Feature Article

October 15, 2013

In an Effort to Reassure Its Customers, BlackBerry Issues an Open Letter

I have been following the activities of Research in Motion (RIM) since it officially changed its name to BlackBerry at the end of January. I heard all the news about the new Z10 touchscreen smartphone at the launch event. Unfortunately, since that time, things have not been looking too good for the company.

In the wake of losing some corporate and government contracts, as well as the fact that the flagship smartphone, the Z10, is not doing nearly as well as hoped for, BlackBerry announced yesterday that it was issuing an open letter to customers. The letter appears this morning, Oct. 15, in 30 newspapers across nine countries.

The purpose of the open letter is to “set the record straight” about BlackBerry’s continued existence. At the end of September, BlackBerry did not have its normal call to shareholders or webcast to announce the earnings results for Q2 2014.

What was announced was the fact that Fairfax Financial made a bid of $4.7 billion for the company. In another interesting turn, last week BlackBerry co-founders Mike Lazaridis and Douglas Fregin said that they are considering a bid to buy the company.

Will Stofega, program director for IDC Research, believes that an open letter is a risk move because BlackBerry is acknowledging that its customers and carriers are nervous. However, Stofega said, “It’s between a rock and a hard place. They could have stayed silent, but at this point, they didn’t have much to lose.”

Frank Boulben, BlackBerry’s chief marketing officer, said that BlackBerry wants to tell investors and consumers that, regardless of how ongoing acquisition discussions pan out the firm will continue to support its individual, business and government customers.

It is the concern that BlackBerry has accepted a bid from Fairfax Financial and is looking at other options that has caused so much unrest. The letter appearing globally in today’s newspapers is designed to alleviate this.

Boulben said, “We have very competitive and differentiated products and services. They have a lot of value for all stakeholders...and the company, financially, is strengthening.” There is no denying that the company is financially on sound ground. BlackBerry has somewhere in the neighborhood of $2.6 billion in cash and it is debt free. But of course, this is also what makes it a good buyout option.

I have been saying for a while now that I have had a strong feeling that BlackBerry wants to move out of the hardware business and focus on the software side of its offerings. It appears that I was not far off the mark. The letter focuses heavily on BlackBerry’s software and device management businesses.

Boulben emphasized that the firm will continue to research and support handsets running its BlackBerry 10 platform. He made it clear that the company’s overall focus is to show how its hardware and software products stand out from the rest of the smartphone field. Boulben said, “It’s important that they hear that message of focus. We’re not trying to be everything for everyone.”

BlackBerry may not be trying to be everything for everyone, but it is gearing its software to be cross-platform and work on Android and iPhone devices. By re-emphasizing its software which has a rich history in government and corporate spaces, it is trying to get past the fact that its dominant market share has dropped to about three percent worldwide.

Boulben said that the company already has six million Android and iPhone customers pre-registered for the launch of its BlackBerry Messenger (BBM) service. He said he expects that BBM will launch on both platforms "within days." He is confident that BlackBerry has fixed issues that arose after the initial cross-platform launch of the messaging service last month.

Carl Howe, an analyst for the Yankee Group, said, “Rumors of its death are greatly exaggerated. It’s not dying, although Wall Street is telling it to die.” He said that the firm’s history in the government and enterprise space continues to give it an advantage. It will be years, he said, before companies such as Samsung can compete in that space.

Boulben noted that BlackBerry is publishing the letter, which highlights the company's strengths from its security offering to its device management capabilities and its mobile messaging platform to relieve the uncertainty that people are feeling right now. "Whoever is interested in BlackBerry understands that the company has world class products and services. These are products and services that customers can continue to count on."

It will be interesting to see just how the public views this open letter issued today by BlackBerry.

Edited by Alisen Downey

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