlackBerry executives crazy to think that enterprises are willing to grapple with consumer-grade devices instead of soldiering on with their trusty, secure BlackBerrys. It must make them crazier still to know that they must put to pasture one their finest inventions, the RIM network. And yet, that is the world we live in. One where “good-enough” security and management has beaten great, where TCP/IP-over-cellular has supplanted proprietary networks, and where the black-and-white of company-owned has been replaced by the gray of BYOD.

It is late in the day for BlackBerry. It’s not too late, however, for the company to pull more rabbits out of its toque. I hope it will.