What BlackBerry going private means for India

After the warning of a record quarterly loss of nearly $1 billion, largely due to a write-off on the BlackBerry Z10 smartphone that failed to ignite consumer interest as BlackBerry expected, and plans to lay off about 40 percent (nearly 4500 people) of its already reduced work force within the next 3 quarters, the news that BlackBerry has signed a letter of intent with a group led by Fairfax Financial Holdings, a Canadian insurance and investment company, to pay shareholders $9 a share in cash, pending a variety of conditions, and thus taking the company private comes as no surprise. There were no details on identities of other companies in the group. Rumours of this scenario playing out have been strong in the world of BlackBerry watchers for weeks.

This essentially means that BlackBerry as we know it will be very different from the BlackBerry of tomorrow. With plans to take the iconic BBM cross-platform, a lynchpin of the erstwhile BlackBerry strategy to sell smartphones, a genre it invented, no longer exists.

More from Business

Hyundai India’s Rs 27,870 crore IPO oversubscribed by 2.28X, largely driven by institutional investors How Indian fintech startups are driving Malaysia’s UPI-like digital payments revolution

The intent to go private is so that BlackBerry can now action their articulated mobile computing vision without pressure from financial markets in the medium-to-long-term- they are aiming at a future where they are a leader in software-driven mobile computing solutions (that touches vehicles, healthcare, financial markets, etc, etc) with BBM extending reach to the consumer domain and connecting the two (which is why BBM is going cross-platform).

[caption id=“attachment_1130111” align=“alignleft” width=“380”] A man is silhouetted against a video screen with the Blackberry logo as he pose with a Blackberry Q10 in this photo illustration. Reuters[/caption]

Impact Shorts

More Shorts

Chennai Ranks #1 in Challan Checks: ACKO Insights for Smarter Car and Two Wheeler Insurance Decisions

Tata Harrier EV vs Mahindra XEV 9e: Design and road presence compared

QNX, the software at the heart of BlackBerry 10 is already used in millions of cars, sophisticated healthcare equipment, financial terminals, and even nuclear power plants. The vision is where your mobile computing device can seamlessly talk to your car or medical equipment, or where you only carry one powerful mobile computing device as opposed to today, with a smartphone, laptop, etc. At work, you dock your device which is connected to the Cloud and peripherals such as a monitor, keyboard and mouse. Your peripherals will exist, but compute power will not come from a laptop or a PC but from your mobile computing device.

And Prem Watsa, a Canadian-Indian, born in Hyderabad in 1950 may be the best guide for such a journey. A _Reuters_ profile describes Watsa as an old hand at looking wrong today and right tomorrow. The profile adds: Like the billionaire Buffett, an investor Watsa says he admires, Watsa preaches a long view that suggests it may be too early to assess his decision to buy into BlackBerry.

Speaking last year, Watsa suggested investors looking for a short-term rebound in BlackBerry might be disappointed. “Is it going to turn around in three months, six months, nine months? No,” he told reporters. “But if you’re looking four, five years … We make investments over four or five years.”

What it means for BlackBerry and India

With the massive write-off on the Z10 and the market not providing any rosy perspective on the Q10 or the Q5, the writing is on the wall for the consumer-facing hardware business. This is why BlackBerry’s latest flagship, the Z30, was launched quietly in faraway Malaysia, and not in the US as the Z10 was. Malaysia incidentally generated 300 percent growth for BlackBerry in recent years. The focus will be on the enterprise space and perhaps in markets where BlackBerry continues to do well.

India though is a different story. While BlackBerry was a strong player in India till a year ago, things seem to have drastically changed. According to IDC India, BlackBerry’s share of the Indian smartphone market dropped to 2 percent in the AMJ 2013 quarter from 7 percent a year earlier, even as smartphone sales in India are growing at over 50 percent annually. Market tracker CMR shows BlackBerry’s market share slipped to 0.7 percent in July, down from 7.1 percent a year earlier.

India has also seen churn in top management with erstwhile BlackBerry India MD Sunil Dutt leaving suddenly right in the middle of the BlackBerry 10 launch cycle.

As BlackBerry now focuses on the niche enterprise and prosumer space, which are not price-sensitive, marketshare in the price-sensitive Indian market may dip even further. One near-certainty is that Z10 prices will come down quite a bit as a result of the write-off.

However, the enterprise focus may be a good thing for BlackBerry in India, where they have been strong in the enterprise space. India also hasn’t been as affected by the BYOD (Bring Your Own Device) trend that’s much bigger in developed markets.

As Indian enterprises adopt BYOD strategies and allow employees to get their own devices, many Indian CIOs would look at BlackBerry to provide the device management layer (MDM), and leverage BlackBerry Enterprise Service 10 (BES 10), the latest release of the platform that is not new to IT teams. Also remember that India is a huge Android market and Android is the mobile OS that worries CIOs the most, considering widespread Android malware and security issues.

According to IDC, Android has an overwhelming 91 percent marketshare in the Indian smartphone market, whereas Android holds a 79.3 percent share in the global smartphone market. Samsung in fact has recognised this problem and is trying its best to provide Android solutions for the security-conscious enterprise, but BlackBerry may have the entrenched advantage here.

In fact, the only good news emerging from the gloom surrounding BlackBerry is the adoption of BES10, with more than 25,000 commercial and test servers installed to date, up from 19,000 in July 2013. Also, BlackBerry’s current India MD Sunil Lalwani is an executive with deep experience in the enterprise space - which will play to BlackBerry’s advantage as they refocus on the enterprise in India.

Job cuts wise, India is a small outpost for BlackBerry- around 65 employees is what I hear. While we have not heard anything definite, some job cuts may be imminent in India too though with an already lean team, actual numbers may be low. Also with job losses happening over time, India may not be impacted soon.