- Recent information suggests that BlackBerry is aiming to become a unified communications solutions provider.
- The Passport comes with "BlackBerry Natural Sound" technology, a long battery life, and 4 microphones capable of adapting the audio level to the environment.
- While call quality was an issue with cellphones, businesses had a good reason to keep land lines and purchase conferencing equipment. The Passport can put an end to all that.
- The BlackBerry Passport is a disruptive technology capable of wiping out the existing teleconferencing market, and lowering video and web conferencing costs by making it more accessible.
- The Passport is BlackBerry's ticket into the $34 B conferencing market. With BlackBerry's rigorous execution schedule, the stock remains on track to hit $15 by end of year.
Outperforming the Nasdaq and the Dow
Value stocks are about as exciting as watching grass grow. But have you ever noticed just how much your grass grows in a week? - Christopher Browne, Value Investor (1946 - 2009)
BlackBerry (NASDAQ:BBRY) is still on track to become one of the best performing tech stocks of 2014. It remains a far superior performer when compared to the Nasdaq or the Dow. Despite the recent drop in share prices, year-to-date, BlackBerry is +34.40%, Nasdaq is +6.04%, and the Dow +2.93%. Its performance is more than 5 times better than the Nasdaq and more than 10 times better than the Dow.
(click to enlarge)
Source: Google Finance
It's G82B^2 (It's Great to Be Square)
Last year, the Business Insider declared the smartphone dead. Actually, it just got reincarnated. BlackBerry's Passport will revolutionize the way boardroom meetings in America are held. The first inkling that BlackBerry may be onto something became apparent to me when I noticed John Chen was hiring people from Avaya (AVYA) and I realized my Z30 had unbeatable call quality. With its capability to produce clear, static-free calls and rich, full, and resonant music, it is a cut above the competition. I became convinced that BlackBerry can challenge Avaya, Polycom (NASDAQ:PLCM), and Mitel (NASDAQ:MITL) in the traditional enterprise handset game if it wanted to. When I read Donny Halliwell's recent article on the BlackBerry Blog, I became even more excited! The Passport was coming with technology previously available only to BBM Video, and it has 4 microphones.
Have Passport, Will Travel
BlackBerry is in a class of its own when it comes to handling sound. As BlackBerry continues to tease us with the features coming to the Passport, it becomes apparent that they are onto something: an avenue of growth which Samsung (OTC:SSNLF) and Apple (NASDAQ:AAPL) missed and will have trouble breaking into as BlackBerry is the patent leader. According to Thomson Reuters' 2014 State of Innovation Report, BlackBerry ranks #2 in mobile telephony patents. It is behind Qualcomm and ahead of Apple.
My research shows the conferencing industry is expected to grow quickly as more people work from home, and companies attempt to unify a global workforce without expending too much on flights and accommodations to bring people together. Other facts of interest are as follows:
- By 2017, various reports predict teleconferencing to be worth $14 to 17 B; videoconferencing, also up to $17 B; and webconferencing, $2.88 B.
- Video conferencing is growing at 20% or so per year.
- The web conferencing market has a compound annual growth rate of 9.8%. The demand is expected to grow rapidly as vendors report 25 to 30% increases in usage.
- Small and medium-sized businesses, along with developing markets, and Asia-Pacific are high demand areas spurring future growth.
- An IDC report shows that Cisco (NASDAQ:CSCO) has 43.4% of the worldwide video equipment market; and Polycom comes in with 26.5%. Both experienced dramatic declines in revenue. The Passport's release will continue to cut into their bread and butter as standalone software and hardware becomes less appealing.
When the total conferencing industry value sits at $33.88 B, it is good news to shareholders to see that BlackBerry is pursuing this avenue of growth in addition to IoT. With the Passport, BlackBerry can convinced companies they do not have to buy dedicated equipment for teleconferencing. Instead of shelling out $700 to $1000 for bulky equipment that only serves one purpose, they can just upgrade their people to Passports.
The spaceship-like Polycom SoundStation or its more bug-like cousin from Avaya have occupied boardrooms for many years. Over time, wireless or touchscreen models have shown up, and so have extension mics. While teleconferencing equipment serve a purpose when people are scattered across geographical areas and some are in remote locations, it does not come cheap and it is bulky to move around. The BlackBerry Passport will make purchasing them less appealing.
With Passport, will travel: excellent voice conferencing can be at the owner's fingertips, anytime, anywhere. As the device gets around, it will create a buzz around many coffee tables, kitchen tables, and desks because of its unique offerings and curious form factor. Small and medium size businesses are ideal target customers given the price tag and versatility. The biggest selling factor will be that it is like Motorola (NYSE:MSI) DynaTac meets modern smartphone all over again: no one will miss the bulk.
The Network Effect
The release of the BlackBerry Passport enhances BlackBerry's overall communications offerings for all users. As BBM and BBM Video continue to go cross-platform; and BBM for the Windows Desktop is in the roadmap, the value of BlackBerry's products and services becomes valuable over time.
I remain confident that BlackBerry will be the winner. Despite the Apple/IBM news, one needs to notice that BlackBerry is a diversified international business and its stock is outperforming Apple and IBM (BBRY +33.46%, AAPL +17.75%, IBM +3.48%), year-to-date.
Source: Google Finance
Historically, BlackBerry has released new devices on a Wednesday. Given the next earnings report is on September 26, I believe the Passport will be out before then.
If rumors of Apple's iPhone release date are true (September 19), then BlackBerry is probably going to release the Passport before then. Of interest to shareholders will be the rumor that Apple is having production problems and their phablet is delayed till 2015. If so, the BlackBerry's Passport has limited competition this year. And if the BlackBerry Classic (due in November) is just as robust as the Passport with the key difference being the form factor, buyers will have double the choice with the same great benefits. I remain convinced that due to the product release cycle, new features, and new markets, BlackBerry's stock still has a 50% upside in 2014.
Disclosure: The author is long BBRY. 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.