The word on the street is that all is not well with Silent Circle and their ailing Blackphone. The device simply isn’t selling. As recently exposed, lawsuits are flying between the encrypted communications firm and their former partners in the endeavor, the Spanish company Geeksphone. The details are gory, and the cost to Silent Circle could be significant. According to Matt Neiderman, Silent Circle’s general counsel, “Silent Circle will be terminating dozens of employees and otherwise reducing its operating costs by around 50 per cent.”
Ironically, part of the issue seems to be down to poor communication between partners. And though it is understandably a dispute they would have preferred to have kept quiet, there are plenty or commentators and experts lining up to put the boot in.
So rather than join the fray, let’s put aside the management decisions made and who said what to whom, and focus on the most important issue: the overwhelming lack of demand for the Blackphone, and the reasons why this should have come as no surprise.
Let’s agree that the argument as to the necessity of encrypted messaging in the modern world has been resolved. Cyber-crime is multi-faceted and aggressive – not protecting your communication (or doing so poorly) is akin to leaving your keys under the welcome mat and hoping for the best. So how would you like your encryption served? Silent circle, traditionally a software company, has taken a big bet that the answer is hardware.
When comparing a software to hardware in the encryption market the arguments can be split into Security, and Everything Else. So let’s deal with the Everything Else first.
Consumers want to use the device of their choice, one that suits the rest of their needs. In terms of economics and scalability it’s no contest, as Silent Circle are currently discovering. As for reliability and the ability to upgrade, the response to technology creep from the market is clear – software all the way.
Which brings us to Security – is hardware really better than software? This is where Silent Circle and their partners seemed to have missed the point – the consumer shouldn’t have to choose! The founder of DubaiBlog, and telecoms engineer sums it up well, “Each device requires software in order to operate, and a device is nothing else than hardware. You could not really choose between hardware and software; there is a total interdependence.”
So when, for example, Apple’s iPhone provides similar levels or hardware security to the Blackphone, but at a lower price, and can house effective third-party encrypted communication software, the question for Silent Circle is: where exactly is the gap in the market for the Blackphone? Anyone…?
Harvey Boulter, Group Chairman, Communication Security Group