Gartner advises clients to drop BlackBerry

BlackBerry rejects Gartner report advising clients to replace BlackBerry devices in next six months

Tags: Blackberry (www.blackberry.com)Gartner Incorporation
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Gartner advises clients to drop BlackBerry Gartner has advised its BlackBerry clients to look for alternative mobility solutions. (Getty Images)
By  Mark Sutton Published  October 1, 2013

BlackBerry and Gartner have clashed over a forthcoming report from the analyst company which advises enterprises to drop BlackBerry technology in favour of other mobile devices.

The report, which was due for release to Gartner subscribers near the beginning of October, said that customers should either shift completely from BlackBerry, or phase out BlackBerry devices for all users apart from executives who want a device with a physical keyboard or those in high security jobs.

The report said that BlackBerry corporate users should ensure a replacement can be in place in six months. Gartner analyst Bill Menezes told ComputerWorld: "Gartner recommends that our [BlackBerry enterprise] clients take no more than six months to consider and implement alternatives to BlackBerry. We're emphasizing that all clients should immediately ensure they have backup mobile data management plans and are at least testing alternative devices to BlackBerry."

"BlackBerry isn't going to disappear overnight and there's probably a six month window to consider and then implement alternative.

BlackBerry rejected the Gartner report, with a company statement saying: "We recognise and respect external parties' opinions on Blackberry's recent news. However, many of the conclusions by Gartner about the potential impact of a sale or other strategic alternatives, are purely speculative."

In September BlackBerry announced a loss of $965 million in the second quarter, in part due to slow sales of its Z10 smartphone since its unveiling in March. The company will also cut 4,500 of its 12,500 workforce by the end of the year.

BlackBerry has agreed in principal to a buyout by Fairfax Financial Holdings, for $4.7 billion, at the end of September, although the company has said that it would continue to explore other options.

Fairfax already holds 10% of BlackBerry shares, and Prem Watsa, chairman and CEO of Fairfax said that a deal to go private would help BlackBerry to develop long term plans.

"We can deliver immediate value to shareholders, while we continue the execution of a long-term strategy in a private company with a focus on delivering superior and secure enterprise solutions to Blackberry customers around the world."

Analyst company Ovum, however, was also sceptical about the existence of any long term strategy, saying that BlackBerry will likely be out of the devices business by the middle of next year.

Jan Dawson, chief telecoms analyst at Ovum commented: "Taking BlackBerry private doesn't solve the fundamental problems at the company. First, the company's device sales are cratering, and its announcement last week that it no longer intends to pursue the consumer market is essentially the death knell for this business. BlackBerry's supply chain relies on scale for profitability, and it will never again be able to achieve the scale necessary to make money on devices. It's likely that BlackBerry will be out of the device business entirely by the middle of next year.

"The next challenge is that BlackBerry's other businesses are all to a greater or lesser extent dependent on its devices business. BlackBerry Messenger's installed base is entirely on BlackBerry devices, and its launch on iOS and Android was aborted over the weekend. It's mobile device management business is entirely based on its ability to manage BlackBerry devices, and its cross-platform management is much less well established than those of major competitors like MobileIron and Airwatch. If you strip out BlackBerry's use of its QNX operating system for BlackBerry devices, you're left with a business that's worth less than $100 million. About the only part of BlackBerry that looks to be worth a significant amount at this point is its patent portfolio, and that certainly wouldn't justify the purchase price on its own.

Dawson added: "Normally, companies are taken private in order to give a long-term strategy time to payoff without the hassles of short-term investor scrutiny. But BlackBerry's key problem for the last couple of years has been the lack of such a long-term strategy. It simply hasn't articulated a way to rebuild its business as its device sales drop precipitously. Unless Fairfax plans to radically change or accelerate BlackBerry's strategy, it's unlikely to be able to turn the company around. And that means we're likely seeing the beginning of the end for one of the most iconic brands in mobile technology."

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