BlackBerry (NASDAQ:BBRY) has much potential. As a brand that was linked with security and privacy – in today’s post-Edward Snowden era – it could take full advantage of the widespread demand for a device which could give users that security. In fact, even the illusion of being more secure with BlackBerry phones relative to other phones, will ultimately be a game changer. BBM Protected is BlackBerry’s triple layer security messenger, which is currently only available for a fee. It is currently the highest grade of security available on market smartphones for this form of communication.

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Perhaps the company is too focused on its high-end clients, ignoring the potential market begging to be filled by the regular consumer.

A survey done by the Pew Research Center found that 43% of adults in the US heard “a lot” about “the government collecting information about telephone calls, emails, and other online communications as part of efforts to monitor terrorist activity.” Yet, in all honesty, no one has done a thing about it. The majority of people (>90%) agree or strongly agree that consumers have lost control over what information is gathered about them by both corporations and governments. In the survey 80% agree that Americans should be concerned with governments monitoring their phone calls and emails. Because there is no solution, there seems to be little demand for it; however, if Apple(NASDAQ:AAPL) could create the demand for tablets then BlackBerry can certainly create the demand for increased privacy and security.

The table above demonstrates people’s lack of confidence in the security and privacy of their information – in particular when sending e-mails, text messages, and instant messages. With so many people feeling their information is insecure, why is there not a bigger demand for it to become so? Frustration might play a major role here. There is very little alternative to giving out your information. When you enter a website anyone can easily track your IP and country, what pages you browse, and what links you click on. On the phone, users know their material is easily hacked or monitored, but not much of an alternative is given. We have come to accept that this data is collected and used, and simply hope it is not used against us.

BlackBerry does have a solution, but they don’t target it at the general public. The newly-released FAQ outlines that BBM Protected is relatively cheap, just $29.99 a year, a figure most people would pay if they understood its security benefits. First of all, as a brand centralized around security features, any upgrade to the utmost level of security should be an integrated BlackBerry feature, at least for the flagship device users. The company has been struggling between trying to be an attractively designed phone with a brand name (hardware) and an enterprise security solution (software). Why can’t BlackBerry be a secure phone that holds all the BBM security features inside? Why own some of the top security patents if you are not going to use them to convert Android and Apple phone users to BlackBerry phones? It is time to make a decision. If you make smartphones intended for mass markets, then make them the most secure smartphones available for mass markets. But don’t make a brand that sells smartphones, and by the way, also makes security software for businesses.

All BlackBerry Services Should Be Free on Their Native Devices

Let us break down this idea in more detail. In terms of BlackBerry phone sales, the company really has very little to lose and much to gain by making the BBM Protected integrated by default for free. According to Morgan Stanley, only “8000 units of the handsets have sold so far this quarter (passport)” of which very few are likely to be BBM Protected customers. Making them so would allow the company to rebrand its phone as the “only secure mobile handset”. This will be attractive to both consumers and companies and actually help push BlackBerry’s phone sales to the 2 million unit target of 2015 (to which they are not even close).

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The image above refers to BBM Protected, not the normal BBM.

BBM Protected on All Other Mobile Phones for a Fee

The message is not clear. BBM is supposed to be more secure than other messengers, but it is not branded as such. Not one mention of security in any description page states that the messenger is somehow more secure and private than any other. Why is BlackBerry competing in the overcrowded instant messenger market instead of the security market?

Below is a snippet of the features listed on the Android Shop, with no mention of privacy or security.

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Apple’s App Store mentions a few security features, but just standard things. Timed messages is not really a security feature, it’s a gimmick. Message Retraction is pretty cool, but raises a couple questions. In order to be able to delete a message from the chat you would have to be able to either –

1. Go into the other users phone and delete the message from his phone’s memory (not very secure on his end I would say, also not the case).
2. The message is on the servers and not on the other user’s phone, which means it is not as secure as it should be.

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Again, not the security branding I am referring to. The Windows App shop and even BlackBerry’s page do not improve on these descriptions. Right now BBM is just another messenger; however, it could be much more. If the Pew Research survey is accurate, what people are yearning for is not to hear that they can block other users – they want to hear that no one is listening in. Here are some first thoughts.

BBM

“Chat at the highest level of encryption available for free”

“Feel safe knowing no government or hacker is viewing your data”

“Keep your private information private”

“Don’t have your information stolen and put online like the celebrities”

And then only mention features and speed.

BBM Protected

“Highest security available on mobile phones”

“View to who your messages can safely be delivered and to whom not”

“Never write confidential information outside of a two-end BBM Protected connection”

“Personally insured to be secure and private”

BlackBerry’s stock is completely dependent on perception right now. If the company can flip its image and re-create a brand it could perhaps recapture market share from Samsung and Apple. Many say the brand is linked with security right now and still fails; however, I feel this is not the case anymore. The fact that there is no mention of high encryption levels on any BBM description supports that view. The company needs to target BBM downloads for security reasons, and upgrades to BBM Protected for very high security (for everyone).

Investment Opportunity

BlackBerry just hit a 9-month low at $8.80, and as of now is trading at around $8.90. Analysts on both Yahoo Finance and MarketWatch are bearish regarding BlackBerry. The market forecast self-learning algorithm at I Know Firstcontradicts this bearish outlook on BBRY. The prediction engine says BBRY has one of the strongest Buy signals for the 1-year horizon. The positive +53.79algorithmic signal says BBRY is currently undervalued, and bottom numbers 0.1 indicates it has a high probability of going up in price over this period. The 3-month forecast is also bullish.

BlackBerry still has a way to go in defining its business; however, it already has the hardware and software to make it happen. Analysts are bearish as their criteria for earnings and sales are not being met. I Know First measures what the stock’s behavior is according to the actual market trading, not opinions or news. The market seems to be more bullish than analysts, which normally is what counts at the end. If BlackBerry is able to capitalize on the raising security concerns of every phone user – not just enterprises and large businesses – they might just find themselves in very high demand very quickly; however, this is a risky long-term play. Investing long term in BlackBerry strongly depends on them recapturing a positive brand image, with the above suggestion being one of the ways they can do so. When people just believed that Samsung wants to buy BlackBerry the stock exploded to $12.60. If people have confidence in the brand again it could go much higher; however, a return to $12.60 in today’s price level will equal an over 40% return on the investment.

Business relationship disclosure: I Know First Research is the analytic branch of I Know First, a financial start-up company that specializes in quantitatively predicting the stock market. This article was written by Daniel Hai. We did not receive compensation for this article, and we have no business relationship with any company whose stock is mentioned in this article.