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Wireless Infrastructure Newsletter

IBM/Apple deal targets Microsoft, hurts BlackBerry July 17 2014

Apple wins most in pact to create 100 exclusive iOS apps for vertical markets and harness IBM enterprise channels

By Caroline Gabriel

Just as some confidence was returning in BlackBerry and the turnaround plans of its CEO John Chen, it has suffered another blow as IBM and Apple team up in its enterprise heartland. The duo, which will create exclusive iOS applications and work together to target vertical markets, will not really be aiming fire at the ailing Canadian company though - their real target will be Microsoft, while Apple will be keen to keep Google's Android and web services firmly in their place too.

The companies hailed their agreement, named 'IBM MobileFirst for iOS', as a "landmark" and IBM CEO Ginni Rometty praised Apple as "the gold standard for consumers", apparently forgetting similar enterprise-focused alliances it has made in the past with companies like Samsung and, of course, Microsoft. If it puts greater resource into this one than some past efforts, Apple will certainly be able to build on its already impressive growth in the enterprise, acquiring a new salesforce, a hugely trusted brand in areas like security, and 100 new iOS business applications.

These 100 apps are the heart of the deal. They will be created jointly by IBM and Apple, exclusive to iOS and tailored to individual vertical markets such as retail, healthcare, banking, transportation, telecoms and insurance. This will give Apple, already a strong player in the enterprise, the ability to target specific segments in a way its current frameworks do not allow.

In addition, IBM's cloud services such as device management, security and analytics will be optimized for iOS. This is where BlackBerry, as well as other mobile management platforms, will feel the pinch - and the move may also prevent Apple being tempted to bring its own expanding artificial intelligence platforms into the enterprise space, rather than keeping them for consumers and Siri. IBM's analytics engines, including the famous Watson machine learning platform, are a critical aspect of its services and mobile-first offering. So it is a considerable coup that Apple has agreed to standardize on its new friend's analytics and big data apps, effectively cutting a hefty market off for other players in this booming area.

Apple has also agreed to tailor AppleCare for enterprise deployments with support onsite via IBM; and use IBM's Fiberlink MaaS360 for mobile device management; while IBM will package device activation, supply and management for the iOS partnership; sell vertical-focused iDevices bundled with its apps; and lend the support of its 100,000-strong consultancy group and its financing arm to push Apple solutions.

Apple CEO Tim Cook said: "We're putting IBM's renowned big data analytics at iOS users' fingertips, which opens up a large market opportunity for Apple. This is a radical step for enterprise and something that only Apple and IBM can deliver."


Glimmers of hope as BlackBerry beats forecasts June 23 2014

Smartphone maker narrows losses as cost cutting takes effect, but revenues and handset share still falling

By Caroline Gabriel

There are glimmers of hope for BlackBerry, which for the first time in years reported better than expected results, though it remains in the red. CEO John Chen, the well respected technology veteran who was brought in last year to rescue BlackBerry, says the company is now stabilized and he can turn his attention to growth and a realistic program to "save the patient".

BlackBerry shares leapt by the largest amount in six months as the firm reported a loss of 11 cents per share for the fiscal first quarter (ended May 31), far better than the 25 cents consensus forecast from analysts. Revenue also beat estimates, though it fell to $966m from $3.07bn a year earlier. Adjusted operating expenses were down 57% in the quarter from a year ago. Net income was $23m, reversing a loss of $3.1bn in the year-ago period, and excluding a one-time accounting gain and certain restructuring charges, its adjusted loss was $60m or 11 cents per share. BlackBerry has $2.7bn in cash and short term investments. Long term debt fell to $1.34bn from $1.63bn in the final quarter of the last fiscal year.

Chen said he was on target to reach break-even cashflow by the end of this fiscal year (by the start of March 2015), and to return to profitability during the ensuing fiscal year. "I am really at the tail end of our restructure programs," Chen said on the analyst call to discuss the results. "Right now, everything that I'm doing is judiciously starting to lay the groundwork for revenue growth for next year."

The CEO, who took the helm in November, has cast aside the self-delusion and over-optimistic promises of his predecessors and been cautious in his outlooks, though last month he said the chances of successful turnaround had risen to 80:20 (from 50:50 soon after he took over). He has taken a long cold look at BlackBerry's ailing business, though he has refused to ditch the smartphone business. Although most of the company's opportunities lie in its still-strong enterprise influence and its mobile management platforms, there seems to be a sentimental attachment to the once-iconic handsets. However, their cost structure has been transformed by outsourcing most of the models to Foxconn of Taiwan.

This is one of many moves made by Chen to bring BlackBerry's costs in line with its diminished fortunes. In many ways, his program of the past six months has looked like an effort to make the firm an attractive acquisition again, though the CEO insists his aim is to make BlackBerry viable as an independent entity, even in the world of BYOD (bring your own device), to which its device business adapted so poorly. "We're a viable company, we have a strong balance sheet, we have lots of cash, and now we are starting to focus on growth," he said in an interview.

Success in that goal will depend on going beyond cost-cutting, the source of most of the improvements so far, as Chen recognized in his talk about growth. If the program of job cuts, asset sales and other cost reductions is nearing its end, this fiscal year will be critical to prove that there is still organic growth left in BlackBerry, particularly in important platforms such as secure email, the multivendor BlackBerry Enterprise Server, and in services such as BBM messaging.

It will also, surely, mean the end of the handset business, which is still disintegrating.

BlackBerry recognized revenue on 1.6m smartphones in the quarter, partly because of the introduction of the lower priced Z3 phone in Indonesia, a prime market for the firm, last month. Although slightly better than analysts had expected, the firm's global shipments are projected to fall by almost 50% this year to about 9.7m units, according to IDC forecasts.

That would mean a market share of 0.8% in 2014, down from 1.3% last year and 19% in 2010 - and this could slide further to 0.3% by 2018, said the researchers, though it seems hard to believe that BlackBerry would still be in the hardware business by then. Chen has said one of his tasks is to ensure that services growth is sufficient to replace lost hardware revenue (hardware was still 39% of the total in the quarter). If his plans succeed, once this new balance is achieved we may finally see the death of the famous phone.


BlackBerry harnesses its strengths for IoT challenge May 22 2014

Project Ion will provide cloud-based device management, security and analytics, with a QNX apps ecosystem

By Caroline Gabriel

BlackBerry's CEO John Chen clings to the firm's once-iconic smartphones, in the teeth of all the reasons why the company should focus its whole attention on back end systems, the enterprise messaging and device management services in which it still excels. To be fair, Chen is managing expectations ably, emphasizing the long term and looking for new opportunities - among which, the internet of things is clearly a prime candidate.

BlackBerry has unveiled a set of initiatives under the umbrella codename of Project Ion. The IoT may be the refuge for every firm which is struggling in the mobile market, but in BlackBerry's case, they can offer something that is genuinely needed, turning its device management capabilities - already transformed to support multivendor platform - from smartphones to 'things'.

Project Ion is somewhat vague for now, and the full platform will not be released until next February, but its overall objective will be to create an open cloud-based platform to support device management and rich analytics of data derived from embedded objects. Businesses will be able to access and analyze information from huge numbers of varied sources and turn it into actions, using a mixture of open source and third party tools, all held together by BlackBerry's framework.

This will be powered by BlackBerry's two remaining crown jewels - its enterprise mobility management system, now a cloud-based offering; and QNX, the platform which it acquired initially to underpin its marginalized BB10 operating system. Despite that failure, QNX, whose history is in the automotive sector, has significant potential in other areas. BlackBerry has already talked up its opportunities in the connected car, and now it will harness QNX to create a broader IoT offering built around a secure public applications platform.

The key will be to support common web tools so that developers can adopt QNX for its security and other credentials, without having to learn specialized skills. QNX already exists in devices like cars, but BlackBerry will also open up its documentation, or even open source elements of QNX, to make it easier for programmers to write for gadgets that can talk back to the QNX cloud.

BlackBerry is using the Cassandra database, which it says it optimized for data writes and for consolidating masses of data in many formats into a single structure. Other open source tools in use include Kafka, for getting data in and out of Cassandra; Apache Solr for search; and Vert.x for programming. Programmers can use C languages, JSON, Node and other common tools.

This will be a key difference between the mobile and the IoT markets - the former is moving to OS-neutral, cloud-oriented technologies such as HTML5 slowly from its native OS starting point, while many IoT systems can go open from the start, allowing all kinds of new operating systems to participate.

This will be especially important in enterprise and industrial areas. Google is working hard to make sure Android remain at the heart of the IoT developer ecosystem for consumer services, but the early growth will lie in vertical segments, where the tools are far more fragmented.

While IoT cloud services, including device management and data analytics, will be highly competitive areas, BlackBerry has some genuine advantages, including surviving loyalty in many enterprise sectors, and strong security technologies. However, it knows that the old model of fully controlling its platform is gone, and this will be a more open affair, with the firm looking to build the compulsory 'IoT ecosystem' of partners, operators and developers.

Perhaps the most impactful attempt to bring together all those disparate groups in an enterprise-focused platform is GE's Industrial Internet Consortium, and BlackBerry has duly joined that initiative, and could be a valuable contributor to its efforts. The firm pointed out that is is also a founding member of the Application Developer Alliance, which focuses on challenges of security and privacy for developers.

Alec Saunders, VP of cloud at BlackBerry, launched the project at the O'Reilly Solid conference in San Francisco and urged developers to sign up - a select group will have access to the technologies next month. Saunders said in an interview with GigaOM: "We have stolen liberally from open source software in computing and networking that has been going on in the last couple of years. Many of them didn't exist in the form we are using them in, 18 months ago."

As well as end-to-end security, BlackBerry is planning other ways to differentiate itself from start-ups like Xiveley and the big enterprise service providers. Saunders spoke about context awareness, a big trend in consumer IoT and analytics - for instance, being able to access the right information about a car, depending on who is asking for it.

Chen said in a statement: "Billions of connections, generating trillions of transactions and exabytes of data daily, will require platforms that can operate securely on a global scale. No other company is in a better position than BlackBerry to provide the technological building blocks, applications and services needed to enhance productivity, improve real time decision making and deliver on the vision of the Internet of Things."

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