By Neil Halligan
The ultra-secure smartphone is swiftly becoming the communications device of choice for billionaires, governments and ruling families around the world. Mike Janke, who runs the firm, explains more.
Meet the phone that could replace the BlackBerry.
Dubbed the ‘Snowden Phone’, the Blackphone has the ability to make and receive calls without being bugged or hacked.
The device is so secure that it doesn’t allow telcos or any apps to take any data — the lifeline of any phone app, social media outlet or data company.
“We’re the first [communications] company in the world that has built a $2bn-plus valued company with zero customer data,” is the proud assertion from Mike Janke, CEO of Silent Circle, the company that built the phone.
It’s the very antithesis of what the modern smartphone has become and, unsurprisingly, the major data hoarders like Facebook and Google are not major fans of the Blackphone, according to Janke.
Smartphones, or more specifically the users that generate the valuable data, have become big business for a lot of tech companies.
“There are 16,000 major data companies in the world and there are 112 million apps every day that take over 20 pieces of data an hour,” Janke reveals.
“Facebook takes 34 pieces of data every 58 minutes off your phone. Your contact list — they have every piece of it; your browsing history, your location, keywords out of your email — if it says ‘shoes for my wife’, they collect that,” he says.
Even an app like Angry Birds takes 19 pieces of data every hour, while the taxi app Uber will take 16 pieces of data — and this is whether you’re using the app or not. Ninety-eight percent of Google’s revenue comes from data, while the smartphone manufacturers themselves supply their phones with as many as six undeletable apps that can take as many as 36 pieces of data.
But that’s not the reason why the former elite US Navy SEAL member started discussions on creating the world’s first privacy phone.
That began about four years ago, when he was CEO of security construction and logistics contracting firm SOC, another company he co-founded.
“We were working for the UN, NATO, governments, and they would say you need to have some sort of security for people’s communication,” says Janke.
When he looked around for something, he found there wasn’t anything available.
“I remembered most of the Fortune 1000 companies and governments that I worked with, everybody used to encrypt their emails PGP (Pretty Good Privacy), which was the world’s very first encryption for emails.
“And I said ‘why don’t I see if that guy who created the world’s first encryption is still alive and I met Phil Zimmermann, who is in the internet and cyber security hall of fame.
“Then we grabbed Jon Callas, who created Apple’s Whole Disk Encryption [now the company’s CTO], all security on iOS devices,” Janke explains.
They sat down and laid out their vision for the new device that would become Blackphone. Two years on, the Geneva-based company now employs just under 130 — “It might be well over 150 by the time you write this,” he quips — and the revenue figures are growing at an alarming pace. “We have grown from 2013 1,170 percent in revenue, which is insane,” says Janke.
“We expect to hit $1bn in revenue by 2016 at this pace, if we just keep this pace,” he adds.
The accolades have followed as well. It was named as one of Time magazine’s top 25 inventions in 2014 and awarded the prestigious phone of the year at the Mobile World Congress in March.
The real success of the Blackphone, however, is probably best demonstrated by the people who have found a genuine need for it.
Whistleblower Edward Snowden gave the phone his endorsement, which initially saw governments rail against it, until they investigated it further and started ordering it in their hundreds.
Five heads of state and four royal families use a Blackphone — they also have an iPhone, Janke admits, but says there’s a need for privacy.
“It’s been really fascinating for me to see this confluence between what happens globally as it relates to the word privacy and the word security as it relates to business and governments. It’s really the same thing,” he says.
“When somebody picks up the phone and wants to call a reporter in the field in Syria, there’s no security nets. There must be maybe 25 governments that are grabbing it, probably four or five different hackers, or criminal gangs. A competitor, for $179, can build something that can listen to your building’s communication,” he adds.
And then there’s the demand from some unexpected quarters.
“My one co-founder was knighted by the Dalai Lama in May for protecting the Dalai Lama and the Tibetan government against the Chinese,” he says.
“Afghan women’s rights groups use our product because if [they] get busted trying to promote women’s rights in Afghanistan, they’ll be killed.
“That’s the seriousness of it. It’s great to be in Time magazine and Foreign Policy’s top 100 inventions, but the reality of it is what we do is a lot more serious to a small segment of the world’s population, but if it works there and you protect people there, it can protect the CEO of a fashion company to keep their intellectual property,” he adds.
And that’s where the market really is for Blackphone — the corporate market.
BlackBerry, the phone it aims to replace, started out as a provider of secure email and communications for large enterprise businesses, before entering the consumer market.
The Blackphone is similarly aimed at the corporate sector, providing a secure method of sending documents.
“What we really are is a platform of software services and devices, and we have some of the things that are first in world. Send a report Blackphone to Blackphone, or to the company’s software. It will [be] encrypted completely from end to end, no servers in the middle. That has never been the case before,” says Janke.
Demand for the phone has been phenomenal, he adds.
“We are [selling] at a pace faster than we can produce, replacing BlackBerry in the enterprise, literally.
“In Latin America, Carlos Slim [the multi-billionaire boss of America Movil] is using Blackphone to replace BlackBerry in the enterprise completely,” he says, further underlining where the firm is targeting the product.
The demand, he says, is from a core market of 15 percent of the population that are concerned about privacy, and who didn’t have a secure phone before the Blackphone arrived on the market.
“We don’t need to be HTC or Samsung and sell 15 million devices; it’s not what we are,” says Janke.
And large companies like Samsung, he points out, do not want a phone like a Blackphone.
“Never,” he says, when asked if they’ll ever bring out a privacy phone. “It doesn’t mean they couldn’t technologically do it.
“We have the world’s two most famous cryptographers and security people in the world alive today. They built encryption.
“Would you trust a secure phone that was built by the NSA? No, they’re not in the business of trying to secure your secrets.
“Could Google build a secure phone? Probably a better phone than us, but is Google in the business of selling security? No, they’re in the business of getting data. That’s how they sell ads, that’s how they’re almost a trillion-dollar firm,” Janke explains.
He’s pragmatic enough to realise that there will be competition in the future, but says few will have the calibre of people Silent Circle has.
“There will be [competition] down the road, sooner than we can probably imagine. You don’t go in two years from zero to well over two-and-a-half billion-valued company and somebody doesn’t say ‘that’s something we need to get into’.
“But the barriers to entry are that you have to be Phil Zimmermann or Jon Callas or Elon Musk of security. We’re lucky,” he says.
Over the next four months, Silent Circle will launch two more devices, including a tablet that Janke believes will change boardrooms around the world.
“You’re going to see a tablet that’s going to blow your mind. The conference phones will be gone from most of the boardrooms around the world.
“We have invented the world’s very first secure tablet that also does encrypted conference calling up to 50 people, video teleconferencing on an eight-inch tablet. Put it on the table, everybody calls in one number. Pin numbers are gone forever and you see who everybody is,” says Janke.
The table will be launched at Mobile World Congress in March, followed by the launch of a larger, faster phone.
He says they’ll also take on Skype, with an encrypted peer-to-peer VoIP client that will launch in December.
“Skype is owned by Microsoft, which means the US government has access to Skype communications, which also means probably hackers to do as well.
“What we’ve built is the very first Skype that goes from one computer directly to another and nobody else’s. No servers, no telecoms,” he says.
It’s another exciting product from a company that is still in its infancy, but is growing up fast. Whether it achieves the aim of replacing BlackBerry remains to be seen, but it has certainly built a niche for itself in the tough smartphone market.
Blackphone arrives in the Middle East
In the Middle East and Africa, the approach has been slightly different. Silent Circle has signed a distribution agreement with Dubai-based BigOn Telecom, which will concentrate solely on government and enterprise and do not plan to release it to the consumer market.
Users will more than likely need to register the phone with regulator, similar to what currently happens with Sim card registration.
“The focus is really the government and enterprise market, we’re not going to consumer,” says Ramzy Abdul-Majeed, CEO of BigOn Telecom.
“There is no value to hack regular person’s data, but it matters to hack a corporate,” he adds.
BigOn has teams across 75 countries right now, working with government and corporate clients.
Mike Janke says the demand from banks in the region for the Blackphone has been extremely strong.
“The issue of data leakage in banks in the Gulf region is so severe that we’re going to have [to] do special production runs just for BigOn Telecom in December.
“That has nothing to do with privacy as individual — that’s securing the financial institutions of the Gulf region, which in turn protects the economy,” he says.
BigOn is planning a launch of the device in the coming weeks.For all the latest tech news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
will the US government ALLOW consumers to use it?