RIM considers split, handset unit sell-off: Palm 'Groundhog Day?'

RIM considers split, handset unit sell-off: Palm 'Groundhog Day?'

Summary: A Sunday newspaper claims the struggling BlackBerry maker could split in two and sell off its smartphone-making division -- in what is reminiscent of how Palm met its demise.

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Research in Motion is considering splitting the company in two, according to a paywalled story by London's The Sunday Times.

The BlackBerry maker could see its struggling smartphone hardware sold off, and its data network retained or licensed to others.

RIM is expected in the coming days to announce an operating loss for its first-quarter. Since then, its stock price has dropped significantly and for a short while dipped below the $10 a share mark.

The newspaper cited Amazon and Facebook as possible buyers of the hardware business at a knocked-down price.

Interestingly, Facebook has repeatedly denied it has a smartphone in development. Amazon has fringed on the tablet scene with its range of e-readers and its Android-powered Kindle Fire, but has shown no apparent interest in engaging with the smartphone market for now.

Without citing sources, the data network and BlackBerry Messenger software would likely see it opened up to smartphone rivals, such as Apple or Google. It's also possible for the company to retain hold of its data-offering infrastructure and license it out to others, such as Android vendor Samsung.

RIM chief executive Thorsten Heins said in May, announcing the likelihood of an operating loss on deck, that the company will "evaluate the relative merits and feasibility of various financial strategies, including opportunities to leverage the BlackBerry platform through partnerships, licensing opportunities and strategic business model alternatives."

Or failing that, the company could remain as one and sold in its entirety, such as to Microsoft, the newspaper added.

In a nutshell, RIM isn't looking for an all-out buyout and would rather separate, split, and sell off sections as and when it needs to. It should come as no surprise in fact as the Sunday Times has effectively laid out all of RIM's cards on the table.

The newspaper said RIM could announce such plans at some point during this summer.

Splitting the company into two divisions could be dangerous for the other. Blackberry smartphones require the data network for email and browsing, while RIM's data network is all but completely worthless without BlackBerry phones.

RIM's acquisition of Ubitexx in May 2011 could open up the data network to other smartphone makers, in what now appears in hindsight to be a strategic move in case all else failed.

BlackBerry Mobile Fusion allows enterprise-like secure email for iPhones and Android devices. However, the software would likely be sold to enterprises that already have their own BlackBerry enterprise (BES) infrastructure, and it is unlikely that OEMs like Samsung or HTC would pay licensing fees for the privilege of operating on its network.

But those thinking back not so long ago will no doubt remember that smartphone maker Palm met an eerily similar set of circumstances.

In the mid-2000's, Palm Computing voluntarily split into two, which then became PalmOne, which created Palm-related hardware, while PalmSource developed operating system software. PalmOne changed its name back to Palm Inc. in 2005, while later that year PalmSource was acquired by ACCESS.

HP bought Palm in 2010 for $1.2 billion in cash following dwindling sales. After a series of failed CEO transitions and poorly executed management strategy, HP as a whole company suffered financially. A year later, the PC maker said it would cease production on anything Palm related.

Had Palm carried on as a separate company without HP's buyout bid, the current duopoly of smartphone behemoths notwithstanding, the company may have had a shot had it continued to compete in the market share race.

If history is to be our guide, RIM could be facing a similar downfall to that of Palm.

If RIM splits into a data network and a hardware company, the hardware side under a different owner could eventually run Android or even Windows Phone software, and would not have to be limited to BlackBerry 10.

Where that leaves RIM's forthcoming operating system --- which the company has invested so much into, even as much as laying off employees not involved in the software effort --- it remains unclear.

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Topics: Hardware, Hewlett-Packard, Mobility, Networking, BlackBerry, Security, Smartphones

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19 comments
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  • Beggars can't be choosers

    Dear RIM,

    Beggars can't be choosers. Good luck. Here's hoping you can fetch some multiple higher than an image sharing services whose primary technology is allowing a user to apply a dozen or so colored filters to their pictures.
    anerpvar
  • A more timely article

    http://www.forbes.com/sites/adamhartung/2011/04/17/sell-research-in-motion-now/

    RIMM was still trading over $50 at that point.
    symbolset
    • What is with Hartung astroturfing his articles here?

      Is Forbes giving out a bonus to bloggers with the most zdnet traffic?
      Your Non Advocate
  • Hmm

    Part of me thinks it is a brilliant idea to allow people to use iOS, Android, and Windows Phone to connect to the BES and, I know a ton of people that want the Blackberry Messenger on their non-Blackberry Smartphone... However, services like this are a short term solution when you consider that the BES is being assaulted by MS, and most of the other carriers are working towards unified messenger clients of their own.
    slickjim
    • You are right

      Making BES work on other platforms IS probably the only solution they have to survive. But as you said, it is only a temporary solution.

      If they make the switch and continue to sit in their fat azzes expecting to survive with the brand name alone, they will still die a horrible death. They will have to innovate, and constantly improve the service to make it more appealing than the competition. They will have to step up the game and stay ahead of the competition. They can't afford to be a me-too company always late to the game.
      wackoae
  • Go for the money

    Software that enables corporations to embrace BYOD will be highly popular and profitable. Compared to that, taking on Samsung in handset manufacturing is downright stupid. If RIM sells their hardware business, they can position themselves as a neutral third party ("We support all major mobile devices on all the major carriers") in the device-management & security space. There will be demand for that from companies that want to avoid lock-in, whether from device suppliers or wireless carriers.
    Robert Hahn
  • This entire post is a logical fallacy

    Egyptians had pyramids. The Aztecs had pyramids. Therefore, the Egyptians worshipped Quetzalcoatl.

    How about comparing RIM to GOOD. Good was a direct competitor to RIM. They now find themselves as a successful mobile management software company.

    Let's not write RIM off, no matter how gleefully you wish them to fail.
    Your Non Advocate
    • Yep and

      Yep and, the Blackberry techs are pulling a Novell on Good! Basically, they nudge people towards a corporate provided Blackberry as opposed to using their own phones.
      slickjim
      • It's a RIMPocalypse

        We can compare RIM to companies that failed or companies that successfully reorganized. Or, we can watch and see what RIM actually does.
        Your Non Advocate
  • What can save RIM from death?

    Just stop selling the crappy phones and just concentrate on providing services that work on any device. Don't waste time spinning off .... save the money and make the service generic / cross platform
    wackoae
  • Don't feel confortable in a doctor's office in future

    If Blackberry goes under. What's going to happen to all those medical devices???

    I mean Blackberry bought QNX in a bid to save themselves. QNX makes firmwares for various medical devices.
    vgernyc
  • Too late...

    Who is the market for the handheld manufacturing arm of RIM? The list has to be short, mainly Facebook and other companies who aren't currently in the market. And it's going to take a pretty signficant company to do it given they'd be facing an uphill battle in taking on Apple, Google and all the Android OEMs. It's not like some small no name is going to be able to take on those giants.

    As for BES/Fusion, some here imply that Fusion is basically running non-BB phones through the BES infrastructure. I may be mistaken, but my understanding is that Fusion is just an ActiveSync wrapper bolted onto the traditional BES and the main benefit of Fusion is a centralized, platform independent admin console and that being an ActiveSync wrapper, iPhone and Android devices aren't going through the BES infrastructure (e.g. RIM's NOC) the way BBs do. Anyone know for sure?
    TroyMcClure
  • One thing I do know...

    All of you here who are gleefully cheering for the demise of every smartphone platform other than the iPhone and Android will be very unhappy if you get your wish. And it is especially funny the number of people who complained about a 'at&t/Verizon duopoly' who at&t offered to buy T-Mobile who now want an 'Apple/Google duopoly' in the smartphone market...
    Doctor Demento
    • Android is free and open

      I don't think most people have any problem with a duopoly or monopoly if the licensing is free and source code is opened like the Android, which has a majority of the smartphone market. Blackberry just make POS hardware and has been doing so for a while now, so people are just stating the fact and glad to see their POS hardware is going away. IT folks are glad that they have one less system (BES) to support.
      SonofChef
  • I Call BS

    Another tech blogger rumour with no foundation. Why do you suppose these wienies so keen on sinking RIM? Follow the money trail because none of these wannabe's can run a big company or design hardware. Someone one is behind this attempt to sink RIM so they can buy it up for a song. And these bloggers are jumping on the band wagon likely because they get paid by these same people how ever indirectly.
    Home Grown IT
    • RIM doesn't exactly need help...

      They've been doing a fine job of sinking themselves without some shadow company conspiring with the blogosphere.
      TroyMcClure
  • RIM will be worth money, in the IP purchasing market,

    and, the companies that will wish for RIM to disappear will be Google and Apple, and perhaps Microsoft. But, when it comes to IP, Microsoft could be the big winner if they were to acquire RIM and its IP. Then, they could sell the manufacturing arm to Nokia at a discount, or just let it die. The bigger value of RIM might be in the IP department, which again, could be sold to Nokia at a discount, or Microsoft could use as a defense against future IP battles, or, they could retain that IP to build their own hardware to complement WP8.

    No matter what, RIM won't be lasting much longer, and the vultures are circling.
    adornoe
  • One interesting fact

    RIM had many issues in past, one of the funniest is they created tablet for business customers and named it 'playbook'.
    Anyways, If this split is true then its sad that RIM's messaging network could then be separated from its struggling handset business.

    - Sara
    http://www.hireamobileappdeveloper.com/
    Sara_Parker23
  • What a dumb blog....

    RIM has never considered splitting the company - according to RIM. RIM laughed at the report. The London Times cited no sources [or nothing that could be checked] and ZDNet decided to publish this rumoured crap anyways? I guess ZDnet will publish anything without a good bit of journalism called fact checking.
    Even the title is full of doggy do. There has always been rumours [once again started usually by dumb bloggers or even dumber analysts who said that either [or both] Microsoft or Facebook want to get into the smartphone business.
    One article came out claimed that Microsoft is even in production of a smasrtphone - which was news to a manager of the Windows Phone division and everyone else.
    See also http://ebraiter.wordpress.com/2012/06/26/why-not-to-believe-in-rumours-electronics-industry/ for more dumb stuff from analysts.
    Gisabun