One of BlackBerry’s biggest perks is its high security, appealing to corporate executives and government officials alike.  And as the phone-maker struggles to regain its market leadership, BlackBerry faces obstacles in the UK. This week, the UK’s Communications-Electronics Security Group rejected BlackBerry 10 OS as not secure enough for classified material. The CESG certified the mobile operating system for material that is labeled as “Restricted”, but it did not deem the software safe enough to store data that that is classified as “Secret”.  SiliconAngle contributing editor John Casaretto discussed the news on yesterday’s NewsDesk show with Kristin Feledy (full video below).

Casaretto starts off by detailing the reason BB10 failed to pass the test. He says that the issue lies in the native “balance” program, a hyped-about tool used to separate personal information from data that belongs to the device holder’s employer. Neither BlackBerry (formally RIM) nor CESG provided details about the decision, but he speculates that the app’s feature set may be lackluster, or that there is a hard to fix flaw that got government experts worried.

There is no word on when or if BlackBerry plans to patch the balance functionality,, but one thing is for certain: the CESG rejection will have a negative on sales. Casaretto stresses that the company’s future hinges on the success of its upcoming BlackBerry devices, which have historically been used primarily by corporate and government workers.

BlackBerry is doing everything it can to improve the prospects of BBOS10. Among other things it’s offering develops financial incentives to create apps for the platform, an approach that Microsoft also adopted recently.

The software giant is offering $200 to developers who submit an original and polished app by June 30th. The catch is that only the first 10,000 entries are eligible for the prize.

Casaretto says that unlike BlackBerry’s initiative, this move is not a desperate attempt to boost the Windows ecosystem. Microsoft is merely encouraging aspiring developers to get their hands dirty,, and augment the Windows Store catalog in the process.

See his entire segment below: