BlackBerry vs its shareholders: Can Heins buy time?

While investors pummeled CEO Thorsten Heins on Tuesday, anyone who wandered outside the main auditorium where BlackBerry's annual general meeting was taking place in Waterloo would have noticed something that looked a little out of place: An exhibit booth showcasing the Z10, the Q10, the Q5 ‑ and an iPad.

I wasn't on site to see it myself, but Heins actually urged attendees to go outside and talk to the employee holding the Apple tablet to see for themselves how BlackBerry is spreading its wings. While the official emphasis is on selling its own hardware and growing back its subscriber base, the firm's latest BlackBerry Enterprise Server (BES), which helps corporate IT departments manage devices, represents its best hopes for the future.

"We've gone from dismissing the BYOD trend to embracing it," Heins said, referring to the growing popularity of "bring your own device" policies that allow employees to use the smartphone or tablet of their choice, but with enterprise-level IT security. This has been a repeated mantra throughout BlackBerry's last few quarterly calls, as has Hein's insistence that a business transformation like this takes time and shareholders need to give him more of it.

That wasn't enough to satisfy Richard, who described himself as a "tiny investor" compared to others in the room during the Q&A. "I've lost money and for me, it was a significant amount of money," he said. He wasn't encouraged about the stock's future prospects when he was in the States late last year. "I watched personally the rollout of the Z10. I visited many points of sales. My sense is the rollout of the Z10 was a disaster. There were employees who were inadequately trained or not trained at all. There are marketing materials that were missing."

In response, Heins admitted that not everything with the Z10's debut went as planned but that the company learned a lot by the time the Q10 was released. Richard's comments, however, point to the critical challenge facing BlackBerry now. Heins has framed a portrait of BlackBerry's future that's presumably more services oriented, said Kevin Restivo, a mobility analyst with IDC. Whether or not BlackBerry can depend on services revenue from mobile device management (MDM) over the long term isn't a clear part of the picture though.

"This is still a company highly dependent on hardware shipments for the majority of its revenue so BlackBerry still very much needs to make BlackBerry 10 powered smartphones a success," he said. "Device sales underpin BlackBerry's foundation as we know it."

The implication at the AGM on Wednesday, however, is that hardware represents a sort of legacy business for BlackBerry, where it is experiencing considerable customer churn at the expense of Apple, Samsung and others. It is extremely difficult to manage a legacy business for profit while simultaneously managing an emerging-market opportunity like MDM for growth. It's like trying to be all things to all people in the short term while secretly planning to keep company with only a select few in the long term.

Heins has said the first phase of BlackBerry's turnaround involved bringing its costs down. That's done. The second phase was about investing in new products and services. That's now underway. Phase three is about driving profitability, which he warned would not come easily. That could mean asking for more patience than investors are willing to give. BlackBerry's new slogan is "Keep Moving." Heins had better hope they don't just move on entirely.