BlackBerry Has No NSA Spying Problem, Apple Has Security Problems

| About: BlackBerry Ltd. (BBRY)


BlackBerry fell big after IBM and Apple announced their deal to offer iOS devices and solutions for enterprise users.

BlackBerry investors should do some profit-taking now, because bad propaganda always inspire the shorts.

Apple has a history of security breaches and bugs.

BlackBerry can survive an IBM/Apple tandem, because it is largely untainted by the NSA spying scandal. IBM is out of favor in China.

BlackBerry (NASDAQ:BBRY) shares fell during the after-hours trading yesterday, after Apple (NASDAQ:AAPL) and International Business Machines (NYSE:IBM) announced their partnership. BlackBerry's sell-side team received very strong ammunition to snipe down BlackBerry back to below $11. BBRY dropped by more than 4%, and it may continue to slide down later today.

The formidable presence of IBM in the enterprise market gives Apple devices a strong boost for corporate clients. Majority of BlackBerry's revenue now comes from enterprise services. Consequently, BlackBerry bears will take this latest news as good reason to pummel down BBRY for the next succeeding days.

It might be prudent for nimble BBRY players to do some profit-taking before the stock gets beaten down below $10. Hardened BlackBerry fanatics who want to fight this one out may still use protective puts.

BlackBerry Can Survive Apple/IBM

BlackBerry can survive an IBM-assisted Apple assault. IBM and Apple still cannot match the security level of BlackBerry enterprise solutions. IBM may win new iPhone and iPad sales for Apple, but the enterprise market will remain a stronghold of BlackBerry.

Corporations of today are now paranoid about industrial espionage. BlackBerry was the first mobile solutions company to receive the U.S. Department of Defense's "Full Operational Capability" (NASDAQ:FOC) seal of approval. The U.S. Department of Defense may have allowed the iPhone and the iPad for use of its employees, but only if under BlackBerry software.

BlackBerry Enterprise Services 10 and 12 are already Bring-Your-Own-Device compliant. Corporate workers may use more iPhones with IBM's help. However, enterprise iPhones will most likely still use BlackBerry's Secure Work Place for ultimate security.

Apple's Security Performance is Spotty

Security is not one of Apple's best traits. Apple currently sells the most number of premium handsets, but its iPhones are prone to security flaws. Google (NASDAQ:GOOG) engineers had to help Apple find and fix major security bugs in iOS and OS X. John Chen only needs to highlight the past security issues of Apple devices, and corporate buyers will be less enthusiastic for the iPhone.

Fortune 500 companies should worry that Apple's iTunes accounts have been repeatedly hacked. Tim Cook and Jon Ive may come up with the best-looking smartphone designs, but Apple still can't prevent security breaches.

BlackBerry touts a cryptography technology that the U.S. National Security Agency (NYSE:NSA) still cannot hack. BlackBerry servers and handsets should appeal to Chinese and Russian firms who despise the NSA's snooping activities.

IBM has a great reputation for security, but as long as iPhones use Apple-coded OS and apps, BlackBerry will remain the top mobile device management provider. BlackBerry can provide secured BB 10 phones, email, messaging, and data servers.

IBM Has China Problems

IBM will not be able to help Apple sell more iPhones in China, Russia, and other anti-U.S. countries. The Chinese government is openly encouraging Chinese banks to replace IBM servers and software. IBM, along with Cisco (NASDAQ:CSCO) is under suspicion by China's command economy leadership.

Chinese firms will find it very unpleasant to defy the anti-IBM sentiment of Chinese Communist party leaders and military generals. Ten years from now, most Chinese corporations and government firms will likely no longer be using IBM servers and software.

China Central Television recently warned Chinese viewers that the Apple iPhone is a national threat. In spite of Apple's denial that its phones can be used to spy on Chinese people, the damage is already done. Other countries who are also paranoid about the NSA's spying activities may perceive the iPhone as unworthy for enterprise-level use.


John Chen can grow BlackBerry's enterprise business by emphasizing its NSA-proof feature. The IBM and Apple tandem is strong, but these two companies will find it hard to convince corporate clients to abandon BlackBerry's BES 10. The pervasive practice of corporate espionage demands the best security for corporate communication.

BlackBerry offers an all-in-one secured mobile device management solution. SecuSmart is using BlackBerry's encryption chip for its desktop/VOIP phones. SecuSmart sells its BlackBerry-encrypted phones for $2,800 each, and three governments have bought them.

Obama still uses a BlackBerry phone in his official capacity. Chinese and Russian hackers have not yet succeeded in hacking Obama's phone. The NSA's inability to crack BlackBerry's encryption has compelled it to give a BlackBerry phone to Obama.

Lastly, I believe a BlackBerry phone is still more secure than a Blackphone that uses Android OS. A smartphone with Android software may never be 100% secured.

Disclosure: The author is long BBRY, AAPL. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.