BUAD 301 Final Paper

Analytical Profile of Blackberry Limited 1
DATE: April 13, 2015
TO: Professor Sentz
FROM: YoonHwan Cho, David Johnson, Maxwell Galbraith
SUBJECT: Analytical Profile of Telecommunication Company BlackBerry Limited
Scope
Our group will present the telecommunication company BlackBerry Limited. In this report we
will provide the information so that the readers have a better understanding of the
company. Topics covered in this SWOT analysis are: Blackberry’s security and reliability
advantage, the investment and development of QNX, the opportunity to enter the tablet market
and increase user appeal, the potential for a large market share for the automotive platform via
QNX, and the threat of competition and how it should be dealt with. At the end of the report, we
will provide the plans of how BlackBerry Limited can continue to stay competitive while going
up against the smartphone giants: Apple and Google.
Objectives
Most people have heard about the telecommunication company Blackberry Limited. The purpose
of this report is to give a detailed analysis of Blackberry from an investor’s point of view and to
present it in a strength, weakness,opportunity, and threat format. Yes, Blackberry makes cell
phones for personal and corporate use, but they do much more than that. We are here to provide a
glimpse into what Blackberry offers in forms of market share,and what can be done to improve
on that at the same time as mitigating as much risk as possible. In today’s world, competition is
fierce in the smartphone market, and companies that do not have a large presence may not appeal
to investors. This report will not only communicate what markets and niches Blackberry is
dominant in, but it will also identify where Blackberry can grow in, which might signal a sign as
a potential lucrative future investment. Going forward, this report’s ultimate objective is to
provide a thorough analysis of Blackberry’s current position, where it should concentrate its
resources in, and thoughtful recommendations that serve as a guideline for investors.
Methodology
Company Background
Research in Motion (RIM) is a Canadian telecommunication company founded by engineering
students, Mike Lazaridis and Douglas Fregin in 1984. In January of 2013, the company changed
its name to BlackBerry Limited. The company’s main headquarters are located in Canada,with
subsidiary locations in United States and Europe. The first BlackBerry, a Pager,was introduced
in 1998 and patented the keyboard design, which was easy to type with user’s thumbs. As newer
devices were introduced to the market, it quickly gained popularity due to its features:messaging
could send fax, read receipts, and send/receive emails (Moon, 2013).
Secondary Research (sources)
Blackberry Limited is one of those companies that is well known throughout North America by
their products, yet still remains relatively unknown as far as management and where the company
is heading in the future. As a group, we had to dive deep into the internet to discover the
information we needed. Yes,there is a lot of information about Blackberry products and sales
figures, but as mentioned before, the strategies behind management and philosophies of
Blackberry’s executives required more in-depth analysis. We found a large amount of useful
information on accredited business newspaper websites such as forbes.com and
theglobeandmail.com. In addition the scholarly journal titled MarketLine Case Study:Blackberry

Limited provided a huge wealth of information in a clear,decisive manner. This journal discussed
the potential of Blackberry’s future in the consumer market. Published in April 2014, it was one
of our most up-to-date credible sources.
Not much numerical data was provided straight from Blackberry’s website. In fact,almost no
useful information pertaining to our analysis was found on Blackberry’s public website. As a
result, our group had to reply on mostly credited internet sites and journals to come to a decision.
We strived to use the most up-to-date information as possible, and as with all internet sources, we
carefully filtered our result to weed out any bias or options of the authors. Due to our filtered
internet research and use of the MarketLine Case Study, we were able to implement clear data
into our analysis and come to the results that we present below.
Findings
Strengths:
Security is one of the most appealing features of BlackBerry. A lot of businesses are
communicating by emails and messages. Sensitive information are sent and received between
businesses and if even one information was to be leaked, it would cause a problem for the
business. BlackBerry’s secure network provides the assurance that the content of one’s device is
safe from an unwanted breach. According to a study by security firm Trend Micro, Bloor
Research and Altimeter Group, BlackBerry scored the highest when compared with smartphone
giants, Apple IOS and Android. Comparison of the following was considered to find the best
secured Operating System: built-in security, application security, authentication, device wipe,
device firewalls, and virtualization (Ashford, 2012).
With increasing number of businesses implementing Bring Your Own Device (BYOD),
BlackBerry may be the most sought out device for businesses. Professional users will be able to
benefit from using BlackBerry because it provides reliable features such as: higher security, better
email service, calendar management, messaging, battery life and most of all BlackBerry
Enterprise Service (BES). BES is designed to facilitate productivity by securely connecting
employees to data,applications and people. With over 70 Security Certifications and average of
35 petabytes of data transfer per month, it is the way to do mobile business (The BlackBerry,
2015). Additionally, BlackBerry is the owner of over 44,000 patents of basic functioning of a
mobile devices, security, and consumer-friendly features. Most of BBRY’s patents are in security
rather than wireless; however,these patents are worth more than $1.43 billion in NB values.
BlackBerry limited acquires hundreds of patents every year in order to make improvements to its
mobile devices (Decker,2015).
The acquisition of QNX Systems in year 2010 is an added asset to the BlackBerry Limited. QNX
is designed for embedded devices and an extremely stable and secure microkernel based
operating system that Blackberry uses to empower its smartphones and tablets (Team,
2014). Competitors such as MacOS and Windows use an operating system that uses monolithic
system, but with a microkernel architecture, it is better equipped for multi-tasking and is less
likely to crash the device because it is more stable, secure,flexible, and easier to maintain since it
uses separate servers/circuits unlike monolithic where applications and processes all share the
same memory (Umiastowski, 2013)
Weaknesses:
One of the weaknesses that BlackBerry has is the inability to compete with the
competitors. BlackBerry has fewer application selection compared to Apple and Android and

with the perception of BlackBerry being for the “professionals,” BlackBerry lacks in unique
designs to attract the younger generations. According to a research,the number of applications
for each Operating Systems are followed: Android 1.35 million, iOS 1.3 million, Windows 0.3
million and BlackBerry 0.15 million. Also, there is an issue of availability of
applications. BlackBerry’s versions of applications are usually unavailable while the same
applications of other Operating Systems are already released (Klais, 2013). Not being able to
bring application and design in the same level as the competitors will result in lower appeal to the
consumers.
BlackBerry was the most popular smartphones and they were mostly sold to companies to be
used in businesses. The brand was known in the market, but with the introduction of iPhones and
Samsung devices, the demand for BlackBerry dropped. Majority of BlackBerry users were
corporate employees and companies were providing this device for them to use for work;
however, the phone had limited use because the freedom to run application will have cause a
higher risk to its security. Therefore,the I.T. managers wanted to issue a more secure to the
employees, but consumers wanted phones that are attractive,fun and free to use, and wanted a
device that is directly available to them (Manjoo, 2013).
Finally, BlackBerry failed to market and promote the brand to the consumers. In business
marketing is the key. Changing the company name to BlackBerry was a start because consumers
didn’t have any idea that RIM made BlackBerry, but failing to constantly promoting its new
available products, caused a continuous decline in market share and sale. The two juggernauts in
smartphones Samsung and Apple spent over $400 million and $333.4 million, respectively, on
marketing in U.S. alone, while BlackBerry spent slightly over $40 million, only 10% of what
Samsung spent. Without strengthening the brand, company will always fall behind its
competitors (Cheng, 2013). Not being able to market the brand and making designs that are
appealing to consumers had an impact on the company’s net income, the company suffered net
loss of $6.8 billion in three consecutive years, from year 2013 to 2015 (BBRY,2015).
Opportunities:
In recent years,Blackberry Limited was struggling financially. More specifically, they were
experiencing huge overall operating expenses,upwards of $7 billion. Like any company that is
under financial pressure,one opportunity is to revise their cost accounting department in pursuit
of cutting unnecessary costs. Under the leadership of CEO John Chen, Blackberry has
significantly reduced its overall operating costs. From total operating expenses of $7.12 billion in
FY 2014, total operating expenses for FY 2015 were $2.02 billion, a massive decrease (Pellegrini,
2015). A main source of this cost cutting comes from Chen’s decision to outsource device
manufacturing to an outside company, Foxconn. Moving forward, another opportunity for
Blackberry resides in reducing its cost of revenue, which in turn increases gross profit (Silcoff,
2014). Chen and other executives could hire out a worthy specialized accounting firm to conduct
cost-profit analysis and dive deeper into their cost cutting strategy.
Second, QNXis regarded as Blackberry Limited’s most potential technology asset. The
opportunity that Blackberry has here is that they need to invest more into further developing this
technology for the automotive connectivity field. Simply put, QNXruns your car’s infotainment
system. Blackberry already has contracts with over 40 automakers, mostly in North America and
Europe. This investment of capital will work towards expanding QNX to be applicable to
automakers in China and India, specifically automakers like Hong Qi and Tata Motors.
Furthermore, Blackberry and QNX currently have the ability to partner with Apple to provide the
operating system for Apple’s CarPlay. With contracts ranging from Ford to Ferrari, this
opportunity could provide huge revenue for Blackberry (Dignan, 2014). Currently, QNX retains a

53% market share,with its second place rival Microsoft’s market share of only 27%, there is no
doubt that we could see market share percentages as high as 65 to 70 percent within the next five
years (Team,2014).
Lastly, Blackberry Limited has an opportunity to re-enter the tablet market. Aiding this process
will be the QNXoperating system and a revamped cloud based structure. It’s time for Blackberry
to begin offering ultra-secure tablets to their corporate clients, like the U.S. government and
enterprise users,for discounted rates. Blackberry acquired Secusmart, a super-secure mobile
operating system based on QNXlast year. Using this technology, the tablet will be able to
separate work applications from personal apps, keeping the data from the two sides apart and
minimizing potential security risks (electronista.com, 2015). This will be Blackberry comparative
advantage in the tablet market and potential increase its dwindling current market share.
Threats:
Before the popularity of Apple’s iPhone and Google’s Android really took hold of the
smartphone world, circa 2008-2010, Blackberry Limited was a force to be reckoned with, one
with competative market share and innovation. In 2009, some 40% of U.S. smartphones wore the
BlackBerry badge, according to Silicon Angel, an independent media company based in Silicon
Valley, CA (Wheatley, 2015). However,things have gone downhill for Blackberry once those
competitors took over the market. The continued loss of market share is a direct threat for
Blackberry. Its market share of only 0.7% in 2013 is slightly worse than Microsoft’s Windows
Phone, at 3.3%, but both are dwarfed by the giants of the industry, Apple and Android, at 12.3%
and 83.6%, respectively (Page,2014). Without a substantial share of the market, it is hard for
Blackberry to launch products and develop a new type of customer base, something more
expanded than just government agencies and loyal customers. Due to this, Blackberry also lacks
the ability to regain customers that have moved on to other brands. Apple and Android have no
signs at all of slowing down, so Blackberry really needs to come up with an innovative way to
regain a portion of the market share and customer basis they once had, even if that means just
setting targets at just 0.3 - 0.5% market growth per year. With attainable goals like these,
Blackberry will dismiss the threat of being labeled as,“the walking-dead smartphone company”
(Wheatley, 2015).
Although Blackberry Limited can consider the emerging trend of “Bring Your Own Device”,
BYOD,a strength due to its small, yet loyal customer basis and its BES10 (Blackberry Enterprise
Server) platform, the BYOD trend can also be a substantial threat. This is due to the emergence of
third party companies that do exactly what BES cannot, securely manage multiple devices
(Jurevicius, 2013). Companies like Airwatch, LLC.,now give corporations the ability to let
employees use their personal devices, usually iPhones or Android phones, for their business
needs as well. Prior to the BYOD trend, Blackberry was the only carrier for enterprises that
provided the security and reliability needed. Now, these third party companies make the strengths
that were once unique to Blackberrys available to whatever phone the employee wants to use.
According to Airwatch’s chairman, Alan Dabbiere, “Enterprises could provide separate corporate
and personal email on devices, allow for remote access into corporate networks, and have IT
departments set pass codes and link to corporate applications via the devices” (Silcoff, Marlow,
Kiladze, 2013). With the need to not depend solely on Blackberry devices, the BYOD trend poses
a huge threat to the defining qualities that made Blackberry the enterprise giant it once was.
Recommendations
In the history of the technology industry, it is hard to recall a company that took a harder hit than
Blackberry Limited did. In 2013, Blackberry hit rock bottom, but CEO John Chen has worked

hard to turn around the company, and now in 2015, Blackberry has nowhere to go but up. This
company has a unique set of opportunities ahead of it that differentiates itself from other
smartphone manufacturers. Furthermore, if Blackberry capitalizes on these opportunities, they
will provide Blackberry with a stable ground to work off of to eventually re-enter the smartphone
market and compete with Apple and Google.
Our finding leads us to conclude that Blackberry does not need to focus entirely on the
smartphone market currently. Instead, their strengths lie in areas of technology and security that
their main competitors cannot rival. Maximizing these opportunities will put Blackberry ahead of
its competitors and reach clients that other giants in the industry simply cannot. As a guideline to
execution in 2015-2016, Blackberry must follow the three-phase plan as follows:
1. Deliver Security for Enterprises. First,Blackberry must expand and deliver its enterprise
security segment, as their expertise in this area are unmatched. With BES 10 and BES 12,
Blackberry is poised to take advantage of the more than 600 million smartphones that are
used by businesses around the world, the vast majority of these are not connected to any
formal mobility management solution. There is a massive basis of smartphones in the
business world, Blackberry must capitalize on this by selling its BES 10 and BES 12
services to companies who need help managing their phone fleet of smartphones and
tablets (Wheatley, 2015). Targeting smaller startups, internet based companies, and
information holding companies with aggressive negotiations and compelling contracts
will reinforce Blackberry as being the premier company in enterprise and mobility
security management, giving the company the assets and customer basis it needs to
launch its other segments.
2. Expand QNX. Second,Blackberry must develop and invest in their QNX embedded
systems business, which will provide unparalleled access to the automobile industry that
Apple and Google cannot rival. As stated by CEO John Chen, “[QNX is] Already the
dominant machine-to-machine technology of the automotive industry, new capabilities
and cloud services are being unveiled, and we're looking toward adjacent verticals for
expansion” (cnbc.com, 2014). By expanding QNX, Blackberry needs to focus on taking
on more international automakers to utilize their QNX system to provide automotive
connectivity. Markets such as China, Indonesia, and India provide an opportunity for
QNXto establish itself as the premier, cost effective, machine-to-machine connectivity
medium for automotive operating systems. By investing more capital into making QNX
more cost efficient for automakers in less-developed economies, Blackberry will be able
capitalize on the automotive connectivity trend on a bigger scale that just solely relying
on U.S. based automakers.
3. Promote International Markets. Finally, Blackberry needs to look to different
international markets to promote their cheaper and more efficient smartphones and
services, such as the Classic, the Passport,and their messaging service BBM, to
consumers who cannot afford more advance smartphones and whose countries cannot
support that type of infrastructure and bandwidth. Again, markets like Indonesia, India,
and even China have huge areas of less-developed economies. Many people in these
areas do not have access to a computer, and if there is internet service there,it is at a
much lower bandwidth than economically developed areas. In these economies,
Blackberry must market its smartphones that are much more simple to use and require
less bandwidth for a sustainable internet connection. Also in these economies,
Blackberry’s BBM messaging service is more reliable and cheaper than similar services
from other smartphone manufacturers (Ferreira,Connors, 2012). No matter what Apple

or Google does, they will not be able to knock Blackberry off of the top of the third-
world connectivity market. By making efforts to reach more foreign international
markets, Blackberry can increase its global brand awareness. This could pay a huge part
in Blackberry’s future profits as the world becomes more connected at an exponentially
increasing rate.
Following this three part plan is a low risk, high reward strategy that will differentiate Blackberry
from its competitors, provide working capital, and will develop a stable basis on which it can
launch its future technologies to go head to head with other smartphone manufacturers in
developed economies.
Business Impacts
The following plan should be executed to assist BlackBerry in expanding to potential new
markets before competitors have the opportunity to do so. It is probable that corporations could
find other security substitutes instead of BES. Also, automotive connectivity technology from
other companies could surpass QNXin the automotive industry.
However,the potential of failure should not create hesitation, considering the greater opportunity
for success. Blackberry’s superiority in security and encryption is unparalleled, greatly
minimizing the threat of sensitive information being stolen, making it a worthy investment. QNX
is currently the leading automotive connectivity technology in the industry, with the possibility of
greater expansion in foreign automotive markets of countries with enormous populations. Also,
Blackberry could face stiff competition from other mobile devices in foreign markets where other
mobile phones could already dominate the market. Yet,Blackberry’s potential for new customers
is high in global markets where a quality device that provides low-cost services are favorable,
compared with pricey Android, Apple, and Samsung devices that are not feasible for
many. Blackberry has many positive prospects for its future if managed correctly, but the
company needs to invest in these prospective new opportunities swiftly and cautiously before the
competition can.
Conclusion
Within the research and findings presented in this report, Blackberry shows stability with the
possibility for greater advancement. Blackberry stands superior in its security and automotive
communication technologies, with great potential of expansion in domestic and foreign markets.
From the recommendations presented by our group, Blackberry will stand in a strong position for
investor appeal, with increased revenues and greater marketability, returning to the market force
it once was and becoming a company that will flourish for many years to come.

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