If you have read of my posts over the years, you’ll know that one of the core tenets of my research is that significant market share changes only happen at points of market transition. There is perhaps no better case study of this than what has happened to BlackBerry over the past decade and a half.
Prior to the BlackBerry, phones were just things you used to make calls, and the process of doing anything else, even a text message, was so onerous that the only real killer application for a mobile device was voice. But then along came BlackBerry with its slick four-line display and a full keyboard.
I remember getting my hands on one in 1999 or 2000 and thought it was one of the most revolutionary pieces of technology I had ever seen. For me, being in IT, the big problem it solved was that it mobilized email. Now, no matter where I was, I could have access to email and be connected on things going on in my business immediately. For example, I had our NMS system email me when there were network outages. Now I was always a step ahead instead of a step behind. Pretty soon, almost every mobile worker was carrying one.
Mobility was transitioning from voice to email and BlackBerry rode that curve better than any vendor. By 2009, it had almost 50% of the U.S. smartphone market. However, between then and now, something happened to mobility – it shifted away from email and transitioned to mobile web as the killer application. BlackBerry tried to make the shift, but saw one device fail after the other. Personally, being a Canadian boy, I had a bias towards BlackBerry and tried the Storm, Storm II, and other “touch” devices, but I eventually caved and went the iPhone way. Today, I estimate that BlackBerry’s share in the U.S. smartphone market is now under 3%. The market shift has happened and BlackBerry will never be a significant player in the handset industry again.
So what now? Last week, BlackBerry announced that it was buying Good Technologies for $425 million in cash to strengthen its position in the mobile security space. The move was a bit of surprise given that relations between the two firms have been tense over the last decade. The two companies settled some patent lawsuits in 2004, and earlier this year BlackBerry had been critical of Good’s product announcements.
The positive here, though, is that BlackBerry recognizes there is a market transition going on and that Good can help them become a player in that market. The transition I’m talking about is to a world where we think and act mobile-first. This includes the red hot Internet of Things market as well. It should be pretty clear to anyone that the world is going more and more mobile, and this creates new security threats.
Earlier this year, I ran a security survey with Tech Target and it revealed that mobile device security is currently the top security challenge in the enterprise. Also, half of the respondents felt that the IoT would change their security infrastructure this year. Good has been one of the market leaders in mobile security for years and has recently been active in its role in IoT, so the acquisition should help BlackBerry establish itself in both markets.
This move by BlackBerry also enables it to go cross-platform and have a strong play in the iOS and Android universes. Saying this would have been sacrilege years ago at BlackBerry, but the times are changing and the fact is, if BlackBerry wants to continue to shift into an enterprise mobile security platform, cross platform is the norm, not the exception.
The timing works from Good’s perspective as well. The company filed an S1 in 2014 but never did IPO. There has been some industry chatter of layoffs at Good, and the S1 filed does show a hefty amount of debt. For all of BlackBerry’s problems, the company does have a war chest of cash, so BlackBerry should be able to invest in Good at a rate that Good couldn’t on its own.
Typically, I’m not a fan of two struggling companies joining forces. I’ve used the analogy that when you tie together two people with one broken leg, they still can’t run. However, in this case, I think the combination makes sense. BlackBerry has the ability now to become a bigger player in the endpoint security market and catch the mobile-first transition, while Good can invest without having to IPO.