Five alternative futures for BlackBerry

Five alternative futures for BlackBerry

Summary: BlackBerry is exploring options ranging from joint ventures through to the sale of the company: we take a look at how each of these could shape up

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BlackBerry was for a long time was the undisputed leader in enterprise smartphones, and enjoyed considerable success for a time in the consumer space too. Since then, it's faded dramatically: across five of Europe's biggest markets — Great Britain, France, Spain, Italy, and Germany – BlackBerry now has a mere 2.2 percent market share, while its new BlackBerry 10-based handsets haven't been the breakthrough hits the company had hoped.

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In the enterprise, BlackBerry has been undermined by the growth of the bring your own device culture — which has resulted in a huge influx of iPhones and Android devices into the business — while its attempt to break into the tablet market with the PlayBook had met with little success. 

Now BlackBerry has revealed its board of directors has formed a "special committee" to explore strategic alternatives for the business which could include joint ventures, strategic partnerships or alliances, a sale of the company or what it calls "other possible transactions".

"Given the importance and strength of our technology, and the evolving industry and competitive landscape, we believe that now is the right time to explore strategic alternatives," Timothy Dattels, chairman of BlackBerry's special committee, said in a statement. However, the company noted that there is no certainty "that this exploration process will result in any transaction".

BlackBerry chief executive Thorsten Heins said that while the special committee looks at alternatives the company will continuing with its strategy of reducing costs, driving efficiency and accelerating the deployment of BES 10, "as well as driving adoption of BlackBerry 10 smartphones, launching the multi-platform BBM social messaging service, and pursuing mobile computing opportunities by leveraging the secure and reliable BlackBerry Global Data Network".

So what possible futures is BlackBerry now facing?

Partnerships

The company emphasised its desire to accelerate BlackBerry 10 deployments in its statement, and one way to achieve that would be to license out the operating system to other handset manufacturers in an effort to regain some critical mass.

After all, despite initial scepticism, BlackBerry 10 has met with largely positive reviews and is generally seen as well built and secure.

However, this route hasn't proved fruitful for the company in the past. BlackBerry has already been looking at licensing for a while without much to show for it: last year it engaged JP Morgan and RBC Capital Markets to help with a strategic review of how to leverage the BlackBerry platform through partnerships or licensing opportunities. And while BlackBerry 10 is a solid OS, there are a number of well-known alternatives — Android in particular — available to handset makers as well as a growing number of upstarts in form of Windows Phone, Tizen and Ubuntu Touch.

If it touted the OS around and saw no interest in the past, it's therefore unlikely that it would see any this time around, when its market share is even smaller.

Take the company private

Going private in itself can't fix the problems that BlackBerry has, but could give it the breathing space it needs.

Michael Dell's ongoing attempt to take Dell private has made the idea of tech companies going private suddenly fashionable again. The benefits are that it allows the owners to make the tough long term decisions needed to fix a company without having Wall Street rubbernecking and second guessing its every move.

BlackBerry has cash reserves and is far smaller that Dell so going private is a realistic option, assuming it can get a private equity firm interested. But that leaves the question of what would BlackBerry do to turn the business around even if it became a private company? If this is a route that BlackBerry pursues, the private equity firm that buys the company — and the direction they choose for it — will determine if it can return to something like health or be sold for scrap.

Sell the company

BlackBerry has been linked with a number of potential suitors over the past few years, from Lenovo to Amazon to Samsung and Microsoft. Some of these might be interested again, but there are a few others who might be tempted too: HP for example might consider taking another tilt at enterprise mobile, or even Dell.

However, there's no obvious candidate for a buyer these days. Many hardware makers have exited the mobile business in recent years and for those wanting to get into the business again or even for the first time, there are cheaper and easier ways to do so out there.

Break up

Another option may be to break the company up, by selling the various assets off — BlackBerry's thousands of mobile patents could be extremely attractive to Google or Apple, for example. It could even separate the hardware and software sides of the company, and concentrate on developing its MDM and enterprise software business — a business that still has a future whether its handsets sink or swim.

However, at least one analyst rates this as unlikely. Wells Fargo Securities senior analyst Maynard Um said in a research note: "With regard to asset sales, we believe BBRY would have the most value as a whole though there could be interest in various parts of the company — OS for the automotive or smartphone market, infrastructure for security, intellectual property, enterprise subscriber base, et al."

Do nothing

As BlackBerry's statement notes, "there can be no assurance that this exploration process will result in any transaction". It could be that after looking at all the options BlackBerry still decides to go it alone. It still has a strong brand, a reasonable enterprise customer base and some attractive technologies — it could be that a leaner BlackBerry can find a place for itself in the mobile ecosystem.

But, as Larry Dignan points out, it's going to be hard for BlackBerry to pretend that it will business as usual while all this goes on, and customers and staff will be unsettled and in limbo. The sooner the uncertainty is resolved — however it is resolved — the better.

Topics: BlackBerry, Enterprise Software, Smartphones

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39 comments
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  • bb will finally be dead by years end

    As myself being a former user, I finally made the switch to ios and android after 2 times with bb and I have no more use for it anymore now... same goes for android for me too but bb is long dead as competition has caught up to them.. so for me im considering windows phone next and still keeping my ios and android products for wifi use...
    ITGuy000
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  • HP

    Maybe Meg Whitman @ HP will buy them, to plug their mobile gap - LOL
    neil.postlethwaite
    • I think

      HP is focused on Android as their platform for mobile. They do at least have vanilla Android on the devices, which is nice, but I don't want BlackBerry's semi-homage to webOS to die the same fate that Palm and webOS did.
      TheMimic12
  • BlackBerry was for a long time the undisputed leader

    So was Nokia, Dell, MySpace, Yahoo, ... oh this list is growing ...
    EnticingHavoc
    • look closely

      Except BB and Dell all the other are in growing path
      Mac_Win
  • Translated

    No idea so lets have a guessing game. pffttt.... Come back when you have a real story.
    NoAxToGrind
  • No ones stupid enough to buy them. Any miniscule

    market share acquired this way would vanish on the consumers next device upgrade. And no ones stupid enough to put their own money towards going private as that's a zero roi move. And no one wants to partner with anyone who's in the final few circles around the drain before going down. The fact is there is just no outs left for BB. I feel sorry for anyone who bought one of their new devices under the come back delusion. No one wants to upgrade to BES10, they're all looking at throwing bes out. You just can't execute that poorly for that long and expect to stay around. Goodbye BB.
    Johnny Vegas
    • No one?

      Funny didn't we just read last week DOD granted Blackberry exclusive access for BES 10? We're in the middle of our own BES 10 roll out and I know of many other entities doing the same.

      The blog world wish for Blackberry to just up and fold are so sensational.
      MobileAdmin
      • Reality is that, BB is a "dead company walking", and the DOD and any

        company that uses them now, will be looking for a replacement within a few months.

        BB had better start looking to sell whatever they have now, before it loses even more value and have to sell their assets at auction or fire-sale prices.
        adornoe
  • Google should buy them

    help prop up struggling Motorola.
    William Farrel
  • A must buy for Microsoft

    Microsoft should purchase BB. BB is well suited to compliment Microsoft's strengths.

    1. Consolidate the automotive market with QNX and windows embedded automotive
    2. Consolidate enterprise, financial and government markets with BB
    3. Extend Process Control and Automation market share with QNX
    4. Extend the partnership with Nokia with the combined abilities of BB and Nokia
    Krishna_Prasad
    • thats defenitely good

      That's definitely good for MS and as usual any company going to die will look for big brother's hand.
      Mac_Win
    • Thats what exactly I was thinking

      Combine BES with Yammer, Lync, Skype etc. and since it is already integrated well with Exchange, it will be easy for Microsoft to appeal to Enterprises on mobile end.
      Ram U
    • right... send more MS money down the drain.

      The only thing of value in BB happens to be the patent portfolio.

      And even that is questionable.
      jessepollard
      • @ jessepollard

        Absolutely agreed.

        There is no more value in Blackberry for Microsoft. This was the same board and CEOs that displayed a lack of vision when Steve Ballmer took a deal not once but twice to their board. A joint venture then or an OEM relationship (like Nokia's) will have saved Blackberry while improving WP OS's marketshare (and enterprise profitshare) even drastically.

        That particular lack of vision on Blackberry's previous CEOs and board and current CEO Heins should not go unrewarded or unpunished. The company has only 3 assets to boot with -
        #1 BES and MDM solution - Competing solutions including Good Tech and Intune are catching up. In fact, Microsoft will be better off acquiring Good Tech (a startup) since their push email and MDM solutions are equally good. It will not gain much if BES is acquired.
        #2 NOC network - If demand for encrypted email is still growing using BES and NOC network, then iPhones will not enter mobile enterprise. iPhones and to a much smaller extent Galaxies are replacing Blackberries. Their management should have known that they needed a bigger enterprise server (like Windows Server) integration to fend of mobile device encroachment. And they did not act on it prefering a silos approach. And they paid for it. Their NOC is actually their most useful asset since it still is used by the defense, federal and a few private corporations. But it should not be valued at more than $500 million - $1 billion.
        #3 BB handset business is a major losing pit. Their A series, Z series and Q series do not even compare to Lumia handsets or LG handsets in consumer brand perception and future growth potential.

        Essentially, all Microsoft needs is their NOC network and how to tie it to DELL or NOKIA. And of course any viable patents. So I do not see a value beyond $2 billion for the whole deal and that is actually a premium for what is left and what can grow in a few years.
        calahan
        • @ and more

          I think it should be added that Blackberry died (or is dying) since premium and mid-end consumer/enterprise mobile devices are increasing geography-centered.

          It appears Google Play gets most of its revenue and some profit from East Asia and SE Asia (China/Japan/Korea/Taiwan/Singapore/Malaya). And Apple dominates USA/Canada with its iTunes and iOS AppStore revenue.

          Sony has a chance to dominate the Japanese market. And Nokia has a high probability of dominating Western/Southern European markets and South American markets (they already have mid-teens marketshare there). So it is a matter of time before Samsung carves up its own app store and OS platform to own Korea and parts of China. And Huawei/Alibaba will attempt to do the same with China. I do not know who looks to dominate the Indian mobile market but it looks like Samsung at the moment.

          Google Play and iOS AppStore have tough competition in each geography since each hardware vendor is slowly transforming into a systems and software vendor owning all of the stack including the appstore.

          Instead of 2 major appstores, there will be atleast 5 to 6 major appstores including Amazon's by 2017.

          And it is difficult to see how Blackberry mobile phones will develop a brand following and a consumer appstore with growing revenue outside of Indonesia and parts of Africa like Nigeria where most of their consumers reside excluding enterprises in America. These users will not buy costly paid apps. The app model will be free apps or advertising driven apps. Blackberry does not have the deep pockets to support itself in such a fragmented industry.

          Motorola may not die since Google will keep it alive to sell Google phones. But HTC and Blackberry do not have the deep pockets of Nokia or LG to survive today so they can fight tomorrow. Both will die in a few quarters.
          calahan
    • Yeah but do you really want

      to wait 10 minutes for your Car to boot up?
      nbjeter3
    • Blackberry already has a buyer

      Do your freakin' research!
      It's Fairfax Holdings:
      http://market-ticker.org/akcs-www?singlepost=3269891
      Jacob VanWagoner
  • Buy back...ha

    I had to chuckle when BB let float the idea they're thinking of going private, with the buy back that entails. They have "reserve" money, the article says, but in no way do they have enough to purchase themselves back from the shareholders, many of whom have lost 75% of their investment and therefore would probably not sell at current price. And what happened to the 5 or so Pro-Blackberry hacks replying to every article about how the Q10 was flying off the shelves and how many of these vapor customers were switch overs from iOS or Android? Sad that they modified their 2007 version by just making it larger and copied the iPhone 2010 for the keyboard-less entry. They needed better management to make a comeback after their Detroit-style meltdown.
    trefire