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BlackBerry could stand to benefit after U.S. authorities hack iPhone

BlackBerry Inc. could benefit from the U.S. Federal Bureau of Investigation’s successful unlocking of the San Bernadino gunman’s iPhone as major smartphone makers look to shore up security on their devices. But technology analyst Carmi Levy says it will mean Blackberry drawing a “line in the sand” on government access, like rival Apple Inc. (AAPL.O)

“If BlackBerry wants to maintain its brand going forward . . . it’s all about security. It needs to be perceived the same way,” said Levy in an interview with BNN.

Privacy software has been a key focus for BlackBerry for several years as the Waterloo, Ontario-based company shifts its focus away from building phones.

“Security is what we do. Privacy is what you get. We have the most trusted networks outside of the carriers themselves. It is what we offer, and how we think about our business,” said CEO John Chen in a Feb. 11 blog post.

Both BlackBerry and Apple have denied government requests for so-called backdoor software that would allow investigators to access a phone’s data without company assistance. But Chen has said that BlackBerry’s privacy commitment “does not extend to criminals.”

The successful hack of the iPhone 5C used by Syed Farook avoids a courtroom battle between the U.S. Justice Department and Apple Inc. that could have set a precedent on privacy issues between governments and technology companies.

Apple is now faced with selling a product that has a proven security vulnerability. The FBI and U.S. Justice Department have no obligation to reveal how the phone’s security features were hacked. Speculation online points to third party assistance from the private sector – including Israeli data extraction specialists Cellebrite Mobile Synchronization Ltd.

“Apple has got a problem now. Apple is no longer the one controlling the agenda of who gets into its phones. Some third party is,” said Levy. “Next time the FBI, CSIS, or any other law enforcement agency [is] not even going to bother with a warrant for Apple. They are going to go to that third party and ask for their help.”

Meanwhile, BlackBerry has showcased its ability to combine its core security competencies with Google’s Android platform with the release of its PRIV smartphone last year.

“This could turn out to be a potential win for BlackBerry if they are able to secure contracts with those operating software makers, that would be Google or Apple,” said BNN’s Amber Kanwar.

The potential boon for BlackBerry’s software business comes at a time when some analysts are predicting the company will cease its hardware offerings. Daniel Chan of TD Securities said in a recent note to clients the absence of a cheap BlackBerry handset at the Mobile World Congress in Barcelona a few weeks ago was a telltale sign that the company would focus solely on software.

BlackBerry has been on a buying spree to boost its security capabilities over the last 18 months, acquiring AtHoc, Secusmart, WatchDox, and Good Technology. The company hopes to extend its security services beyond smartphones into Internet of Things-based machine-to-machine communication.

BlackBerry (BB.TO)(BBRY.O) reports its fiscal fourth-quarter earnings on Friday.

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