Research in Motion (NASDAQ:RIMM) may have been left behind by bring-your-own-device (BYOD) to the workplace movement, but enterprises may be willing to offer it a lifeline if it plays its cards right. A recent survey from Osterman Research shows that corporations that allow employees to bring their own devices are incurring higher expenses as they hire more to support the changing trend.  What required less than 3 IT employees to support 1,00o mobile devices in 2011 will need about 3.6 this year and more than 4 next year. As a result, IT spending is increasing every year and is expected to rise from about $294 per user in 2012 to about $339 in 2013.
The rising IT costs of managing multiple devices will give enterprises pause as they work on moving away from RIM’s BlackBerry infrastructure. This gives RIM a chance to stage a comeback not only from a successful BB10 launch that may change consumer perception about BlackBerry smartphones, but also from its recently launched Mobile Fusion software designed to support multiple mobile platforms. We have a $12 price estimate for RIM, about 60% ahead of the current market price.
Enterprise stronghold remains key
While BlackBerry phones may have gone out of favor with retail customers, they are still the smartphone of choice for many companies. A big reason for that has been the security and manageability of RIM’s devices that can be easily controlled with the company’s BlackBerry Enterprise Server (BES) software. However, as enterprises became more open to the idea of employees bringing their own mobile devices to the workplace – a trend expedited by RIM’s declining brand value and the falling sales of its BlackBerry 7 smartphones – corporate IT spend has increased and returns from using the BlackBerry infrastructure have diminished.
RIM’s BlackBerry Mobile Fusion software that was launched last November could provide an answer to that problem. The new mobile device management (MDM) software is an evolved version of the BES that is compatible with iOS and Android platforms as well. With added compatibility, this may not stop employees from switching away from BlackBerry handsets, but it will help RIM stay relevant in the enterprise domain, long enough for its BB10 devices to catch on. RIM, however, needs to convince corporates that the best way to reduce their IT spending would be to leverage their existing BlackBerry infrastructure and use the Mobile Fusion software to manage multiple devices.
Most may wait for BB10 launch
By not coming out with better smartphones earlier, the BlackBerry maker has squandered a huge opportunity. However, the increasing costs of managing multiple devices shows that making the switch is stickier for enterprises and that they would have been more supportive of RIM had it proactively tried to address the changing market dynamics. The delays in launching the BB10 OS is actually testing their patience to the hilt. Still, we believe that most of RIM’s existing corporate customers are likely to wait for the launch of the BB10 smartphones early next year and gauge the response that it sees before deciding to move on from BlackBerry altogether.
The secure push email service that enterprises rely on is RIM’s most valuable division currently, accounting for more than 40% of our price estimate for the stock. We believe that these services are unique value propositions for RIM’s customers, and the company needs to fall back on these revenues to tide over this increasingly tough-looking transition period.Notes:
- BYOD means soaring IT support costs for mobile devices, ComputerWorld, July 11th, 2012 [↩]