Editor’s Note: Welcome to our weekly feature, Analyst Angle. We’ve collected a group of the industry’s leading analysts to give their outlook on the hot topics in the wireless industry.
Earlier this month, BlackBerry announced that it was considering a number of strategic options including selling the company. My first reaction was sadness – similar to the time when I heard that Palm was put up for sale (and subsequently sold to Hewlett-Packard that then sold the WebOS technology to LG this past February). Just five years ago – right after the launch of the iPhone, BlackBerry (then Research In Motion) had 40% market share of the smartphone market. They were riding high. It appeared that no one – not even Apple – could stop them.
My how times have changed in just five short years: time flies when you’re having fun and it’s been a lot of fun to watch the smartphone market develop over the past five years. Apple and Samsung are both now selling over 100 million smartphones per year. And, the market for smartphones is set to double yet again over the next five years. I feel like we’re only halfway through a gigantic roller coaster ride that’s already leaving us with a pounding heart and breathless.
Back to BlackBerry. After a multi-year delay, their new BB10 operating system and line of devices are on the market, but they are not selling as expected. So, now the company is forced to look at strategic alternative including selling the company. Here’s a case where BlackBerry has a solid offering in software, devices and services, but the momentum has moved away from them. It’s tough to get the mojo back when you’ve lost it.
The first question is to determine if they would be better off selling to someone else or staying together and seeing if their brand, products and services can make a solid comeback – with the measure being whether they could sell 100 million or more units a year. Right now, that seems doubtful or it will take far too long to achieve.
Here’s my take on the most viable sales possibilities:
–Lenovo: This could be a good fit because Lenovo is strong in China and could use BB10 to leverage the platform in both China and the rest of Asia. And, Lenovo still sells a ton of ThinkPad laptops mostly to the enterprise market, a BlackBerry strong hold. Finally, they had doubters when they purchased the PC business from IBM, but they have been very successful growing that asset – Lenovo just recently became the largest PC company in the world. This would catapult their mobile handset business and enable them to play in the leagues alongside Apple and Samsung.
–Microsoft: Could Microsoft eat enough humble pie to buy someone else’s mobile OS? Would they be able to dump their current mobile efforts and jump on board with BlackBerry? If they purchased BlackBerry, they would pick up BlackBerry’s 80-plus million subscribers and could leverage Microsoft’s strong position in the enterprise. Many might see this as crazy, but they did a good job buying Skype, which is now becoming more pervasive in mobile than before when it was independent.
–Nokia: Ah, this one is really interesting because Nokia has always been a “darling” of the mobile industry. Most of us have had a Nokia phone at one time or another. The relationship with Microsoft hasn’t produced the results that either firm expected although the partnership looks good on paper. This would give Nokia total control over both hardware and software. They have an almost captive market in Scandinavia and other parts of the world so it might result in a significant uptick in sales.
–Microsoft and Nokia: This variant may make sense. In this scenario, the BlackBerry software (OS, BES, device management, messenger software) would go to Microsoft and the hardware would go to Nokia.
–Canonical: This is a young company in London that is pulling together a new mobile OS called Ubuntu that’s based on the Linux open software model. They really don’t need the mobile OS, but they could use the 80-plus million subscribers to launch their sales effort. This is one of those “far out” options that likely wouldn’t happen, but is still on the list of possibilities.
–IBM: Thus far, IBM has only focused on software in mobile with their MobileFirst offering. But, IBM still has a golden name in the enterprise and could use BlackBerry to offer enterprise customers a convenient and easy-to-use mobile device in which to manage their software assets. They could certainly make a splash with BlackBerry. Maybe they could bring back the Charlie Chaplin “Little Tramp” ads.
–Good Technology: To me, this one actually may make the most sense. Good already has thousands of enterprise clients, but their software can’t run on BlackBerry devices. This would give them a mobile OS, tens of millions of customers and a family of devices in which to sell. Good could then be sold on any mobile platform. This would be like Google (a software firm) buying Motorola.
–Yahoo: You think this is far fetched? CEO Marissa Meyer says she wants Yahoo to become a mobile company. Well, if they acquired BlackBerry, they would gain a mobile OS, solid software and services and a strong entry into the enterprise market. Don’t count her out on something like this. You’d hear a lot about them, and they certainly could do more with BlackBerry than the company is to do on its own now.
–NEC: NEC is very successful in Japan and recently launched a solid line of rugged smartphones under the Terrain brand. Buying BlackBerry would be a possible good strategic move for NEC and give them an opportunity to play on a bigger stage in mobile.
–Cisco: CEO John Chambers says that Cisco has to become more “mobile centric.” They love selling hardware, but haven’t any offering in the mobile client device space. They are enterprise-centric, just like BlackBerry. They are excellent at integrating acquisitions and having them grow and succeed after they are acquired. This possibility looks very solid and sensible to me.
–Going private: This option may be the most likely as it would give BlackBerry time to continue their recovery process. The key would be the price as a private equity firm (or consortium) would want to have lots of upside and little downside on valuation.
Notice that I didn’t include HP on this list as many others have. They suffered severe indigestion from swallowing Palm a few years ago. They can’t afford to risk another “buy and dump” scenario with BlackBerry. Also on the “do not bid” list would include Apple, Google and Samsung. Wireless operators wouldn’t be a good fit as they want to sell multiple hardware solutions. These are all doing so well there wouldn’t be much to gain over what they already have.
What we hope to see is that the BlackBerry assets (primarily the operating system and device management services) will find a home where they can live and offer value to the enterprise market.
Do I hear $5 billion? Thank you to the lady in the back. How about $10 billion?
J. Gerry Purdy, Ph.D. is Principal Analyst, Mobile & Wireless at MobileTrax L.L.C. As a nationally recognized industry authority, he focuses on monitoring and analyzing emerging trends, technologies and market behavior in the mobile computing and wireless data communications industry in North America. Dr. Purdy is an “edge of network” analyst looking at devices, applications and services as well as wireless connectivity to those devices.
