Why yesterday’s news about BlackBerry in the Pentagon matters so much

By Chris Umiastowski on 21 Jan 2014 04:09 pm EST

BlackBerry’s stock price was up again yesterday, and it’s logical to assume this move was driven by the Pentagon’s announcement that it will deploy 80,000 new BlackBerry devices starting Jan 31st of this year. UPDATE: It looks like I was mistaken to use the word "new". While some deployments will certainly be new devices (people break/lose them, new ones are purchased), this doesn't appear to be a new device order.  When I'm wrong I admit it :)

Between the very bullish Citron report and yesterday’s Department of Defense story, BlackBerry continues to trade higher. I think short term stock analysis is a total waste of time, but that doesn’t mean day to day news doesn’t matter.  It helps us understand a company’s health, and when you have a major division of the US government standing behind BlackBerry, it’s bound to help investors feel more confident about the company’s future.

As a short side note, I saw a trader on Twitter comment about how BlackBerry shares were not moving up because of the Citron report, but instead because sentiment on the stock has improved, and “most good traders know this”.  To me that’s like saying fewer people are depressed these days because most people are happier. It’s a tautology. It presents no actual information.  Obviously stocks move in the short term in response to sentiment because the stock price at any given movement represents quantification of the average (positive or negative) sentiment.  

Guys and gals … learn to totally ignore short term market fluctuations. It won’t add any value to your life.  Pay yourself first (i.e. save) and invest for the long term.  

Ok.  So that’s my little stock rant for today.  Back to the story … the deployment of any new devices by the Pentagon devices itself is no big deal. It’s a tiny little improvement in device sales and call me Captain Obvious for pointing out that we would be hard pressed to measure the effect on the company’s income statement.

The true importance of this news comes from what it says about confidence in the company’s future. Not only is the Pentagon remaining a big BlackBerry device customer, but they’re running BlackBerry enterprise device management tools too (they were one of the first to approve BES 10). So they’re effectively telling the rest of the world, “Hey don’t worry about BlackBerry’s continued existence.  We’re not worried.  We know they’ll be around.”  That’s an important message for IT folks in other organizations to hear.

The company made some of its own huge communication mistakes, but I really think the hundreds or even thousands of negative media headlines caused people to believe that BlackBerry was soon to be gone

Since I brought up stock sentiment above, I’d also like to talk about business sentiment because I think it’s really important. Remember over the last two years the media (in general) was pounding all over BlackBerry for a variety of device and OS-related reasons? First there was extreme skepticism that Waterloo would ever even launch BlackBerry 10.  Then there was a variety of criticism about the hardware and operating system features. But the real damage came (in my opinion ... I admit I’m guessing) when the device sales numbers came in below expectations.  This is what drove tons of headlines about BlackBerry possibly exiting the hardware business or even going bankrupt.  The company made some of its own huge communication mistakes, but I really think the hundreds or even thousands of negative media headlines caused people to believe that BlackBerry was soon to be gone.  I think that caused a snowball effect of negativity.  It hurt.

Today I think we’re starting to see the reverse situation manifest in the marketplace - and thanks to John Chen’s very different communication strategy.  People (i.e. technology buyers in the enterprise market) are starting to be bombarded with positive messages about BlackBerry’s dominance in enterprise. Independent reports(such as by Citron) that take a strong stand are getting airtime in the media. This helps the message go viral, and I think has an important effect on the perception of BlackBerry by customers.

Customer sentiment matters, and I think yesterday’s Pentagon news is another great example of positive sentiment that is helping the business.

Topics: BBRY Editorial

Reader comments

Why yesterday’s news about BlackBerry in the Pentagon matters so much


That was the FIRST time I checked the stock in a while...was rather happy about it. :) Go 'Berry!

Mmm...CB10! Just the tip though...

I have been watching the BB stock for a couple of years. I listen to the good news from CB. I have bought the stock on bad news, having faith the company will survive. I just think that there is real worth to the company. It always has cash in the bank. It has the ability to get short term loans.

Regret, users have not had faith in the hand held devices, likely due to negative talk in the press that the company will not be there in the future. The consumer feels, why buy a product that will have not future support?

The market for cell phones has reached the point that most quality level phones look alike. Most folk don't change their expensive phones too often. The way the US networks are restructuring their contracts does not make it attractive to obtain a new phone every two years when their contracts are over. Contracts are fast going away.

So, where is the new market for phones? In the far east, India, China, Brazil. In those cases BB has already started a program to have their lower price products made off shore.

So, what can we say about the future?
BB will slowly regain their phone share of the market.
BB will rapidly improve their share of the BES share of the market.

Here is hoping that BB's position will recover fast.
BUT: BB must begin positive vibes with their marketing to make this happen.

"due to negative talk in the press that the company will not be there in the future"

I'm not so sure it's just "negative talk".

If at launch you walked into a Verizon or AT&T store and tried to buy a BlackBerry 10 phone, they'd steer you to a different device (assuming they even bothered to sell the device). Even in the BlackBerry homeland of Canada that was true - one of the main Canadian carriers doesn't even sell the Z30 in store.

Why? Not because there was no demand, but because carriers made less money on BlackBerry and therefore didn't bother to train their staff - in fact quite the opposite, they actively tried to sell other devices.

What will really save BlackBerry is producing devices at lower cost, thereby allowing carriers to make money. At which point the carriers will market the phones and train their staff.

It all comes down to price in the end. Just price to the carrier not price to the consumer.

The damage to BlackBerry was done years ago when inexperienced CEO's allowed costs to spiral out of control in the mistaken belief their upward trajectory would last.

Despite countless examples of where sales staff have actively steered people away from BB10 (even if it would suit that customer's needs, and in many many cases even if the customer specifically asked for a BB10 phone), there is still a large contingent of people on this site that don't believe this has ever happened.

They firmly believe all sales staff are fair and balanced and will always happily suggest a BB10 phone if it would suit that customer.

CB10 : Z10 STL100-3

No disrespect, but, I have never heard that anyone is lining up for a BB at any price.
But, people line up for a day to buy the 'latest' high price Apple iPhone, sight unseen.

Which company is lacking .. you decide.

Simple answer: NOBODY PAID THEM!
Have you ever gone to an Apple Store the day before the midnight release of a new iPhone. For a day, they line up around the block; LOT'S of folk want the newest models ...
not paid BY Apple, but, paid TO Apple

It's true that Apple have managed to create an almost religious fervour among its customers.

But I don't recall huge lineups for Android devices, and they sell in far greater numbers than iPhones.

And a thousand people stood in line for an iPhone, does not make Apple huge. What does is carriers pushing iPhones onto the ordinary Joe walking into a carrier store.

BlackBerry could have spent its entire cash reserve on marketing BB10 and it would have made no difference whatsoever because carriers make less money on BB10 devices.

What is so difficult about the idea that carriers might want to make a profit?

And by the way, people did line up for BB10 at launch, and in Indonesia there was a mini riot at one store!

What you are saying about carrier support is true.

Here in New York City, on the first day of Z10 release many TM stores had no orders. I went to the main midtown store; they sold twenty the whole first day even though CB and TM had extensive advertising in the press and in-store.

After, TM had limited sales despite Z10 newspaper, in-store, TV ads.
TM later decided to remove the phones from retail stores.

What went wrong? It was not the phone which is as good if not better than the Samsung and Apple products.

BB apparently did not give adequate sales support to the TM retail stores. When I was in the stores the only people who knew the product were BB merchandisers, who left after a short time.

"BB apparently did not give adequate sales support to the TM retail stores"

if you're CEO of TM or AT&T etc, and are about to sell a new phone, whose responsibility is it to train your staff? And how do you know that BlackBerry didn't offer support and it was not accepted?

I've heard the lack of carrier support took BB by surprise (Boulben admitted as much), and they weren't savvy enough to deal with the issue before launch.

It appears BB must have realized at the last moment they weren't going to get carrier support either in store or with marketing, and as a result decided to cut marketing and hope for the best.

Either way you're right to target BB sales folks, because one way or another they fell down on the job. Which I guess explains the axing of BB US sales management.

I wonder however, whether it was a lack of sales support, or a lack of understanding that carriers were not that interested in their products (or both).

There still seems something missing beyond the stock up-tick.

I agree that this is great news for the Marketing Department and will get stock watchers attention. But, are you proposing that any good news is welcome and widely understood?

For equipment (and/or service) sales to take off there has to be more than continued existence as a draw. Do you think that the fear of having BlackBerry close has stopped people from even looking at BB10 devices? Or, is there a pent-up demand that is about to explode into the market.

I remain puzzled that a good operating system has not caught on. Maybe I am completely underestimating the task of regaining good sales numbers.

Posted via CB10

Is Pentagon ordering the new BB10 devices/servers, or buying the old OS7 BlackBerry devices (eg: Bold 9900)?

I can't find this tidbit in the article...

I don't think that's a folder, it looks like the box that came with the review units of the Z/Q phones CrackBerry reviewed

Lots of action from Kevin and Chris especially this past week. I'm not mad about it.

Posted while peeking and flowing on my incredible BBQ10! 

No offence to the rest of the CB team but it is definitely Kevin and Chris's post that completely captivate me. For some reason I haven't heard a "rant" from Kevin in a while and I kinda miss it. Kevin's rants are from the heart and Chris's post are just smart and honest!

On the right track and I like the article,If you want to see who Andrew Left(Citronresearch) is tune in to CNBCfastmoney today at 5pm.he will talk about Blackberry ,should be good.This guy deserves our attention!!

I'm glad to see sentiment beginning to change. I took a big gamble on BB knowing it was going to go through the wringer, just didn't expect it to go through as long and as hard as it has. Let's hope this trend continues on, I saw the potential but didn't expect the behaviour of the traders to be as it was. We all know the stock is a bargain, even today. There is a lot of unseen value here.

Boy this downward spiral has been going on far too long...cheers to some light at the end of the tunnel.

Mr. Chen is the Trojan Horse!

Keep The Faith  BlackBerry Q10 


Tell him Ajax was allegedly involved in it, but that might confuse him too much, yes, JavaScript was in pre-alpha stage in those days!

iPhone for me? Scr... ahem Q that!

How many times does it have to be repeated that no NEW BlackBerrys are being deployed? Also the MDM solution they are deploying is by Fixmo, not BlackBerry.

From the original Jan 16th press release from DISA:

"DOD will begin deploying version 1.0 of the unclassified mobility capability Jan. 31 and will build out capacity to support up to 100,000 users by the end of the fiscal year.

The program currently supports 1,800 unclassified mobile devices including iPad 3 and 4, iPhone 4S and 5, Samsung 10.1 tablets and Samsung 3S, and Motorola RAZR devices with participation from the combatant commands, services, and agencies throughout DOD. The program also supports 80,000 BlackBerry phones.

By Jan. 31, DOD Mobility Unclassified Capability users in DISA will begin the phased transition to initial release 1.0 capabilities including the mobile device management system, mobile application store, approved devices list, supported cellular access, DOD PKI support, transition of approved applications and enterprise services for mobility including DoD Enterprise Email, the DOD Global Address List, Tier 2/3 Service Desk Support and Defense Connect Online."

The DoD didn't say they were deploying 80k NEW devices. They said they were deploying 80k BLACKBERRY devices.

Now, they are using BES10, and it's probably fair to assume that much of that 80k will be BB10s, but I agree that it's not correct to assume.

Where does the media release say anything about BES10? I also don't see how this is good news. If anything it telling us that it phasing out BlackBerry. They just needed a way to be backward compatible.

Posted via CB10

Agreed that they aren't selling any new phones, but just the article being reported by all of the tech and financials reporters is probably more valuable due to the perception about the company. Any good news is huge for Blackberry right now.

Yes. I'm a huge fan but...people got very angry when the media took a dim view of BlackBerry and spread half truths and unsubstantiated news. The media view may be less ugly but this 'news', even though a positive, is still being interpreted incorrectly.

Fixmo is a Toronto company. They came up with a new idea called Mobile Risk Management (MRM). They partner with MDM providers. They signed a agreement with BlackBerry last year to develop BlackBerry support for BlackBerry 10 and BES10. I have not seen a report where they will provide support for BB7 devices - unlikely. They are also a BlackBerry app developer. They are 2 peas in a pod. They have other MDM partners (including MobileIron) but these MDM providers are speculative plays and they are not certified. They also support things like Knox - but as we all know israel discovered some serious security flaws in Knox. Fixmo obviously impressed the Pentagon with their stuff in their prototype testing last year. This is a big deal. The Fixmo - BlackBerry security and risk management deals worked and they got the job.

Posted via CB10

I guess Prem saw that all along. The DOD and other gov't infrastructure around the world are too deeply invested in BBRY for them to simply disappear.

We've seen with the Knox fail that there is nothing in the short, medium or even long term that could replace BlackBerry.

The consumer market is fickle, but it can be done. "Just one hit away from being great again", I believe.

My name is Prem, I'm using BBM ... from my QuZe10 ...whatarhyme...

Knox will keep failing. Bolted on security solution, instead of from the ground up.

Samsung has no direct control over Google/Android, but BBRY owns QNX.

No sunshine here today, all overcast, monsoon season in Tropical North Queensland. 8-)

My name is Prem, I'm using BBM ... from my QuZe10 ...whatarhyme...

Thank you again Chris for the no-nonsense plain English description of what's going.

Posted via CB10 on a Z10STL100-3/

Thanks Chris,

it is always a breath of fresh air to read your articles. I am not an investor myself (can not spend what you do not have ;) ) but through your articles I feel like I understand the business side a little better!

Great article Chris! We all can agree! "Perception is reality" and that "Perception" is starting to change for the best, as long as the media and the people in the retail outlets stop this "snowball of negativity" all of us that own and use BlackBerry's know how awesome and secure they are! Yes the company has had rough ride. But this later news is a huge morale and perception booster!

From my awesome Z10

Posted via CB10

The battle has been won but the war is not over.

Mr Umiastowski did you read the article in Wired about how the Z30 beat it rivals in a CES 2014 challenge?

Posted via CB10

Very good article, Chris. I agreed 100%, BlackBerry, at times, indeed shot themselves in the foot but the media definitely screwed them nicely. Up, up and away from here on out.

Posted via CB10

They still need to work on the sentiment of the end user. Because while CTO's or CIO's maybe love BlackBerry, the end users, CEO's and Cabinet level people are all still saying that they want to use Apple and Android.

Posted via CB10

At least BB has a place in the pro market or gov or whatever but because the great keyboards they still need to work on the end user experience but I think they can and DAT stock

Posted via Nexus 7 2013

Another obvious point is that DOD is not just any agency. They (at least in theory) demand the highest level of security. So when they say BlackBerry is good enough, that sends a powerful message.
Also, the BlackBerry blog about Knox gives IT people that may feel pressured to put convenience over security some info that is easily understood by nontech management.

Posted via CB10 with "Z" best

For all you know they are running WIndows XP machines at the DOD. Also there is no mention if these are BB10 or BB os7. It makes a difference if it's not BB10.

The DOD can and will use the couple-of-million dollars extended support option from Microsoft for Win XP.

My name is Prem, I'm using BBM ... from my QuZe10 ...whatarhyme...

It's a tautology because it presents no new information? I don't understand that. Do you mean the traders comment was trivial? In the very least the information that traders' sentiment has improved over the perceived values of the stock (BBRY) presents some kind of new information. Seeing as he/she was a trader. Tautologies, by implication, provide no new information but can be useful (specifically in logical claims and such). It sounds to me that you want to claim that, in your opinion, it was a trivial claim. If the BBRY fans want to claim, as I think many do, that the stock has suffered due to false perception, it means the value over the last few quarters was already there just not perceived. Now, what this comment seems to suggest, is that the traders perceptions are aligning with the view that the stock has value. Just because 'they' trade possibly for short term gains, does not necessitate that what they believe now is not in line with what must of us believed about the value behind BBRY, and further than this is new information.

Posted via CB10

Saying a stock has risen because people feel better about its prospects (sentiment) is saying nothing. It's like saying the stock is trading higher because people are willing to pay more for it.

Posted via the Android CrackBerry App!

It is not "my opinion" that the claim was trivial. It is a fact. It is a tautology just like saying "it is what it is".  It's a worthless statement with zero value.  Tautologies serve zero purpose and are not useful in logical claims as you suggest.  Here's a tautology for you.  "In logical claims an argument is exactly as useful as it is, and no more."


And the fact that it matters for traders? Surely that is not something that is in dispute.

Posted via CB10

That tautological sentiment 'logic' is precisely the basis for momentum trading and is embedded into most of the high frequency trading algorithms that comprise up to 70% of daily volume. The stock market is much more of a sentiment pricing machine (i.e. a bubble machine)than it is a fundamental value pricing machine. If you want to 'invest for the long run' you should stay out of the market and instead start a business or something real.


Nothing says security like being deployed across almost the entire mobile network at the Pentagon.

Hope none of the employees there were planning to Instagram or Snap Chat ;)

WireNow, it wouldn't make any sense to say the stock is up because sentiment is getting worse. How does saying "the stock is up because sentiment is getting better" in any way insightful?

Posted via CB10

Hey Jake. We all seem to agree what Tautologies mean. Nevertheless I am not disputing that it is not insightful. I am merely stating that if traders perception has changed, that is new information and it does matter as far as stock value is concerned.

Posted via CB10

As DaSchwantz has stated, and contrary to claims that 'this is not new information', the point is that it does matter for what happens on the traders floor. There is a difference between real value and perceived value. The latter does matter when it comes to buying stock despite the fact that it offers no new information regarding what is happening internally for BBRY. However the claim 'offering no new information ' conflates 'no new information concerning BBRY' with 'investor motovation'..and surely the latter is new information because that WAS NOT the case last year concerning investor motivation.

Posted via CB10

Yah , this is not a win for BB .... compare front page of Fixmo's website and the lack of any mention on the BB corporate website .... nothing

This is not BES ,and there are no new phones mentioned ... Fixmo has a contract to bring into a new system up to 100,000 existing phones and the vast majority are BB phones [probably most of those are legacy BBs]. If all goes well this can be extended to bring in another 200,000 phones and other devices.

There is no mention of BB10 or BES in any info about this and no mention of any new phone sales.

Fixmo does incorporate BB10 into it's systems so at least BB10 isn't excluded

see this http://fixmo.com/fixmo-partners-bb-10

perhaps this is not a loss either as Fixmo doesn't seem to be in the same market as conventional MDM products. A think an optimistic between the lines reading sees BB phones as being favoured and keeping them favoured will be the job

Yes, and we know full well the US Gov't always makes sound financial decisions.....................

Chris, can you clear something up? Are they deploying BES10 or not? I've read conflicting stories about that.

Posted via CB10

My question exactly from the start. Also question his claim that there were new BlackBerry phones involved. Seems to be a simple migration to a new secret MDM solution. I smell backward compatibility to legacy BlackBerry devices. That is it. I do not take this as good news at all.

Posted via CB10

It's good news, but the actual sales work was really done long before Chen. I met numerous DoD folks at BlackBerry Live. I enjoyed watching them rock out to Alicia Keyes. I guess Chen will have a smaller get together for them in Virginia or DC this year?

I wonder if they'll continue deployment in 2015... Chen talks about "regulated" customers like it's impossible to change regulations. I know we're supposed to love the guy for telling us and everyone else what we want to here, but... yikes! He's an American with good political ties who doesn't seem to understand American government at all...

Posted via CB10

Couldn't agree with you more, Chris

This Pentagon vote of confidence will now be part of my stock response to those who say, "you have a Z10... I thought BlackBerry went bust..."

Posted via CB10

Ray # 689,

Chris stated they're deploying 80,000 BB10 devices and BES... you can't operate those 80,000 devices without BES10.

Posted via CB10

Also you don't need BES10 to operate the legacy blackberry devices. Where Is there any mention of BES10?

Posted via CB10

Those who follow DOD and technology know that they are invested in securing the best technology and getting it into the hands of the people who need it. This may seem obvious, but many (most?) government bureaucracies are more interested in fielding a solution that works and doesn't get them fired.
In short, the Pentagon's investment in BlackBerry is an indirect yet clear statement that BlackBerry is still the best secure mobile platform.

Posted via CB10

As always I appreciate your advice Chris. I originally bought my RIMM shares when I did (and added as possible) just for the sake of owning some shares, strictly personal. I've been dabbling a bit with other stocks and want to start slowly building a decent portfolio but I know so little about the game, but it seems I always pick something up when you get to writing, so thank you good sir.

Posted from BitPusher's Q10

Chris. Any thoughts on how the recently lower loonie is going to benefit BlackBerry?

Posted via CB10

Awesome write up Umi.. I think you are 100 percent spot on regarding the "doom and gloom" BBRY articles on most tech blogs. This news was certainly a vote of confidence in the fine product that BBRY delivers along with a vote of confidence in the company as a whole.

Posted via CB10

Still waiting on BGR and Bloomberg to report this DOD order and thumbs up to BES10 as their only choice! Oh yeah still waiting........... lol
What we do have is a article by BGR - BlackBerry laughs at Samsung’s Knox security struggles.
Never ceases to amaze me how BGR tries to spin things around!

I am pretty sure there is big confusion around this article. Dod is not "buying" 80000 phones, they are just deploying them on a new platform....i read quite a few articles but correct me if I am wrong.

It's more important as an endorsement of security and, as we all know, sub standard security on many other platforms. That's just sort of a fact that crapplle has to deal with. And apparently not very well.

Posted via CB10

It's been said here before, one of BlackBerry's biggest problems is the perception that they won't be around. I've been waiting for this announcement because it sends a strong and clear message to the contrary. Watch the others follow.

Posted via CB10

I'm happy that BlackBerry is still holding on. Although I really think that BlackBerry will survive and eventually thrive.

Posted via CB10

BlackBerry will deploy 80K new devices starting Jan 31st of this year... for a company that is trying to recover, it is a big deal...

Go BlackBerry!

Posted via CB10

My issue, although this is good news, most sites and news reports have completely turned off BlackBerry except for the selling of buildings. Engadget, the BlackBerry hater supreme is not writing any BlackBerry articles. It's like BlackBerry is being treated as if it's already done or they don't want to draw attention to it.

Posted via CB10

Classic!! Good will always reign over evil. Every story needs a hero. We had a foot in the door, now a knee. Go on Mr Chen force that door open.

This is a big deal - BlackBerry needs to stay on top in the enterprise, and make it known :)

Let's reduce FUD all around!

Focus on facts. The DoD solution is Fixmo, not BES10. The 80,000 phones are legacy. The good news is that bb10 phones will be the predominant choice for future upgrades, in my opinion. I'm happy that this is helping change sentiment, but if you've been paying attention there's no new information here either.


Regardless of the news, it won't save BlackBerry as the 80,000 BBOS devices the Pentagon are buying is a drop in the ocean compared to the number of iPhone's activated in a single weekend.

Dare I mention the Samsung activation numbers?

Well.. news is good for uplifting the confidence and would love to see BB rise up.

But i definitely feel the current mobile market is "Content Driven". Matter of fact the maximum content holding platforms are IOS and Android. Blackberry should start to think luring ppl with exclusive contents. Its an analogy as BlackBerry is exclusive in terms of security, that's why security leads you to BlackBerry.

Same way I think for people to get better content, they have either options of IOS or Android.

If BlackBerry can crack this "Content Race" there would be no time ppl will fall back to BlackBerry.

Content makes Xbox or PS sell over PC's coz you don't get content the same on both. Its all about capturing the "Content Market". BlackBerry has been slow in this respect and has to gain up as fast as possible even if that means spending a good amount for bringing exclusive content. You get content and small amount of marketing you can get from ppl itself when they start to talk about it. :P

Cheers for BB.

Posted via CB10

Still have my BB stocks, didn't sell em as yourself, Chris. A older, wise man told me once: "If you wanna play stocks, do it with money you don't need at all'. In BB's case, i did break a sweat at around $6.5 when they dropped but never really panicked. Here we go again, a rollercoaster ride, go BB, go.

Does the Canadian gvt use BES10? I remember seeing an article abt 1 gvt official ranting about BBM. It would be ironic seeing foreign gvts endorsing BlackBerry but ridiculed @ home.

#Peek & #Flowing on my 8520. Lol

I've been using my Z10 for about 3 weeks now...I only purchased it because I love BB and I'm a loyal Canadian living in the US, wanting to support this company. At 3 different AT&T stores I was either told not to look at Blackberry, or immediately steered elsewhere. None of them had a functioning BB demo device. And after my (online) purchase, the phone tech support person had not even heard about the Z10. Pretty frustrating. I had to be very persistent to get a BlackBerry again. But I do love the phone. Now for an update from 10.1****

Also, isn't the MDM provider MobileIron? Not BES? If so, isn't the whole pentagon confidence thing a falsehood?
Please double check.