Archive for September 2013

BlackBerry, As We Know It, Is Done

The highway of mobile technology is littered with broken companies and products. Apple Newton, Go, Palm, and many more could easily be characters in a info tech version of a Bruce Springsteen song. And now BlackBerry, previously Research in Motion, is heading out on the road for one last separate deperate try at relevance. But, like the characters that populate The Boss’ New Jersey, a last chance shot at happiness usually ends in disappointment and that’s pretty much what will happen to BlackBerry.

After horrendous quarterly results that included announcements of layoffs (on top of previous layoffs), an enormous quarterly loss, burning through $500M of its cash cushion in one quarter, and a reduction of their smartphone products from six models to four, it was not much of a surprise that they agreed to be purchased by a group led by their largest shareholder, Canadian investment company Fairfax Financial Holdings, Ltd for $4.6B. No matter what the price, it feels like throwing good money after bad. Maybe someone figured out the breakup value and came up with a number north of $4.6B, Or else it was simply pride in my northern neighbor’s technology prowess. Either way, it’s hard to see what can be done with BlackBerry now.

Actually, that raises the question: Is there value left in BlackBerry? Sure there is which is why, like Motorola, the parts are worth more than the whole. First off, BlackBerry has a lot of patents. That’s always helpful in the mobile technology arena. They have secure messaging and email software that would be of value to any of a number of companies that want to create more secure mobile products. That’s the real star in the BlackBerry sky. They still have millions who subscribe to their secure messaging service, though that number is dropping. They also own the QNX embedded RTOS – that’s real time operating system for you non-total-geeks. It’s pretty useful for the small devices that are beginning to make up The Internet of Things. There’s usually not a Google-dollar of money in embedded operating systems but there is value in one robust enough to power medical systems (really – medical monitors and important things like that).

They also have… actually that’s pretty much it. Sorry to say there is not much else of interest. Most of the company was involved in the smartphone business and that has been a bit of a disaster. The BlackBerry 10, the newest touch screen smartphone, was so uninspiring that the company has to write down something in the neighborhood of $900M in unsold inventory. Worse than that, many enterprise application vendors have stopped developing mobile applications for the BlackBerry. They can talk about moving away from the consumer and focusing on enterprise but that strategy is irrelevant if the application software companies don’t go along with it. From what I can see, they’re not. Few new enterprise application company bother to develop for the BlackBerry and many old time partners don’t seem to have them in their future plans. Some enterprise software companies are quiet about their BlackBerry plans but none are running to stand beside them and publically lend support. Instead, they are only supporting customers who have been using BlackBerry devices for a while and will eventually wean them off the nearly irrelevant devices.

I expect that Fairfax will make a noise about finding a new strategy to keep the company whole rather than tussle with Canadian regulators. As soon as the deal closes though, I imagine them selling off the patent portfolio and software assets as soon as possible. There will be takers of course. The secure messaging applications alone will be interesting to practically every major information and mobile tech company. QNX could go to a major customer or perhaps a company like Google that wants to embed themselves in all types of devices. Mostly to get the data from those devices but that’s a discussion for another day.

What about the mobile handset business? Nothing comes to mind. Maybe they can convince HP or Dell to take a shot at it. Both companies would certainly benefit by having a native and robust mobile device capacity. Probably not enough to spend the money and deal with the distraction. On second thought, they both have enough problems to fix right now without trying to absorb a mess like BlackBerry’s handset unit. Far more likely, the unit will declare bankruptcy and disappear.

Sorry to say, BlackBerry is finished. Kaput. Done like dinner. I hope they can prove me wrong but I wouldn’t put money on it. Too bad.

Salesforce.com and Workday

There sure has been a lot of partnerships announced by major software companies. First there was the Oracle-Microsoft alliance (which I admit sounds like something out of the book 1984), then the Oracle-Salesforce.com bromance. Yesterday (September 18. 2013), Salersforce.com announced another strategic partnership, this time with Workday. Workday is an upstart cloud software company, much like Salesforce.com once was, that focuses mainly on human capital management and financial management. The partnership is a product integration one and not a sales arrangement. Both companies have pledged to do a deep integration with each other’s products so that each company’s applications work seamlessly together.

The announcement was significant in two ways. First of all, it benefits customers. Salesforce.com and Workday customers will soon be able to enjoy a fully integrated, nearly end-to-end enterprise business solution. Not just a CRM solution or a financial software solution but almost a whole business management suite. The deep integration, which included sending sales revenue and forecast information to Workday and allowing Workday alerts to broadcast in Chatter, means that different departments can share information effortlessly. Both Salesforce.com and Workday customers can do this without having to buy into single vendor’s monoculture. Each vendor can focus on what they do best while still offering a complete enterprise cloud application solution.

Another reason this announcement is meaningful is because of the opportunity it represents for both Workday and Salesforce.com channel partners. The partnership removes barriers for partners trying to provide complete solutions without the integration turning into a science project. In the end, it reduces significant risks associated with deploying Salesforce.com and Workday as part of a wider enterprise solution.

The announcement did leave a few nagging and lingering questions unanswered:

  • Will this evolve into something more than an integration partnership? At present, the partnership is all about application integration. That’s good but will that be enough for customers? Will there be co-selling and bundling opportunities in the future. Salesforce.com and Workday emphasized that this was an “engineering” partnership but seemed to leave the door open for it to become more than that in the future.
  • What does this mean to the Oracle partnership? On this account, Salesforce.com’s Marc Benioff was a bit vague. No one said any of these deals were exclusive but it’s hard to imagine there won’t be some consternation and confusion amongst Salesforce.com customers who will wonder where devleopment energies will go – Oracle or Workday.
  • Does this mean that Salesforce.com is eschewing the buying or developing of other enterprise applications? Are they content to stick to the sales and marketing crowd they know well and let partners do the rest? It would be a good strategy in the short term. They have been quite successful building up from a narrow base of cloud CRM into a powerhouse product portfolio for marketing and sales organizations. The next step would seem to be to break out from that traditional customer base to service the software needs of the whole company. These partnerships provide additional reach but they cede control of much of the enterprise application ecosystem to others. So, is Salesforce.com content to continue to grow within its traditional categories? Or will they aspire to have the same reach as Microsoft, SAP, and their partner, Oracle?

From a customer point of view, this is a good partnership. It promises to deliver end to end cloud solutions that would have been much more difficult for Workday and Salesforce.com customer to achieve. From perspective of Salesforce.com and Workday, this is also a positive arrangement. They will be able to claim that they can deliver complete enterprise solutions which allows them to better compete against their competitors. At least for a while, this is partnership has benefits for everyone. Everyone that is except Salesforce.com and Workday’s competitors.