Abacus Director of Security Brian Lozada comments on BYOD in the financial sector

Aug 29, 2014

Chris Metinko, Merger Markets
August 27, 2014
• Long-term growth of government and financial markets in question
• Expertise could provide foothold in Internet of Things

BlackBerry’s (NASDAQ: BBRY) early success with its enterprise security platform may serve only as a temporary reprieve while it looks for growth from initiatives in the Internet of Things and its security patents, industry sources said.

The Waterloo, Ontario-based phone and security provider earlier this month announced its new Secure Work Space platform for third party systems like iOS and Android had received approval from a key US government agency. Department of Defense customers can now use iOS and Android devices in addition to BlackBerry smartphones, with all devices managed and secured through Blackberry Enterprise Service 10 software.

That deal, said a venture capitalist in the security sector, was a good start for BlackBerry in solidifying its ability to secure sensitive information on third-party devices. Carving out a niche in government contracts, and those of other heavily regulated industries such as finance, may give the company solid revenues, but not likely a long-term growth strategy, he cautioned.

Many in the financial sector already have a “bring your own device” (BYOD) policy at this point, said Brian Lozada, director of information security at Abacus Group, a provider of IT solutions for investment management firms. While BlackBerry allows for additional visibility into firms’ IT operations, mobile device management (MDM) companies such as AirWatch, MobileIron (NASDAQ: MOBL) and Good Technology are also effective in helping IT departments manage mobile devices across the organizations, he said.

IT departments want to provide more flexible BYOD plans to retain and attract employees, a security company executive said. Those policies have made it easier for companies like Apple (NASDAQ: APPL) to compete against BlackBerry’ hardware offerings in the enterprise, he said.
User friendliness may also hurt BlackBerry’s chances, according to the VC. Anytime another vendor’s software or features are added to devices made by companies such as Apple and Samsung, those device’s user-friendliness — which is what makes them so attractive —diminish, the VC said.

Apple CEO Tim Cook has made it clear Apple will target the enterprise market and likely will be a tough competitor for BlackBerry. In mid July, Apple and IBM (NYSE: IBM) announced a partnership in which IBM would develop enterprise applications for Apple’s mobile devices.

The Apple-IBM agreement will help IT professionals manage BYOD environments because they will have support for employees using iOS devices for enterprise functions, said Nick Balletta, CEO of TalkPoint, a webcast platform. The agreement will cut into BlackBerry's market significantly, he said.
Furthermore, new enterprise security features on Apple’s iOS8, due out this fall, is expected to close the gap on BlackBerry, suggested Deutsche Bank in a note Monday. Deutsche said companies it had spoken with were planning to jettison their BlackBerrys in favor of Apple’s iPhone, which would boost the business of mobile device management (MDM) companies like MobileIron.

While the Apple-IBM partnership may not have an immediate impact on BlackBerry, it does raise the competitive pressure within the enterprise customer base, said an industry analyst. Already the company must compete against much more established enterprise vendors including VMware(NYSE: VMW) after its AirWatch acquisition this year, Citrix (NASDAQ: CTXS) after its 2012 Zenprise deal, and IBM after its 2013 acquisition ofFiberLink and now its partnership with Apple.
BlackBerry, which has a USD 5.22bn market cap, declined an interview request. In a written statement about its mobile security offerings and the Apple-IBM partnership, it said, “Enterprises should think twice about relying on any solution built on the foundation of a consumer technology that lacks the proven security benefits that BlackBerry has always delivered.”

BlackBerry’s most recent earnings for the quarter ending 31 May show a slight stabilization for the company on the revenue side. The company reported revenues, which had been in severe decline due to decreasing handheld devices sold, fell only 1% from the previous quarter, to USD 966m. Revenue for the same quarter last year was USD 3.1bn. Blackberry’s revenue breakdown for the most recent quarter was approximately 39% for hardware, 54% for services and 7% for software and other revenue. For the same quarter a year ago, the revenue breakdown was approximately 71% for hardware, 26% for services and 3% for software and other revenue.

The company, however, still is seeing losses. The company reported net losses, excluding noncash charges, of USD 60m for the quarter ending 31 May, wider than the USD 42m in the preceding quarter, but less than the USD 67m in the same quarter a year ago.
Finding a new niche Blackberry will continue to sell both its security software and hardware as it pivots to interconnected devices and the Internet of Things, said a source in the mobile security sector. On 18 August, BlackBerry created a new business unit to be called BlackBerry Technology Solutions. The unit is comprised of BlackBerry’s technology assets, including its embedded software (QNX), its Internet of Things application platform called Project Ion and Certicom, the company’s cryptography applications. Sandeep Chennakeshu will lead the unit. He has served as president of Ericsson mobile platforms and CTO ofSony-Ericsson.

The new initiative is BlackBerry’s play into the new — and growing— Internet of Things space where so many other tech giants like Apple, Samsung,Google (NASDAQ: GOOG) and Intel (NASDAQ: INTC) are staking claim. The new unit could allow BlackBerry to offer companies the ability to gain insights and data not just from their connected devices that have Blackberry software, but other devices and sensors now connected to talk and interact with each other.

BlackBerry clings to device management while seeking pivot -- industry sources


Learn more about how your firm can benefit from our comprehensive IT and cybersecurity services.

Contact Us