Thus far, CEO John Chen has done a fantastic job turning around BlackBerry Ltd. (TSX:BB)(NASDAQ:BBRY). When he took over in late 2013, there were serious concerns the company wouldn’t survive, but he has successfully cut costs and refocused the company. Those concerns are not nearly as prominent today.

So, now begins the next stage of BlackBerry’s recovery, one that involves stopping its slide in revenues. In order to accomplish this, Mr. Chen hopes to increase software-related sales to US$500 million per year. It’s a tall order considering that this number is still under US$250 million.

Now that challenge has become even harder thanks to Microsoft Corporation (NASDAQ:MSFT).

A new offering

BlackBerry’s software ambitions are in Mobile Device Management (MDM), which allows enterprise customers to manage its employees’ phones and tablets. MDM has grown substantially in recent years and is now a $4 billion industry.

In late March Microsoft announced that some MDM features will be included at no additional cost in all Office 365 commercial plans. What does this mean? Well, in plain English, if you’re a small- to medium-sized company, and you’re already a Microsoft customer, you can get basic MDM services for free. Even better, this MDM offering is fully-integrated with Office 365, making it easier for administrators to manage.

Enough competitors already

If this wasn’t bad enough for BlackBerry, the MDM market has already become very competitive and this has driven down prices. According to one estimate, the price per device has fallen from US$150 in 2010 to US$30 in 2013, and this number will likely fall further. Even Google Inc. has entered the fray.

So, it shouldn’t surprise anyone that Microsoft is giving away MDM services; there’s so little money to be made anyway. Besides, MDM can serve as a gateway towards more lucrative offerings down the road.

This spells bad news for BlackBerry

This is the last thing that BlackBerry needs. Investment banks such as Morgan Stanley and Goldman Sachs claim that BlackBerry’s MDM offering isn’t selling well. This is backed up by the numbers; the company’s software revenue has been falling short of expectations. Mr. Chen’s goal of US$500 million in software revenue now seems like a pipe dream.

BlackBerry does have one thing working in its favour: it is the leader in security. With the increasing frequency of cyber-attacks, this advantage cannot be understated. That being the case, companies like Microsoft are much larger than BlackBerry, and that alone can help bridge the trust gap. In other words, I don’t believe Microsoft is seen as a risky company to do business with.

So, investors should remain very nervous about BlackBerry, despite Mr. Chen’s progress. As far as I’m concerned, the stock is just too risky to buy at this point.

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Fool contributor Benjamin Sinclair has no position in any stocks mentioned. David Gardner owns shares of Google (A shares) and Google (C shares). Tom Gardner owns shares of Google (A shares) and Google (C shares). The Motley Fool owns shares of Google (A shares) and Google (C shares).