Bad News for Blackberry - Samsung, Apple Take the Pentagon

Bad News for Blackberry – Samsung, Apple Take the Pentagon

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

Iain Butler

Chief Investment Advisor, Motley Fool Canada Fool since November 2012 Iain Butler is Lead Advisor for Stock Advisor Canada. He is also the Chief Investment Advisor for Motley Fool Canada. Before joining the Fool, Iain was a “buy-side” analyst and through this experience is well-versed in the idiosyncratic ways of the Canadian market. His investing interests are centred on scouring the market for interesting businesses that trade at reasonable prices and offer an appealing risk/reward relationship. Since joining the Fool in 2012, Iain dedicates each day to spreading Foolishness throughout this great country!

Published May 2, 2013 7:59 am EDT

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.

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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.