BlackBerry Turn-Around Must Leverage Customer Trust in Secure Network

NEWS ANALYSIS: With its last major suitor, Lenovo, rejected by the Canadian government, a beleaguered BlackBerry faces an uncertain future after it buys time to work on a turn-around plan.

BlackBerry's last chance to sell itself to a bigger company has evaporated now that the Canadian government has announced that Chinese company Lenovo would not get approval to buy the mobile company because of national security concerns.

This comes as no surprise considering BlackBerry's status as a secure communications platform used by companies and governments worldwide.

And this isn't the first time that Lenovo has met with rejection on security grounds. U.S. government users, for example, may not use Lenovo computers for any sensitive data. Similarly, contractors that handle classified data may not use the company's computers for that type of work. Lenovo has been implicated in the past with designing in back doors for Chinese hackers intent of stealing information for use by the Chinese government, although such activities have never been conclusively proven.

But a quiet word to BlackBerry's management was all it took to chase that opportunity away, leaving BlackBerry with a billion-dollar investment by a consortium headed by Fairfax Financial Holdings. A previous $4.7 billion leveraged buy-out by Fairfax Holdings has been abandoned, replaced by the investment. Fairfax CEO Prem Watsa is spearheading the investment and will return to BlackBerry's board, allowing BlackBerry to remain a public company.

Meanwhile, a number of wanna-be investors are crying foul, saying that they really wanted to buy BlackBerry, if only...

But it's been pretty clear all along that BlackBerry's management was never interested in selling the company piecemeal, as was being proposed by former Apple CEO John Sculley, who suggested that BlackBerry could base itself on Android, and abandon the device business by selling that part to the Chinese. No word on what Sculley planned to do with BlackBerry's secure network.

So now BlackBerry finds it must continue to fend for itself facing diminishing prospects in a highly competitive mobile phone industry with a current device business that never caught fire. But it still has plenty of cash, which it's burning through steadily. The billion dollar investment is intended to give BlackBerry time to work through its problems, and time for newly-named CEO John Chen to work his turn-around magic.

The good news is that Chen has done this before. His turn-around chops are some of the best in the industry. He has the experience to handle a struggling mobile company and he seems to believe he can make it happen. But the question is what can Chen or anyone else do to take this once-great company that has squandered its birthright? It can't just be more of the same thing, because that's what now-ousted CEO Thorsten Heins was doing.

Wayne Rash

Wayne Rash

Wayne Rash is a freelance writer and editor with a 35 year history covering technology. He’s a frequent speaker on business, technology issues and enterprise computing. He covers Washington and...