Is Blackberry becoming the next IBM? The question may sound ridiculous, but upon further examination, its not the craziest thing I’ve ever said. At the crux of my argument is the fundamental pivot in corporate strategy that IBM made in the 1980’s from a hardware company to a software & services company.
It appears Blackberry is making a similar transition right now. Up 4% today, Blackberry has acquired 20 software startups in the past year. It also penned a 5 year, multimillion dollar contract to continue to provide security software to the world’s most powerful entity – the U.S. Government. Additionally, their ceo has stated that if their hardware business (blackberry phones) continues to slide, they’re prepared to “shift to the software business.”
Some analysts on wall street are optimistic as well, like Steven Li of Raymond James:
“In a note to clients, Li said “Stop worrying about hardware… only positives from here on“, and argued that BlackBerry’s salvation would come from its burgeoning software business, which has recurring customers, high growth, and a 30 percent profit margin.”
In short, I’m not suggesting to buy blackberry stock. It’s still much too risky to predict the future of the ailing blackberry maker, however IBM in the 1980’s & Blackberry today do have one very convincing commonality:
THEY EXUDE TRUST
In a world where gigantic corporations are essentially hollow & only as good as their public reputation, it’s hard to find companies like IBM & Blackberry that are trusted by the entire world & its governments for decades. That trust & reputation can be translated into the software business as IBM did in the decades leading up to the new century.
It certainly appears Blackberry will soon exit the hardware business with 0.2% percent of the mobile phone market & how they pivot will determine the company’s fate.