BlackBerry, Samsung Join Forces on Mobile Security

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BEN DUMMETT

Partnership Could Help Both Companies Win More Enterprise Customers

Samsung, the world’s largest mobile-phone maker, stands to benefit from BlackBerry’s stronger reputation for mobile security

BlackBerry Ltd. and Samsung Electronics Co. agreed to sell each other’s mobile-security technology in an effort to win more enterprise customers.

The deal was the highest-profile of several partnership and distribution agreements BlackBerry announced Thursday to drive sales of its new mobile-security software—dubbed BlackBerry Enterprise Service 12. BES12 is the anchor of the company’s strategy to double revenue from software sales to $500 million and return to profitability in its next fiscal year by winning back corporate and government business.

BlackBerry also announced deals with customer-management software provider Salesfore.com Inc., mobile-device distributor Brightstar Corp. and several wireless carriers including Orange SA, Verizon Wireless, and Vodafone Group PLC, all aimed at getting BES12 in front of as many potential customers as possible.

BlackBerry’s share of the global smartphone market has shrunk to a sliver, and the Canadian company is losing ground to rivals in sales of mobile-security software. The tie-up with Samsung, the world’s largest mobile-phone maker, will give BlackBerry access to a larger customer base to sell BES12, and comes as many companies seek one security solution to manage their employees’ various mobile devices.

“We have slipped,” BlackBerry Chief Executive John Chen said, but BES12 gives the company an opportunity to “recapture that [lost share] and build on it.”

Samsung, meanwhile, stands to benefit from BlackBerry’s stronger reputation for mobile security. That could help the South Korean electronics company accelerate its efforts to expand in the enterprise market, where it has struggled to gain traction.In an interview, Mr. Chen also said more than 90% of BES12 licenses will sell as subscriptions to ensure a source of recurring revenue. “I want a business that is not only growing but predictable,” he said.

Selling more devices to corporate customers could also relieve some pressure on Samsung as its dominance in the consumer market comes under attack from less-expensive handsets made by Xiaomi Inc. and other Chinese vendors.

Samsung and BlackBerry are often characterized as rivals in the enterprise market, but their security technologies can be complementary. Samsung’s security platform, Knox, comes embedded in certain Samsung Galaxy devices, allowing users to separate personal and work data to ensure corporate security and employee privacy. Meanwhile, BlackBerry’s technology allows companies to remotely manage devices to prevent security breaches and data loss as content and applications move between those devices and corporate networks.

BES12 works on non-BlackBerry operating systems, including Apple Inc. ’s iOS, MicrosoftCorp. ’s Windows and Google Inc. ’s Android, which is used by Samsung devices. That means BlackBerry can win business from sales of the software even if business customers don’t use its devices.

The partnership will allow BlackBerry and Samsung to generate revenue from companies that choose to adopt Knox-embedded Samsung devices for their workers and want BES12 to manage these devices. BlackBerry and Samsung will split the revenue from these sales, but the companies didn’t disclose how.

The deal “isn’t about one company displacing the other,” said John Sims, head of BlackBerry’s enterprise business. “This is about one and one makes three.”

For Samsung, the BlackBerry deal is the latest in a string of alliances it has forged with enterprise players, most recently in a partnership with German software company SAP SE announced on Tuesday to better integrate Samsung’s range of mobile devices with SAP’s enterprise mobile offerings.

“Combined with BES12 we will offer more options for customers,” Injong Rhee, a Samsung senior vice president, said in a prepared statement.

Annual global revenue from enterprise mobility-management software is expected to more than quadruple to $5.75 billion in 2018, driven by greater use of mobile devices at work, a surge in mobile apps and increased security threats, according to Radicati Group Inc., a market-research firm.

But BlackBerry has been losing share in this market. Last year it led the enterprise mobile-management sector with an estimated 14.4% share of the market, according to International Data Corp. But rivals, including MobileIron Inc., VMware Inc. -owned Airwatch and Citrix Systems Inc., are eating into BlackBerry’s business.

BlackBerry wasn’t “on a growth path from 2012 to 2013” and it appears it will see declines this year, said Stacy Crook, an IDC analyst. Revenue could stabilize in 2015 if BES12 proves to be a hit, she said.

Samsung’s Knox has also struggled, partly because it is considered too costly, some analysts said. In addition to the extra cost companies pay to have Samsung devices installed with Knox, they also need to adopt mobile device-management software to oversee the devices on the corporate network. Samsung in May indicated that it had 87 million devices installed with Knox, but only 1.8 million were actively using the platform.

BlackBerry’s challenge is to ensure BES12 lives up to its billing. BlackBerry’s current mobile-management offering, BES10, also is meant to work across device types, but it isn’t as effective for non-BlackBerry devices, according to some companies and analysts.

The Canadian arm of U.S. broker Investment Technology Group Inc. uses BES10 software for the BlackBerry phones on its network, but relies on Citrix technology to manage its employees’ iPads, since Citrix allows users to more effectively separate personal and work data on Apple devices, said Daljit Bhartt, the unit’s information-technology head.

ITG’s Canadian arm would consider adopting BES12 for all devices used by the firm’s 105 employees, provided it works equally well across operating systems. “If we can consolidate the [mobile device management] solution, we will take a look at it,” he said.

BES12 won’t replicate BES10 problems, BlackBerry’s Mr. Sims predicted. “BES12 was built from the bottom up to be a cross-platform solution,” while BES10 was built to manage BlackBerrys before additional features were added, he said.

—Jonathan Cheng contributed to this article.