After Google-Motorola, what is the end game for RIM and BlackBerry?

After Google-Motorola, what is the end game for RIM and BlackBerry?

Summary: For Research in Motion and their BlackBerry product line, the final journey will take them down one of three paths: independence, assimilation, or oblivion.

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As I discussed yesterday, Google's $12.5 billion acquisition of Motorola Mobility is a game-changer for the wireless industry.

How this is going to play out in the long term is uncertain. It remains to be seen if the acquisition is a pure "Patent Play" where Google preserves its relationship with its OEM/ODMs for Android smartphones and tablets and uses Motorola's intellectual capital and patents as a shield against Apple and Microsoft.

This is what Google is currently maintaining as its current line of thinking on their company blog.

But we know that what Google is putting on as its public face may not be exactly what ends up happening as my colleague Ed Bott has suggested.

Alternatively, Motorola becomes a "most favored nation" as an equipment manufacturer and farms out ODM and other contract manufacturing and component supply work to companies like HTC and Samsung, in roles which they have traditionally served before coming out with their own branded product lines.

I discussed at some length what the Asian ODMs could do for supplementary income in either the first or second scenarios, which is to work with Microsoft and HP and contract manufacture/design Windows and WebOS devices.

But what of Research in Motion and the BlackBerry? How does this watershed event affect the company and that product line going forward?

Wall Street continues to be disappointed with RIM's performance and has suggested that in the wake of this Google-Motorola New World Order, that the Ontario, Canada-based firm's troubles are only going to worsen and a similar partnership or acquisition of the company may be necessary in order to sustain its existence.

I have previously stated that RIM is a dead company walking. Based on the company's current performance and its failure to execute and sell-though on key strategic products such as the BlackBerry PlayBook, I am certain that this is still the likely end-game. But there are other scenarios that could potentially save the firm and its technology.

RIM stays an independent mobile technology firm and pulls out of a nose dive

While I maintain that this scenario is the most unlikely, it's not outside the realm of possibility. However, for this to occur, the Board of Directors of the company would most likely have to vote "no confidence" in co-CEOs Jim Balsillie and Mike Lazaridis and have them replaced by more dynamic, pragmatic leadership who may have to take significant risks and/or major corrective action in order to turn the company around.

This may include scrapping most of the current management team and promoting people on the engineering/product development side to make decisive changes in the product line, such as accelerating and staffing up the QNX side in order to push the company towards its next-generation technology faster and ceasing development on legacy BlackBerry OS 7 handsets.

This would also probably require a concerted effort to make a complete overhaul of the BES infrastructure in order to natively support QNX, as well as releasing the native email and calendaring/PIM apps for QNX on the PlayBook and QNX handsets in a timely fashion, which would be no mean feat.

Additionally, software engineering resources would have to be appropriately prioritized that are currently working on the SDKs for Adobe Air, Webworks, the native C++ development kit (currently in early beta) and the Android/Java "Players" for QNX.

As a result, developer relations would similarly have to reflect that new prioritization or increased effort in certain areas.

While Android compatibility would certainly give QNX access to a large library of current applications, it may very well be an unnecessary distraction given RIM's limited resources as well as increased risk given the uncertainty of Google's intentions with Android post-Motorola acquisition.

RIM and its technology is acquired by a larger entity

It has been bandied about that the best long-term strategy for RIM is to be acquired or to partner with a larger entity, and the name that gets thrown around most often is Microsoft.

I have a couple of problems with this because from Microsoft's perspective, RIM isn't a clean purchase, any way you look at, even assuming that the company would likely be acquired at its lowest capitalization when the situation would appear most bleak and even the discarded or less-valuable pieces to Microsoft could be sold off.

What would Microsoft gain from a RIM purchase? The most important would be BES and the back-end BlackBerry Secure Messaging infrastructure, which would be in the form of the various datacenters tied into the carriers and RIM's global network operation centers.

The secure messaging infrastructure would have to be re-written or made to work with Windows Phone 7 and Windows 8, which would be no mean feat, so Microsoft could market its handsets as "Windows Phone and Windows 8 Tablets with BlackBerry Enterprise Messaging."

But in addition to porting that over to Windows, Microsoft would probably need to consolidate datacenter infrastructure and re-organize RIM so it fit in best with its own. Any way you look at this, we're probably looking at big layoffs at RIM if Microsoft comes to the rescue.

The other assets that Microsoft would gain from a RIM acquisition would be the treasure trove of 10,000-15,000 patents (of which 3,000+ are mobile/wireless industry patents) that RIM holds, as well as the Canada-based handset manufacturing, design and engineering business.

Potentially Microsoft could use these as a defense against any future litigious activity by Apple and other parties.

Part of these mobile patents include the BlackBerry keyboards for which the company is known for on its handsets that Microsoft could potentially license to firms like Nokia, Samsung and HTC.

All of this IP is the DNA of what makes a BlackBerry a BlackBerry.

As with Google acquiring Motorola, it would not be clear if the handset manufacturing and design team would still be retained and if RIM would have a similar "Most favored nation" status for Windows Phone handsets and Windows 8 tablets.

Other than their entertainment products division which produces the XBOX 360 and the Kinect, I would tend to think that Microsoft would not want to be in the overall business of creating and selling consumer electronics devices like Apple, but that is only a gut instinct.

We would also have to assume that BlackBerry OS 7 and QNX would both be a casualty of war with a Microsoft acquisition, and that QNX would likely be sold off to a company of interest that needed the RTOS for embedded systems.

Candidates for QNX might be companies like Intel (which already purchased Wind River for embedded systems) AMD, Freescale Semiconductor, an automobile industry leader like General Motors or even a major CE/Industrial electronics company like General Electric, Philips or Siemens. Or possibly aerospace like General Dynamics, Boeing or Lockheed-Martin.

Beyond Microsoft, there are other possible options. My colleague Zack Whittaker suggested that perhaps Samsung, which may be looking for other sources of revenue in light of Google/Motorola, might be interested in owning RIM's hardware engineering, patents, BlackBerry OS and QNX.

However, I feel that it is unlikely that Samsung wants the overhead of running and maintaining the global back-end infrastructure to support BlackBerry Enterprise Messaging. So that part might need to be divested.

Zack also thinks that nationalization might be an option, but I think Canada's got much more serious issues to contend with.

I don't think that Canada is going to "bail out" RIM. It may be an important technology concern for the country but it's not tied into Canada's financial system like banks are. While people will lose jobs, and it would be awful for Ontario economy, the country will not sink or swim on RIM's fortunes or impoverishment.

As to other big techs? I find it unlikely that HP would want to own another mobile company, even though the BES/BlackBerry Enterprise Messaging infrastructure would be an excellent value-add for WebOS. And I don't see Amazon jumping into this even though there is a possible Cloud play here.

Oracle? Larry Ellison has certainly done some weird things lately, and he's at war with Google, so I won't discount it entirely.

Who else? How about a large Asian banking/investment concern that might want to own RIM for exclusive use in Asia/Pacific, where the product is still strong? Of all the possible scenarios, I think this is much more likely to occur than anything else described above.

RIM would probably have to abandon ship in North America and Europe in order to meet regulatory and national security concerns in order to satisfy such a sale, however.

It would be a huge culture shock to the Canadian firm if they had to report to Chinese, Korean or Japanese masters, but hey, PalmSource ended up getting sucked up by the Japanese a bunch of years back. This sort of thing wouldn't surprise me at all.

RIM walks into the white light and is devoured in pieces by techno-vultures

While it is certainly possible RIM could be acquired in whole by any of the entities described above, it's much more likely that some sort of hybridized end for the company comes to fruition.

As I have mentioned, some parts may be more desirable to some companies than others, and we might be looking at a Nortel-style bid for patents, businesses and IP, in which the company ends up getting torn apart and sold off in chunks.

What do you think the most logical end game for RIM will be? Talk Back and Let Me Know.

Topics: Enterprise Software, Banking, Google, Mobility, BlackBerry, Security, China

About

Jason Perlow, Sr. Technology Editor at ZDNet, is a technologist with over two decades of experience integrating large heterogeneous multi-vendor computing environments in Fortune 500 companies. Jason is currently a Partner Technology Strategist with Microsoft Corp. His expressed views do not necessarily represent those of his employer.

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  • RE: After Google-Motorola, what is the end game for RIM and BlackBerry?

    Acquisition is their only hope for survival. I was a die-hard RIM/BB fan-Apple won me over. This is what happens when you have not 1, but 2 CEO's that fail to innovate.
    mainframe85
    • RE: After Google-Motorola, what is the end game for RIM and BlackBerry?

      @mainframe85 Really? Failed to Innovate... If you knew anything about BIS/BES you would not be saying that! Of-Course, a Apple-Head like yourself wouldn't understand that Android/IOS wouldn't be able to run BIS/BES Mainframe Servers. Didn't Apple kill off its Server Software, and isn't Microsoft running iCloud? Real Innovative!
      kwatcha
      • RE: After Google-Motorola, what is the end game for RIM and BlackBerry?

        @kwatcha
        No, Apple did not kill-off its server software. The Lion version is available for download. However, Apple did kill-off its X-server hardware.
        Wakemewhentrollsgone
      • RE: After Google-Motorola, what is the end game for RIM and BlackBerry?

        @kwatcha
        Apple is probably coming out with new server hardware soon... they always have something new..
        Hasam1991
      • RE: After Google-Motorola, what is the end game for RIM and BlackBerry?

        @kwatcha respondents

        Please, be at least a little realistic.

        Apples so called servers are going to compete with Microsft's servers for the basement of the server space. they will provide very little competition for Sun/Oracle, and IBM won't even notice them. Apple has near zero to offer big corporate. Rim is not in any danger, except for possible hyperbole damage from pundits. Jason's Option three is already happening.

        Rim people were and will be the big corporate people. The folks who just want to look corporate have already moved over to Apple, which after all is just all about looks anyway, so all the damage that will be done is already done.

        Apple for looking productive, Blackberry for being productive. Android for somewhere in the middle, where most of the market really is.
        YetAnotherBob
  • QNX

    Don't really care about RIM one way or another, but I hope QNX lands somewhere good. Nice OS.
    MC_z
    • RE: After Google-Motorola, what is the end game for RIM and BlackBerry?

      @MC_z Unfortunately if the mighty Redmond Vole gets ahold of RIM, they wouldn't likely spin off QNX, as it competes and kills the embedded LoseDoze O/S. The likely scenario would be QNX customers getting "transitioned" to LoseDoze a few years out, and the QNX O/S gets kicked to the curb.

      Basically when you cannot compete based on the merits of the technology, buy out and close down your competition (which is a convenient side effect of buying RIM).
      HackerJ
  • RE: After Google-Motorola, what is the end game for RIM and BlackBerry?

    Another Assumption about Blackberry not being able to beat the competition... Tisk Tisk Tisk. You all will never know!
    kwatcha
    • RE: After Google-Motorola, what is the end game for RIM and BlackBerry?

      @kwatcha QED
      dheady@...
    • RE: After Google-Motorola, what is the end game for RIM and BlackBerry?

      @kwatcha Difficult to predict. http://www.ommrudraksha.com/products/120-11-mukhi-rudraksha-bead.aspx
      rudraksha1
  • RE: After Google-Motorola, what is the end game for RIM and BlackBerry?

    I think it will end up sold off in parts. Microsoft just partnered with Nokia - a much better partnership then any deal with RIM. I don't see Samsung buying them outright either. In pieces however... Microsoft, Samsung and HTC possibly splitting the Patents, others stepping in to fill their needs on the rest.
    RGC6789
    • RE: After Google-Motorola, what is the end game for RIM and BlackBerry?

      @RGC6789

      Look at the financials. Rim is making money, not losing it. To continue, All Rim has to do is nothing. The end game for them would be to take Jason's advice and really annoy their current customers.

      Like Apple showed ten years ago, Rim doesn't have to dominate the market, they just have to have a niche that works well for them. They have that niche, and are not in any real danger of losing it.
      YetAnotherBob
      • Right, in five years how many Crackberries will you see?

        ....
        @YetAnotherBob
        GoPower
      • RE: After Google-Motorola, what is the end game for RIM and BlackBerry?

        @go power<br><br>I stopped and looked up sales figures from Gartner, Over the last year, Rim has gone from 55,000 to 65, 000 in sales. That is Jason's 'Nose Dive'. In any other business, a growth of over 15% in sales would be considered phenomenal. But, in this business, it's all about Hype. It's the "Reality Distortion Field" in action. <br><br>It's only when compared to Apple and Android that Rim looks like it's losing out. The reality is that there are more Rim device users than there ever were, right now.<br><br>So, in five years, I expect Rim to have about 5% of phone users, roughly what they have now. Apple will have slightly fewer. Apple growth overall is flat right now. Yes, there are lots of iPhones being sold, but it's mostly to current iPhone users in the US and Europe. Apple's biggest growth area is old iPhones being sold in the third world. And Apple only has a little bit of that business. It's a 'refurbished' market there.<br><br>Android and Windows Phone 7 or more likely Windows Phone 12 by that time will each be bigger than Apple and Rim combined, but, all Smart Phones will comprise less than 30% of the phone market. It will have topped out. That topping out will probably happen in about two years. By then, everyone who wants a smart phone will have one. So, smart phone sales will do what computer sales did around 2000. The great growth years will be over. <br><br>Apple and Rim are both safe, but they are both close to as big as they are going to get in this market. The growth is just not going to be there for them. Or for anyone else.<br><br>Too bad Jason doesn't look at the real numbers. But, you can. Just remember, Google is your friend. (Search, that is, not everything Google.)<br><br>Oh, and I am not a Blackberry user. I use Android. iPhone isn't the real competition for Android any more, it's between Windows and Android now. Only the iPhone fans don't already know that. I think that Android will win. But that's still only worth about 12% of the total phone market. there loser there gets around 11%. Smart Phones won't save Microsoft any more than X-box could.<br><br>Also, Nokia is making a very serious mistake in abandoning Symbian. Now, looking at the real numbers, that may just be a company destroying move. The real money is still in making cheap phones that are just phones, with text, address book and camera capabilities. I wonder if Motorola will realize that in time.<br><br>Quantity still wins out in the end.
        YetAnotherBob
      • RE: After Google-Motorola, what is the end game for RIM and BlackBerry?

        @YetAnotherBob

        Have you been paying close attention to what is happening out there in the mobile universe? If you are planning on investing; I would let go of the biases and change your philosophies pronto; or hold on to your cash. Apple and Google are going to be the only two companies who survive; all others will be gone, with RIM being among the first to go. Why? Well, even though it was great in it's time, the Atari 2600 wouldn't have much of a future in the company of the Xbox 360 and Playstation 3; would it? Simple analogy? Yes - because that's how simple this is! Nobody cares about iOS, QNX, etc. except a few tech geeks. The PlayBook has QNX and few are buying it. Why? Because it's not as good as something else they can get for the same price; end of story. People simply want good stuff; they don't care what OS makes it good. They also don't care which company makes the good stuff. "It's not the Pen; it's the Penmanship." Also, if all you're looking at are percentages and sales in their present state, you've got tunnel vision and are missing the big picture. Apple is taking out about one company per week these days; and Google is scavenging up all of the leftovers like a big vacuum cleaner. Personally, I'm happy about this; not because of some philosophical preference or ideology; it's because I want to use the best devices available, it's that simple; and so do the majority of consumers. It's not about hype as another posted implied - that's absurd! You think people are that dumb? If you do, I would refrain from investing your hard earned dough. There's a reason every other device is compared to the iPhone, and it has nothing to do with hype. If your just blogging and voicing your opinions, that's one thing; but I wouldn't use that same logic if I was investing (or betting). IMO, the outcome is obvious.
        Illuin
  • RE: After Google-Motorola, what is the end game for RIM and BlackBerry?

    RIM will survive with or without acquisition.
    Ram U
    • RE: After Google-Motorola, what is the end game for RIM and BlackBerry?

      We in Nokialand also had the same opinion on few months ago...(regards from Finland)
      petrile
      • RE: After Google-Motorola, what is the end game for RIM and BlackBerry?

        @petrile

        You are right. Microsoft has destroyed a lot of it's allies over the years. Nokia won't be the first one, or the last.
        YetAnotherBob
    • RIM'S endgame

      I just hope they do it without acquisition.
      FnkPcSyko
  • RE: After Google-Motorola, what is the end game for RIM and BlackBerry?

    "I would tend to think that Microsoft would not want to be in the business of creating and selling consumer electronics devices like Apple, but that is only a gut instinct."

    Microsoft resisted the temptation to build PC's for decades and its easy to assume they would take the same stance with smart phones but, with Google's move and the pressure from Apple I don't know that Miscrosoft can take the no hardware approach this time around.

    Obviously there is a very real advantage to controling both sides (hardware software) of the development process. Apple has clearly proven that and their market share and nice profit margins reflects it.

    I think that if Microsoft is going to be a real player in mobile devices they will at some point have to get in the manufacturing game.
    NoAxToGrind