Saturday, September 28, 2013

Update: Gartner tells IT shops that it's 'game over' for BlackBerry


Respected analyst firm Gartner is set to recommend that all BlackBerry enterprise customers find alternatives to the struggling vendor's smartphones and enterprise management software over the next six months.

Garner's advice to users comes after BlackBerry today confirmed that it expects to lose $965 million in the second quarter amid slow sales of its Z10 smartphone since its unveiling in March.

On Monday, BlackBerry had announced plans to sell the company to Fairfax Financial Holdings of Toronto for $4.7 billion. That came just days afterBlackBerry disclosed plans to lay off some 4,500 of its 12,500 workers.

"Gartner recommends that our [BlackBerry enterprise] clients take no more than six months to consider and implement alternatives to BlackBerry," said Gartner analyst Bill Menezes in an email interview on Friday. "We're emphasizing that all clients should immediately ensure they have backup mobile data management plans and are at least testing alternative devices to BlackBerry."

Menezes said a full Gartner report with three recommended courses of action will be delivered soon to Gartner clients that use BlackBerry Enterprise Service servers and/or BlackBerry smartphones.

Gartner analyst Ken Dulaney, who authored the report, could not be reached for comment.

Menezes noted that while he and Gartner are clearly foretelling BlackBerry's demise, "BlackBerry isn't going to disappear overnight and there's probably a six month window to consider and then implement alternatives."

Many large companies, including some U.S. government agencies, have already replaced BlackBerry devices with Apple iPhones and iPads or Android smartphones. The trend toward BlackBerry smartphone alternatives, underway for some four years, has increased steadily in the last year.

Though BlackBerry indicated Friday in its second quarter results an uptick of organizations installing or testing the latest BES 10 servers, analysts have noted a large number of organizations are also abandoning earlier versions of BlackBerry management software.

More than a dozen established software companies now offer alternative Mobile Device Management and Mobile Application Management software and many clients already have one or more such tools installed.

In a statement, BlackBerry CEO Thorsten Heins said there is "increasing penetration of BES 10," with more than 25,000 actual or test servers installed, up from 19,000 in July. BlackBerry has devised a way for BES 10 to work with iOS and Android device management, partly as a way to hold onto enterprise customers who have relied on BlackBerry smartphones and BES for years when the company used the software as a gateway to BlackBerry's global, secure network.

BES 10 also doesn't offer all the device management components for Android and iOS devices that it does for its own BlackBerry devices, analysts have noted. Also, despite its reputation for network security, BlackBerry hit a turning point in trust for many users two years ago when much of the BlackBerry network went down for several days on nearly every continent.

Even with the BES deficiencies, most analysts believe BlackBerry's biggest problem was failing to keep up with consumer-grade advances seen on Apple's iPhone and on various Android devices. The Apple and Android device can also be managed with MDM tools at work.

The Z10 first appeared in the U.S. in March, six years after the first iPhone launched.

For all the second quarter, BlackBerry sold just 5.9 million smartphones, the company said Friday. Meanwhile, Apple on Monday reported that 9 million iPhones were sold over just three days after the new iPhone 5S and iPhone 5C went on sale last Friday.

"BlackBerry totally whiffed on the smartphone and consumerization of IT trends that Apple hit out of the park and that Android successfully has exploited," Menezes said on Friday. "BlackBerry failed to make timely moves and product introductions to keep itself in the consideration set for consumers who in the age of BYOD increasingly are shaping enterprise device and platform choices."

"Once it became clear to IT that iOS was a viable choice, it was game over for BlackBerry," Menezes concluded.

Gartner's three recommendations for Blackberry alternatives do include an upgrade to BlackBerry 10 devices for executives who want a physical keyboard or those in high security jobs.

But Menezes said even that scenario recommends that a company begin support of other smartphone platforms, either smartphones purchased for workers or those under an employee-purchased BYOD program.

A copy of the 8-page Gartner report, obtained late Friday by Computerworld, notes that Gartner's advice comes as its clients react to the recent bad news about BlackBerry, and ask what to do. "This represents an unusually large amount of negative news for a key vendor, so it's understandable that IT leaders would want to prepare for alternatives," Dulaney said in the report.

In addition, Gartner conducted an August poll of 400 IT and business leaders which found that 24% remain on the BlackBerry platform. The poll found that respondents expect that number will drop to 9% by 2016.

The poll was conducted before BlackBerry announced its loss, Dulaney noted. BlackBerry had only 2.7% of global smartphone sales in the second quarter of 2013, compared to 76.7% for Android, Gartner has noted.

The survey also found that 38% of the IT leaders are using Apple products, while 30% have Android products. The Android number share is expected to increase to 40% by 2016, slightly ahead of the projection for Apple.

Dulaney also said BlackBerry is right to pursue a course that will take it private, but suggested that BlackBerry will be split up, with the core company focusing on wireless services. "The hardware business will remain for sale, but there will be few buyers, leaving BlackBerry to attempt to emphasize niche markets, such as high-security environments," Dulaney said.

Dulaney suggested the hardware group could even be sold to a foreign government "which may be unsettling for some clients."

He didn't name any governments that could buy the group, but some analysts have suggested the Canadian government. BlackBerry has been a source of national pride and is based in Waterloo, Ont.

As for other elements of BlackBerry, including QNX, the base operating system behind BlackBerry 10, Dulaney said it could be reoriented to focus on real-time applications used in autos or elements in an emerging Internet of Things ecosystem.

BlackBerry's software and services divisions could be wrapped into a group that focuses on support of the remaining client base. The group would focus on its network operations center and 500 carrier relationships to manage and deliver applications and content, Dulaney said.

"If the company is split up, one or more of those components will exist to support the customer base until a transition can be made," Dulaney concluded. "The customer list is just too valuable to be ignored by the entire market of potential suitors."

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