BlackBerry has always been a prolific acquirer of other companies, but over the last year it has been pouring a large amount of capital into buying up big companies.
Just over a year ago, BlackBerry bought WatchDox, a secure data sync and share company for the enterprise. AtHoc, a networked crisis communications provider, was bought in July 2015.
In February, BlackBerry bought cyber security company Encription, which will form the basis of BlackBerry’s new consulting practice, the Professional Cybersecurity Services.
Perhaps the most important acquisition has been the $425 million buy-out of Good Technology, a rival in the enterprise mobility management (EMM) space, which has now been completely integrated with its own portfolio.
So is BlackBerry planning to continue with this spree of acquisitions? After all, the company has $2.6 billion in cash to deploy if it wants to.
No, according to Carl Wiese, president, global sales at BlackBerry. The company believes it has most of the major areas covered and is now looking at a "pause" in its acquisitions strategy.
"We’ve done a lot, so we’re much more focused around the integration piece of that," says Wiese.
The company is now looking at cases where it makes "perfect sense" to make an acquisition.
"We’re not looking for some big category that we don’t have," says Wiese. "We’re being very selective in terms of where it plugs in. Right now, we’re not looking for the next big thing."
The reason for this is that BlackBerry now feels that with these acquisitions it has a fairly comprehensive software portfolio.
The containerisation from Good Technology, for example, complements the mobile device management offerings of BlackBerry.
"We were both solving the same customer problem but solving it in very different ways," Christy Wyatt, former CEO of Good Technology, told CBR back in October. "So if you line the two technology sets up side-by-side there is actually very little overlap."
BlackBerry also benefits from a wide range of applications, which Wiese says is a key advantage over its competitors.
"We think our application strategy is far beyond. If you look at things like BBM-protected instant message or WatchDox’s enterprise file sync and share, these are our own branded apps. Then we have about 100 ISV apps."
Earlier this month, the new BlackBerry Messenger (BBM) release on iOS, Android and BlackBerry smartphones added a range of new features to enhance privacy and control.
He cites the more than 4000 applications built by customers with the SDK built on Good Dynamics.
"Put all that together with BES, choice of container, choice of applications, no one else has that top-to-bottom."
This separation of the platform from the apps also affects how the sales channels operate. Wiese says that there are two possible ways of selling BlackBerry software, either with or without the EMM platform.
The breadth of BlackBerry’s software underlines a wider strategic shift at the company which has been on the cards for a while.
In its quarterly results in April, BlackBerry revealed that revenue broke down to approximately 32 percent for software and services, 29 percent for service access fees, and 39 percent for hardware and other revenue.
BlackBerry achieved non-GAAP software and services revenue of $153 million, up 106 percent for the same quarter year over year, meaning software and services revenue reached $527 million in FY 2016.
"We think, depending on who you talk to, that the [software] market is growing maybe 15 to 20 percent. It is growing, but nowhere near as quickly as we are growing," says Wiese.
Handset revenue in the Q4 2016 results was 189.9 million, a 15 percent quarter-on-quarter drop.
After BlackBerry‘s Q4 results, CNBC reported CEO John Chen saying that the company may move to software-only if hardware does not deliver.
Wiese clarifies the comments:
"John has made the comment that software is very important part of the turnaround strategy. He’s been very clear that the device business needs to make money."
Wiese says that the company has made tremendous progress over the last year and "closed the gap significantly".
"He was very public about not making money in the last earnings call.
"That being said, he said he would make money this year. So he’s very focused on turning that business to a break-even at worst and possibly making money."
What has this meant in practice? Wiese says that the launch of the Priv, a BlackBerry-secured device based on the Android platform, has been "part of" the improvement, but mostly it has been driven by cutting costs in the supply chain.
Regardless of whether a hardware turnaround is in sight, BlackBerry will focus on integrating its now fairly extensive software portfolio rather than acquiring for the time being. Time will tell how successful this strategy is.
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