Bad News for Blackberry – Samsung, Apple Take the Pentagon

Further signs that Blackberry’s security “moat” ain’t what it used to be.

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The Motley Fool

In a move that is sure to make Blackberry’s (TSX:BB,NASDAQ:BBRY) executives toss and turn in their sleep, it’s being reported that the U.S. Department of Defense (DoD) will grant security approvals for Samsung’s Galaxy smartphones, along with Apple’s (NASDAQ:AAPL) iPhones and iPads in the coming weeks.

The DoD consists of some of the U.S. government’s most security-conscious agencies, and has represented a customer base dominated by Blackberry in the past.

Even though an immediate mass conversion from Blackberry devices is unlikely, the real issue for Blackberry is the read-through.  If the DoD falls, it opens the doors for other enterprises to follow suit – a classic example of “if they’re doing, why can’t we”.

Banks and other big enterprises that have held on to Blackberry exclusively for its security features may be more inclined to explore other options if they see one of the most secure operations in the world doing so.

Foolish Takeaway

Competition has eroded much of what once made Blackberry so special and unique.  Though the company appears to have come out with a new device that has been well received, at least by the critics, the one thing that has remained somewhat in-tact since the good ol’ days has been Blackberry’s security “moat”.  Slowly but surely, the persistence of competition is finding a way to eliminate this advantage as well.  The company’s sizeable legion of short-sellers are clinging to the belief that someday this advantage will completely disappear.  This DoD development takes one more step in that direction.

Blackberry shares have had a nice run of late and this is beginning to squeeze those who are short the stock.  We have created a special FREE report that identifies 3 U.S. businesses that are unlikely to ever experience a short squeeze.  The reason – these three companies are so dominant that no short-seller in their right mind would ever think of touching them!  Simply click here to receive “3 U.S. Stocks Every Canadian Should Own” – FREE!

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Fool contributor Iain Butler does not own shares in any of the companies mentioned in this report at this time.  David Gardner owns shares of Apple. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

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