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Did BlackBerry Just Surrender to Apple and Android?

By Adam Levine-Weinberg – May 15, 2013 at 11:00PM

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BlackBerry announced this week that it's making its BlackBerry Messenger service and BlackBerry Enterprise Service available for iOS and Android devices. Is this a surrender?

BlackBerry (BB -2.08%) had a busy Tuesday, as it made a plethora of major announcements at its BlackBerry Live conference. Perhaps most interestingly, the company announced that it's bringing two of its signature features -- BlackBerry Messenger and secure device management -- to devices running Apple's (AAPL -3.00%) iOS and Google's (GOOGL -1.82%) Android.

From one perspective, these announcements seem like an admission of defeat from BlackBerry. By offering BBM and secure device management services on iOS and Android devices, BlackBerry is giving up some of its key differentiating factors vis-a-vis those platforms. However, it's also possible to see these announcements in a more positive light. By expanding its services beyond the BlackBerry platform, BlackBerry can engage new potential customers and better monetize the value of its intellectual property.

Opening up BBM
The BBM instant messaging service has long been one of BlackBerry's signature features, but its utility has been declining as BlackBerry's market share has dropped. BlackBerry wants to bolster BBM's value by making it available to iPhone and Android users; moreover, BBM will be a free app. While other cross-platform messaging systems like WhatsApp already exist, BBM has a strong base with 60 million users who send and receive 10 billion messages a day. This should help the BBM app become relatively popular.

Obviously, this move creates the risk that some BlackBerry subscribers will defect to one of the rival platforms, because they can now keep using BBM. However, the upside is much bigger, as making BBM available for free on rival platforms can expose iOS and Android users to BBM and (hopefully) rehabilitate the BlackBerry brand. If BlackBerry can persuade some iPhone users to adopt BBM rather than iMessage, it will also offset some of the platform stickiness that is BlackBerry's biggest long-term obstacle.

Eventually, BlackBerry may find a way to monetize BBM on non-BlackBerry devices. Even if it doesn't, the app will essentially provide free marketing for BlackBerry on rival platforms while also increasing the value of the BBM service for BB10 users.

Mobile device management
BlackBerry also announced on Tuesday that version 10.1 of its BlackBerry Enterprise Service was available for download. Whereas previous versions of BBES have just provided security and mobile device management for BlackBerry devices, the new version will also support iOS and Android devices.

In many ways, this is an even more important product for BlackBerry. The company has long been the leader in mobile device security, but the popularity of the iPhone and Android devices has forced governments and enterprises to find third-party solutions to secure employees' phones. The new BBES will allow companies with "bring your own device" policies to use a BlackBerry security solution running on a single server for all BlackBerry, iOS, and Android devices.

BBES 10.1 will let corporate IT departments to choose what applications are accessible to employees and will separate work and personal data on their devices. This essentially ports the "BlackBerry Balance" feature of the BB10 OS to iOS and Android.

From a business perspective, BBES could be quite lucrative as a mobile device management system. It's being positioned as a software-as-a-service offering, at $59 annually per device. Since most governments and enterprises have worked with BlackBerry (even if they now have BYOD policies), the company has an opportunity to take a leadership position in this market, which is expected to surpass $1 billion annually in the near future.

Foolish conclusion
By opening up its BlackBerry Messenger service and mobile security features to the iOS and Android platforms, BlackBerry is admitting that it's no longer a dominant player in the mobile market. However, that was already obvious from the company's shrinking market share. Supporting iOS and Android devices will allow BlackBerry to diversify away from its hardware business into new software and service opportunities. It could also help expose a new generation of consumers to the BlackBerry brand. Both of these initiatives seem like positive steps for BlackBerry's turnaround.

Fool contributor Adam Levine-Weinberg owns shares of Apple and BlackBerry and has long January 2014 $13 calls on BlackBerry. The Motley Fool recommends and owns shares of Apple and Google. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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