In a move that makes a lot of sense, BlackBerry bought Secusmart today, a German firm that makes voice encryption chips for Blackberries and other mobile phones. Unfortunately, the deal is probably much too late to matter.
The companies have worked closely in the past, so it’s probably not surprising that BlackBerry chose to pull the trigger and purchase them. Secusmart is used by governments and others who are interested in highly secure conversations.
BlackBerry appears to be playing to its security strength with this purchase, but it’s a move they should have made a couple of years ago. BlackBerry has floundered since the iPhone was introduced, watching its worldwide marketshare plunge. At one time it was the most dominant phone in the world, but its marketshare eroded with introduction of the iPhone and later Android phones.
To give you a sense of the dramatic drop, according to comScore in December, 2009 BlackBerry had over 40 percent of US smartphone marketshare. In its most recent report ending in May 2014 it had trickled down to just over 2 percent.
BlackBerry has been in free fall for years and grasping at ways to remain relevant. They tried smartphones that didn’t resonate with the buying public. They tried tablets that failed badly and they have made various other attempts to right the ship. This purchase represents yet another attempt at finding a market it can grab onto in order to survive.
Jack Gold, principle at J. Gold Associates, a firm that follows the mobile industry says this is actually a good deal for BlackBerry because it gives them voice call security, something it currently doesn’t have. BlackBerry has always been about protecting data. Getting Secusmart gives them call security too and Gold thinks that’s significant.
“But while the enhanced data security is important, the Secusmart acquisition provides BB with a technology it currently doesn’t have and will be increasingly important. Secusmart provides a secure voice communications capability that no device vendors, including BB, currently address,” Gold said in an email statement.
With the Edward Snowden revelations that have come out over the last year, it’s clear that governments and industry are worried about protecting data and voice calls, but overall, the reason BlackBerry began its downward spiral was because employees demanded to use the smartphones they chose, and when IT wasn’t choosing the phone anymore, nobody apparently wanted a BlackBerry. This purchase while helpful isn’t going to restore mass market success it once had.
The market erosion began in the US, but over time, it has spread throughout the world and even in once BlackBerry strongholds like Germany, they have lost out to other smartphones mostly from Samsung and Apple.
On my recent trip to Germany, I noticed very few Blackberries as I checked out phones in my travels. This is in stark contrast to even the recent past when I often saw the two phone stack: the BlackBerry for work and whatever other phone they wanted for private use.
BlackBerry is attempting to find a foot hold in a number of niche businesses. In April they bought a stake in a Healthcare IT company, another vertical that could benefit from secure phones. But the question remains whether the company can survive with this niche strategy long term and how patient their stockholders will be.
I first came across Secusmart in 2012 while attending CeBIT, the giant German technology trade fair. At the time, they talked about a close relationship with BlackBerry. The question is why did BlackBerry take so long to purchase this company, which was obviously a good match.
Overall this is not a bad move, but it strikes me as one that comes much too late to matter very much at all.