BlackBerry Has A Consumer Play But It Isn't Obvious

| About: BlackBerry Ltd. (BBRY)

A quote wrongly attributed to Winston Churchill goes: "Americans can be relied on to do the right thing-having first exhausted all other alternatives." Clearly, BlackBerry (NASDAQ:BBRY) has exhausted a great many alternatives, so the question now is whether BlackBerry can be relied upon to do the right thing. There may be only one opportunity to come up with a strategy that works.

That strategy will emerge from drawing the right lessons from what has not worked as well as understanding what won't work. Some believe that the problem BlackBerry, when it was RIM, had was complacency, but that is not true. They were pushing hard to make the business they believed they were in successful.

The problem was that BlackBerry thought their business was the combination of mobile devices and their supporting infrastructure, the BlackBerry ecosystem, if you will. They were just as incorrect as those companies studied in business school that thought they were in the telegraph business or the ice delivery business or whatever.

The actual service provided by RIM was extending enterprise capabilities to employees who were away from their desk. The seamless implementation of this capability was highly differentiated and well valued by customers and the market. RIM's success in various market segments was directly proportional to how much their customers valued enterprise capabilities made mobile.

However, since RIM thought they were in the device and infrastructure business, they could not see new products as a threat if they didn't have a supporting infrastructure. When it turned out that the entire Internet was becoming that supporting infrastructure, they switched gears and tried to match standalone mobile device offerings with well-known results.

This analysis clearly implies an opportunity in enterprise. The BlackBerry infrastructure has advantages that remain of value to organizations, and deriving value from those advantages can easily be envisioned despite challenges in execution.

What will not work in any meaningful way are attempts to make BlackBerry's proprietary infrastructure a separate value driver in the consumer market. It will only prove that people will try things that are free, but won't pay, or won't pay much, for them unless they have to. And in this case, they don't have to. ARPU will be pennies.

So does that mean that Blackberry should abandon the consumer market? Clearly the devices are not differentiated (at least not in a positive way) and if the infrastructure is not of value, what's left?

There is a consumer market in which BlackBerry could be in first place, and do so without a radical change in direction. This market consists of the surprisingly high number of consumers who don't want to be experts in smartphones. They want someone else to manage their phone; not to have access to content, but to perform all the functions necessary so that they can just use it.

Think of how this could play for consumers. Rather than an IT department, a phone could be managed by a parent, adult child, small business, tech-savvy friend, or even oneself with a remote interface. "Phone management services" would spring up.

Carriers will like this model. Those customers who need the most support will be better served; phone management services are likely to provide free support for a period of time as a customer acquisition strategy.

Third party management would make powerful new capabilities practical. Policy driven management, such as time-of-day texting for 12-year-olds. The ability to configure the home screen for an elderly parent with only phone, email, Facebook, and 411. iOS and Android apps to securely manage BlackBerry smartphones.

This focus will start small, but will grow. It would drive new lines of phones (designed by Foxconn, we now know.) Imagine various levels of complexity for different sized businesses. Even management APIs to automate processes and drive new capabilities.

​For architectural and many other reasons, BlackBerry is perfectly set up to develop this consumer-focused management capability, and to achieve consumer success alongside the already articulated enterprise strategy.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.