this article was published Tuesday 19 March 2013 18.13 GMT but removed from original source as well as Google cache, but keeps translated and here and in exported to pdf from evernote

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CESG rejects BB10 software in new Z10 handset, dealing blow
to Canadian firm in key market
Charles Arthur
guardian.co.uk, Tuesday 19 March 2013 18.13 GMT
The BB10 software in the new BlackBerry Z10 handset has been rejected as not
secure enough for essential government work. Photograph: Mast Irham/EPA
BlackBerry's new BB10 software has been rejected by the
British government as not secure enough for essential work, the
Guardian can reveal.
The news is a blow to hopes that the new operating system,
released on the Z10 handset in January, would spark a rapid
revival in the company's fortunes after a torrid year of losses.
The previous BlackBerry version, 7.1, was cleared by the UK's
Communications-Electronics Security Group (CESG) in
December 2012 for classifications up to "Restricted" – two levels
below "Secret".
But the Guardian understands that tests on BB10 and the
BlackBerry Balance software, intended to separate work and
personal accounts and prevent any copying of data between
them, have shown that it fails the same security requirements.
BlackBerry has confirmed that BB10 has not been passed yet by
CESG, but could not offer a date when revised software would
be submitted.

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That is a blow because the Z10 and its upcoming keyboard-
based version, the Q10, are high-priced devices intended to win
back corporate customers who have begun to migrate to Apple's
iPhone or to Android devices, or to replace older BlackBerry 7
phones. Nor has the company offered a clear date when it will fix
the weakness.
Missing out on government business could cost BlackBerry
millions in lost revenues, even if rivals are unable to fill the same
security space: the government and NHS are two of its biggest
clients in the UK, with tens of thousands of users.
Analyst reports also suggest that sales in the UK of the
touchscreen Z10 handset, the first to run BB10, are slowing after
an initial spurt among consumers when they went on sale in
January, leaving sellers with surplus stock.
The Z10 goes on sale in the US on Friday, with the company
seeking to rebuild its share of the smartphone market there,
which has plummeted from a high of 22% in September 2010
with 21m users to just 5.9% and 7.6m users in January
according to ComScore.
But James Faucette at the stockbrokers Pacific Crest, who has a
"sell" rating on BlackBerry, said in a research note looking at
sales in the UK and Canada that "sell-through run-rates for the
Z10 have declined meaningfully in the weeks following launch.
We believe carriers and third-party retailers in the UK are well
above typically targeted inventory levels" and that retailers
Carphone Warhouse and Phones4U have begun discounting the
handsets. "We are concerned that … may ultimately push the
Z10 downmarket" and hit profit margins, he told clients.
He added that he thinks Canadian stores and carriers are also
approaching the same point
BlackBerry said in a statement: "We have a long-established
relationship with CESG and we remain the only mobile solution
approved for use at 'Restricted' when configured in accordance
with CESG guidelines. This level of approval only comes
following a process which is rigorous and absolutely necessary
given the highly confidential nature of the communications being
transmitted.
"The current restructuring of this approval process, due to the
Government Protective Marking Scheme review and the new
CESG Commercial Product Assurance scheme has an impact
on the timeline for BlackBerry 10 to receive a similar level of
approval. The US government's FIPS 140-2 certification of

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BlackBerry 10 and the selection of BlackBerry 10 by the German
Procurement Office and Federal Office for Information Security
underline how our new platform continues to set the standard for
government communications.
"We are continuing to work closely with CESG on the approval of
BlackBerry 10 and we're confident that BlackBerry 10 will only
strengthen our position as the mobile solution of choice for the
UK government."
• Canada's industry minister has declined to say whether he
would block any attempted takeover of BlackBerry by the
Chinese PC and smartphone maker Lenovo. Christian Paradis
told Reuters "I hope BlackBerry will continue to be a Canadian
champion in the world, that it grows organically." But, he added,
"we don't know what might happen. The market is very
aggressive. When you talk about the telecoms sector … this is a
very, very aggressive sector."
Asked whether he would block a bid from Lenovo, mooted last
week in an interview with that company, Paradis said "As the
industry minister, I don't want to send a signal and I don't want it
to look like I prejudged a deal or not."
The Canadian government could block the deal on national
security grounds. Last year, the Chinese state-owned oil
company CNOOC bought Canadian energy firm Nexen, but it
provoked a storm. Analysts believe the US and UK governments
might block a similar Chinese bid for BlackBerry because of its
importance to secure email.
Updated: corrected expansion of CESG.