Just when you thought Research In Motion (Nasdaq: RIMM) was incapable of coming up with good ideas that deliver something people actually want, the BlackBerry purveyor has done just that.
Research In Motion has always been able to boast strength in its BlackBerry Enterprise Server (BES) technology's security. Security features are one of the best things that the company has going for it with 90% of Fortune 500 companies still utilizing RIM's Enterprise grade security, and it's one area that is helping keep the company alive.
A bright spot
BES security is sturdier and easier to implement for corporate IT departments than currently available for Apple (Nasdaq: AAPL) iOS and Google (Nasdaq: GOOG) Android. Both latter operating systems are now adding important security features like encryption and remote wipes, but RIM is still ahead overall.
RIM sends some data through its own Network Operations Center that adds an extra layer of encryption, although it's also another point of potential failure. The company's robust security is one reason governments prefer using BlackBerrys.
Many organizations rely on mobile devices now running various operating systems, including company-provided and employee-owned devices that are used to access internal infrastructure and confidential information.
A new market
Providing access to devices running iOS and Android in addition to BlackBerrys has been a logistic challenge for technology departments, and has created a market in multi-platform mobile device management (MDM) services. A slew of smaller companies have stepped up to try and fill that need, like Good Technology, MobileIron, and BoxTone. You also have better known security players like Symantec (Nasdaq: SYMC) and Intel (Nasdaq: INTC)-owned McAfee in the space.
Enter BlackBerry Mobile Fusion. The offering will incorporate BlackBerry Enterprise Server with iOS and Android devices alongside BlackBerrys and PlayBooks and promises to alleviate some of the headaches that CIOs and IT departments are experiencing. Mobile Fusion builds off of RIM's acquisition of MDM specialist Ubitexx in May, and it should come as no surprise since RIM was up front with its intentions to use the purchase to incorporate BES with iOS and Android. Meanwhile, BES already supports Microsoft (Nasdaq: MSFT) Exchange.
A tough concession
While Mobile Fusion will likely be a boon to enterprise IT, it also nullifies one of the reasons companies and governments were sticking with BlackBerry hardware. If a prospective enterprise customer was thinking about arming its employees with BlackBerrys just to have BES, it can now also consider iPhones and Android phones and get the same security.
The move is an admission that RIM's top dog days in corporate IT hardware may be coming to an end. The iOS and Android tide is inevitably rising, and it's a smart move to swallow your pride and embrace the changing times rather than fight a losing battle in hardware.
RIM's services business is mostly underappreciated, even as it chalked up more than of quarter of last quarter's revenue. Service and software comprised 27% of the $4.2 billion in second quarter sales, up from 22% in the first quarter and 16% two years ago.
Alan Panezic, RIMM's VP of enterprise product management, said, "Our customers have been saying, 'We're moving to these different adoption models, and we'd like you on board with that.'"
A new direction?
Who knows -- maybe this could even be a sign that the company will begin focusing more heavily on its software and services business, which typically carry higher margins than hardware. Better yet, if the Canadian company decides to listen to shareholders and employees and enact a management change to ditch its silly co-CEO and co-chairman roles, I happen to know a guy who's out of a job and probably up to the task.
I'm sure Hewlett-Packard (NYSE: HPQ) ex-CEO Leo Apotheker would gladly come in to start axing hardware operations in favor of higher-margin services and software, even if RIM's hardware business isn't quite No. 1 in revenue like HP's PC business.
Investors are gleefully expressing confidence in Mobile Fusion, with shares up more than 8% as of this writing. Opening up BES to support other platforms is the right response to what the enterprise market is demanding.
Add Research In Motion to your Watchlist to see how Mobile Fusion fares. The mobile revolution is coming and it's going to be huge. Here's a special free report on the next trillion-dollar revolution.
