Operations are improving over at BlackBerry. The mobile device management (MDM) leader reported higher cash levels, stronger profitability, and lower expenses in its first quarter ended May 31. Enterprises no longer need to hold off on upgrading their MDM solutions. By the autumn, BlackBerry will have a refreshed Q10. Users who abandoned their BlackBerry with the physical keyboard may now optionally choose the BlackBerry “Classic” device.
Highlights
The device side of BlackBerry’s market is almost a second priority in North America. The firm is building its sales in markets where it had strength. In Q1, BlackBerry launched the Z3 device in Indonesia. Eight countries will soon get the inexpensive Z3. On the enterprise side, BlackBerry crossed the million user mark in licensees for its EZ Pass Program. There are now 1.2 million licenses issued. More than 10 per cent of the license trade-in came from users switching from competitors. With MobileIron now publicly listed and others to follow, competition could heat up in the MDM market. Still, corporations should be skeptical that the alternatives to BES will improve as competitors raise money from the markets. The user base for these firms are smaller than that of BlackBerry. BlackBerry continues to raise the bar on MDM. Within a few months, BES 12 will have wider support. BES12 will unify support for BES10 and BES5. Pricing will also be far more competitive, dissuading customers from switching to another platform. The platform will support self-service, Windows Phone 8 devices, and will support on premise cloud solutions.
Financials look good
Revenue dropped by a mere 1 per cent in Q1. BlackBerry’s service revenue represented the bulk of sales, at 54 percent. Device sales also improved. The firm recognized 1.6 million smartphone sales, compared to 1.3 million last quarter. It sold 2.6 million smartphones during the quarter.
Cash levels rose to US$3.1 billion, thanks to a tax refund of US$397 million. Real estate sales contributed to a US$287 million boost in cash.
Most importantly, profitability, or gross margin, was 46.7 per cent. This was higher than the 33.9 percent level that BlackBerry reported last year for the quarter ended June 1, 2013.
Partnership with Amazon
BlackBerry is quietly shutting down its Video and Music store. It will now partner with Amazon Appstore to broaden apps and content for the consumer market. BlackBerry 10.3 will be released this fall, and the Amazon Appstore will also be available with that release.
Confidence in BlackBerry justified
BlackBerry owes much of its operational improvements to its new CEO, John Chen. Chen wrapped up the cost cuts in the firm by focusing on the firm’s strengths. This includes MDM, devices in the emerging markets, and secure mobile payments. By outsourcing device development and the related supply chain, BlackBerry may now focus on the enterprise. Enterprise customers may rejoice. By this time next year, BlackBerry might even gain a bit of popularity in the consumer space, but let’s not look forward to that just yet.