BlackBerry (NASDAQ:BBRY) has always had a strong position in the enterprise server business, and this segment has been an important part of overall revenues for the company. Security is one of the most important features that distinguishes BlackBerry's enterprise services from its competitors, and it remains a competitive advantage for the company. BlackBerry has been offering different programs and promotions such as EZ Pass to retain/attract customers to its enterprise services. Furthermore, the company has decided to offer its enterprise services over cloud, which can result in cost savings for businesses. We will try to explain the future prospects of the enterprise servers business and the impact of EZ Pass in retaining/growing the enterprise services business in this article.
EZ Pass a Success
EZ Pass is a program started by BlackBerry in which users from older versions of BlackBerry Enterprise Server can transfer for free by getting limited edition software. Those who were using its competitors' software could switch to BlackBerry's BES10 at much lower prices. The program was launched in June 2014 and stats from the Indian segment were just made public which represent a huge success for this program.
Since the inception of the program, more than 2,600 businesses and 1.2 million employees are trying out the platform, out of which more than 10% licenses were trade-ins from BlackBerry's competitors. Stats also suggest that BES10 has the lowest TCO (total cost of ownership) as compared to its competitors. With this strategy, BlackBerry is primarily focusing on small and emerging enterprises looking to keep their cost down.
India has always been a strong market for BlackBerry and the region was contributing well even when smartphone sales were taking hit in all the other regions. It will be important for BlackBerry to preserve its position in these regions and further enhance its growth in the regions where it is facing challenges. The biggest advantage to BlackBerry is the safety feature of its platform, which is still attracting security-conscious enterprises. Nonetheless, the program (EZ Pass) was a success in one of its regions and we will have to wait for the results of the other regions. We are expecting BlackBerry to do well in other regions as well due to the security feature.
BES Going SaaS Over Cloud
BlackBerry recently announced that it is now offering BES10 as a hosted service through six different providers. This hosted service will act as a self-service portal to mobile device management which will be backed by the option of BlackBerry tech support. In order to provide security to enterprise apps and private files, the hosted service also has a container option to ensure enterprise's privacy.
In the CRM industry, we have seen how small to medium enterprises tend to shift to cloud based service rather than using on-premises versions of the software. The main reason is a considerable cost saving from not having to keep a huge database and management. It eliminates the cost of staff which handles support for that software. This is the main reason why Salesforce.com (NYSE:CRM) made it to the top in the CRM industry with small and medium enterprise on its side.
Now as a hosted service, let's discuss why BES10 might be preferred by small and medium enterprises. The reason is its attractive pricing based on per device cost. The price begins at $19 for each device annually. An additional $4 per device gets BlackBerry tech support for the whole year. This way, smaller companies could avoid license and management cost for keeping on-premises MDM software and pay according to the number of personnel.
However, along with this remarkable move, BlackBerry also has taken a risky step by keeping higher prices for Android and Apple phones or any other brand. The price for devices other than BlackBerry is $60 per device annually with $12 for additional tech support. As we can see the price for the whole package adds up to more than 3 times that of BlackBerry devices. This might be another strategy to push customers toward BlackBerry devices as management is still committed to the handsets business and wants to make it profitable.
There's a lot happening at BlackBerry. The management is still trying to make its handsets segment profitable. We have seen John Chen emphasize the importance of QNX as the technology moves toward the internet of things. Furthermore, the security feature is still providing support. These recent moves by BlackBerry will result in further growth in the enterprise segment of the company, and we believe European and North American businesses will look at the attractive packages offered by the company. The enterprise offers might even result in improved sales from the handsets segment. We believe these steps will further enhance the position of the company and it will continue its recovery.
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