RIM unsellable? There 'isn't enough' of it to buy: analyst

RIM unsellable? There 'isn't enough' of it to buy: analyst

Summary: One analyst believes, despite rumours that the BlackBerry maker could be split-off or sold in its entirety, that there isn't enough of the company to make it look like an attractive purchase.

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Ahead of RIM's earnings on Thursday --- where the company is expected to announce a painful quarter --- one analyst believes the BlackBerry maker has little to be desired by prospective buyers.

"We don't believe RIM has much to offer," says Wedge Partners analyst Brian Blair, in an oddly candid research note.

Ouch.

Beyond a data network and an ailing smartphone-making unit, RIM still has a plentiful supply of high-value patents and intellectual property.

It has no debt but it has in the region of $2 billion in cash sitting around which would make the company look like an attractive buy, especially since its share price began to free-fall earlier this year.

But following the suspension of trading to announce an expected operating loss, the company has opted to chip away at its employee base over dipping into its cash reserves.

Its smartphone-making business is struggling in the face of late-to-the-party BlackBerry 10 operating system and range of supported phones.

The only stable thing RIM has left is its data infrastructure and its vast array of patents. Even then, its patent portfolio doesn't come close to Nokia's --- which in turn is fading fast, perhaps faster than RIM is.

The relationship is entirely symbiotic. The fewer handsets that need the secure data infrastructure, the less value the data infrastructure has. Without BlackBerry handsets that need support, the data network is redundant.

"If there was value in the Network Operating Center back in the day, it seems to have faded. If we have learned one thing from the iPhone, it’s that the device’s security is 'good enough' for the government and 'good enough' for the enterprise."

He noted how "every type of company" has replaced their array of BlackBerry handsets with iPhones.

"If there is value in RIM’s Blackberry servers placed around the world in large numbers, that value is in decline, as those same [BlackBerry Enterprise Service] servers continue to get ripped out on what seems like a monthly basis."

We're therefore left with --- well, nothing much --- except patents.

"Yes, the company has real intellectual property around email delivery, and they still do some things that companies like Apple can’t (ever try to delete an email on an iPhone when not connected to the network?) but overall, their manufacturing capability isn’t worth much in our view."

Nokia has around 30,000 patents and 10,000 patented inventions, and are currently the company's "most valuable and stable assets [...] crucial to its longer-term survival," describes The Guardian's Charles Arthur.

RIM, on the other hand, has more than 4,200 patents with the U.S. Patent & Trademark Office, thought to be worth around $1--3 billion. RIM would likely be better off licensing its technologies out to partners and interested parties than selling off its long-term patent assets as it guarantees a long-term revenue stream rather than a bulk one-off payment which it doesn't need yet.

Seeing as BlackBerry OS is to be phased out in favour of RIM's QNX-based operating system, what about BlackBerry 10? Could the company flog it off at a competitive price to the nearest seller and gain a return on the blood, sweat and tears --- and not to mention the job losses --- that has gone into the software?

"We don’t think anyone would consider buying the operating system at a premium price. Even Amazon, who we could make an argument for, seems to be standardizing on Android. We also don’t think Samsung has any interest, as their Bada platform is more advanced than BlackBerry."

That's a simple "no", then.

In a nutshell, he says that BlackBerry 10 cannot "compete meaningfully" against the three major operating systems already out there --- Apple's iOS, Google's Android, and Microsoft's Windows Phone.

"The potential for RIMM to offer a more appealing, completely new and different OS, without a keyboard (initial devices won’t have it), and with no apps and no ecosystem to enterprise and consumers is incredibly slim."

He notes how RIM is "not a software company at its heart", and that it has taken a beating from those who are software companies, again Apple, Google, and Microsoft, who continue to generate vast amounts revenue from their software operations.

All will become clear on Thursday at RIM's first-quarter earnings. Bring popcorn.

Image credit: Research in Motion/CNET.

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Topics: Security, Mobility, BlackBerry

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26 comments
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  • Can't Beat 'Em...

    ... Join them,

    RIM should enter into a strategic partnership with Microsoft in which they adopt WP8, build WP8 powered BlackBerry phones (and perhaps Playbook tablets) and continue to market them as the go to device for enterprise user. And they should do this before HTC, Nokia or Samsung beats them to the punch.
    widow maker
    • Been saying that for two years. Before Nokia got into WP.

      Probably too late now. They wasted too much time on qnx. Corporate IT is now all over W8/WP8 built in encryption, secure boot, and eas+, and looking to boot bes out for good.
      Johnny Vegas
      • Good is aweful

        Trust me we're using Good and it's horrendous. The UI is painful. It's great if all you care about is security and separation of corporate data but your employees will want to kill you. Good is also 3x the cost of BES and has had a number of outages.

        Unfortunately every other solutions uses Exchange ActiveSync so if / when RIM goes away there will be a huge hole for MDM that the other players cannot fill as they do not have API support from iOS and Android.

        Apple is getting there but it's a hodgepodge mess and at the end of the day employees don't want a locked down iPhone anymore than they wanted a locked down Blackberry.
        MobileAdmin
      • @ MobileAdmin

        Mobile device management has always been easier with BES. It provides seamless document workflow and email true push which even the WP model comes close using pull/push on ActiveSync. Case in point is how attachments are handled.

        Ultimately at the end of the day, I do not think iPhones are cut out for enterprise mobility and that will still be a hole that WP model can fill in when ready.
        calahan
    • M$ is the kiss of death

      only android can save BB!
      The Linux Geek
      • Because Android is the Paragon of Security!

        Android is a mess!! Enterprise doesn't want that solution. With Windows 8/WP8 devices can be locked down!

        Secure boot, device encryption, remote wipe, company hubs for installing apps!!

        RIM adopt WP8 or Die!!!
        jatbains
      • RE: Because Android is the Paragon of Security!

        @jatbrains Practically all commercial Android devices come with locked bootloaders to prevent you running anything but signed images, and in the case of ones that can be unlocked, unlocking requires a full wipe. The newest ones also have things like full device encryption and can be configured to allow remote wipe. So yea...nice research on your part.
        rstat1
    • Pffft

      C'mon, you guys, stop it. Making Windows Phones (or Android phones, for that matter) only makes sense if your distinctive competence is manufacturing, i.e. if you are a vertically-integrated powerhouse with multiple scale plants... somebody like Samsung, or LG, or Foxconn (or at one time, Nokia). To send RIM into battle against guys like that is to send them to their deaths.

      The only way RIM can compete against Samsung is to have a product that Samsung doesn't have, such as a smartphone running proprietary Blackberry software. Then the thing lives or dies on the merits of the software, not on how much margin RIM is willing to leave on the table to win the business.
      Robert Hahn
    • Getting into bed with MS . . .

      . . . has not been a resounding success for Nokia. What makes you think that it would be so for RIM?
      Wakemewhentrollsgone
    • Any solution that is not cross-mobile platform will be the death of RIM

      Is MS helping Nokia stay alive?? To the contrary, Nokia is dying a slow misserable death thanks to WP7. I don't see it changing even with WP8.

      So why would RIM get any better results? Fact is MS has LOST market share in the mobile market (RIM actually owns more than double what MS has today) and unless there is a miracle, I honestly doubt that that will change any time soon.

      So why should RIM bet the farm on an the skimpiest, slowest horse in the race??
      wackoae
      • Nokia isn't dying a slow death thanks to WP7

        Nokia isn't dying a slow death thanks to WP7. Microsoft announced the partnership over a year ago. Nokia failed to come to market in quick enough and when they did they failed to release on all carriers (mainly Verizon). Microsoft's fault in the matter is they should have gone after Rims base to start with and not put all its eggs into one batch with Nokia.

        WP is a great OS but the lack of app knocks it down to good. The lack of hardware to OK and lack of carriers to umm fair.
        thugbot@...
  • Interesting to read that iPhone is "good enough"

    [i]If we have learned one thing from the iPhone, it???s that the device???s security is ???good enough??? for the government and ???good enough??? for the enterprise.[/i]

    Well that doesn't sound good. We all know that "good enough" is never a good thing. Or is it suddenly acceptable since it is an Apple product?
    toddbottom3
    • It' a phrase open to interpretation and relative to a given situation.

      For example a Honda Civic is a good enough car to get you from point A to point B and back again. However if you expect to be shot at an armored car would be good enough unless they will be using a rocket propelled grenade then a tank might be good enough. It all depends on the individual and the situation. If the government and certain enterprises have determined that the iPhone is good enough then who am I to tell them that they are wrong I suspect they have access to studies and experts to inform them....People who know this stuff way better than you or I for that matter. It has nothing to do with it being Apple but rather what they as organizations have determined based on their needs/wants.

      Pagan jim

      Pagan jim
      James Quinn
      • Now you've done it Jim!

        You went and used logic against Toddy! This could be big. LOL....
        T-Wrench
  • It isn't just software that's killing RIM, it's hardware, too.

    Their phones are substandard in both categories.
    baggins_z
  • Brian Blair is a Pro-Apple hack

    Comments like this are pure BS.

    "[BlackBerry Enterprise Service] servers continue to get ripped out on what seems like a monthly basis.???

    Pretty much every company at Blackberry World 2012 still uses BES and Blackberry is still their standard. I'm in the fortune 100 vertical and this was every single major company.

    What is happening is they are supporting iOS for a select handful of senior employees / specific use cases. The bigger issue that will hurt RIM is the days of corporate liable devices are going away. Companies want to shift that cost to employees (BYOD) to get out of the procurement and lifecycle management. The problem is no one has found the secret sauce to still manage the device and control corporate data without impacting the device as they don't own it. (reality is it's currently a unicorn)

    There are an awful lot of people watching BB10, how it functions and the support it gets is still TBD. If half of the current Blackberry user base move to BB10 they locked up 3rd place and will have a OS / platform that can match (and exceed) functionality of iOS and Android. Windows Phone is done. They just threw away what little users they had locking them out of upgrading to WP8 and there is not ONE company (outside of Microsoft) that uses Windows Phone anymore. Considering most companies are just now moving to Windows 7 there are no chance Windows 8 will take off.

    Microsoft blew mobile - they need to just suck up and admit that. RIM did and are in the transition period. Let them finish and then judge BB10. If it stinks you move on, if it's solid and gains support - a whole lot of market shorts can K@ss my @ss!
    MobileAdmin
    • Really?

      "Pretty much every company at Blackberry World 2012 still uses BES and Blackberry is still their standard."

      Well, duh... I would guess those attending BLACKBERRY WORLD would use Blackberry products...

      "Windows Phone is done."

      And you know this how? You have some knowledge that no one else in the world has?

      As to KMA - Pucker up. Smart money has been shorting RIM since last April 2011
      no_axe_to__grind
      • Really

        The point is Blackberry World is attended by the majority of Blackberry customers (world wide) which happen to be the major companies across every vertical. It's likely one of the lone conference that's whole focus is enterprise mobility. The key people involved with providing mobile solutions are all there and talk shop. I did not hear from one peer that they are "ripping out BES".

        Almost every single peer was using some other MDM and no one loves it. People with Good are looking at MobileIron, people with MobileIron are looking at AirWatch etc. I'm talking huge fortune 100 companies with thousands of Blackberry devices in use and looking to RIM for answers. The bulk of these companies are waiting to upgrade their now aged mobile deployment. Some may move to iOS, I didn't hear many supporting Android and there was zero interest in Windows Mobile let alone Windows Phone.

        The issue is not the MDM - the other OS platforms cannot provide the level of security and management RIM does with BES.

        The knowledge is out there - worldwide market share is going down, it's only propped up as they often include legacy Windows Mobile. Carriers don't push it, heck Verizon doesn't even sell a 7.5 device. Add the fact Microsoft has yet again abandoned their users doesn't speak to Windows Phone 8 having much of a chance. They did the same when they moved from Windows 5 to 6 and 6.5 and then again to 7.0. It's always "The NEXT mobile platform we make is going to be .. just you wait." They forget to mention until the last minute you'll need new hardware. No one in enterprise is going to touch that. Heck Apple provides a better enterprise roadmap than Microsoft.

        RIM has a sizable corporate market and it's a big investment. How they execute BB10 will make or break them. But lets see how it is and works (and can be managed) before we fill the grave.
        MobileAdmin
    • Wow!! Just wow!!

      People who attend Blackberry World are BES users.

      Can I say DUHHHH any louder?
      wackoae
    • RE: Brian Blair is a Pro-Apple hack

      "...that uses Windows Phone anymore..."

      It hasn't even been out that long...how can you say "anymore". Unless you're confusing Windows phone with the complete different and unrelated Windows Mobile.
      rstat1