What is next for Blackberry?

What is next for Blackberry?

On paper the offer to buy Blackberry for $4.7 billion looks like a steal for a company with over $13 billion of assets on the books. However, losses have mounted for almost $1 billion per quarter, phone sales declined 25%, revenues fell by over 50%, market share declined to 3%. The deal looks good but buyer has to act quickly to turn business around or sell parts.

 
Blackberry phone business cannot be turned around. As I predicted before Windows Phone solidified its position as global #3 mobile OS, moving to #2 in number of key global markets, displacing iOS countries like India and Italy. Now with Blackberry manufacturing partner is leaving it may have no choice. The mobile market cannot sustain 4 mobile operating systems.

Blackberry has three attractive pieces left:

·         Patent portfolio

·         Messenger with its network

·         Secure global wireless network

Patents alone analysts think worth $5-$8 billion. Messenger is new hot trend with WhatsApp, Viber, Line, Skype and WeChat accumulating huge user bases and turning into billion dollar businesses. Secure global network can be the key differentiator for a device like Kindle or any other iPad challenger. Each piece does not have to be sold to the same buyer. Pieces together can worth between $10 and $15 billion.

Before the end of this year we are going to be talking about each piece sold to a leader or contender in the mobile.

Windows Phone doubles market share. Blackberry off to great start

Looks like Windows Phone has doubled its market share. Why? Because Windows Phone is the highest customer rated phone and has been for some time. Four of ten top rated phones are Windows Phone. Nokia global supply chain and retail muscle helped the even more impressive growth. In Italy for example Windows Phone commands over 13% market share.

BlackBerry has made great competitive phone Z10 which is the second best rated on Amazon. Early success claimed by BlackBerry is 1 million sold phones and reaching profitability again. These news will help the company improve its takeover price as the acquisition remains only a matter of time.

BlackBerry is being sold

As I mentioned several times last year the only remaining option for BlackBerry to return to shareholders at least something is to find a buyer. BlackBerry did not needed to wait for release of BlackBerry 10 as the only items that have remaining value to a buyer are global messaging network and patent portfolio (rated as #5).
However we are still in BlackBerry 10 honeymoon, which will soon meet rough reality: mobile landscape cannot sustain 4th ecosystem. Palm and Symbian went through that stage already.

There is a buyer: Lenovo. PC manufactures wants to move from declining desktop and laptop market to growing tablet and phone. HP tried same move by acquiring Palm. It had disastrous ending. Product was pulled off the market just few days after launch.
If Lenovo is looking to buy BlackBerry for its operating system the ending will be the same. Android and iOS are well entrenched and Microsoft is moving forward as solid 3rd ecosystem. I am not sure what Lenovo can achieve with BlackBerry patent portfolio and global messaging network.
Patent portfolio and global messaging network would be the most valuable to a phone maker looking to differentiate itself.

Perhaps HTC?

Delaying BlackBerry release will hurt

BlackBerry is trying to crawl back into relevance of the mobile play however, it is not going to happen without actual devices customers can buy. Plagued with delays BlackBerry did not want to postpone announcement any longer. As a result US market, the biggest and most important will not see the devices for next few weeks, when benefits from launch marketing campaign will wear off.
It is interesting to see more enthusiasm outside the USA, however many holdouts have switched to iPhone or Android already.
How likely BlackBerry will overtake Windows Phone as 3rd platform? We are not going to wait long.

BlackBerry makes (last?) spalsh

BlackBerry is back from the dead!? Company stopped losing money!? New OS will reverse the slide? 70,000 apps already - very impressive, not Apple, not Google, not Microsoft had such start. We are about to find out very soon.

As I mentioned before the current mobile landscape cannot sustain fragmentation of more that 3 operating systems. Windows Phone has been gaining a lot of traction and Microsoft has cash to keep investing into making its mobile platform successful 3rd player.

Or will BlackBerry fold in weeks like HP failed Palm phone?

My prediction: in the year 2013 BlackBerry will be acquired. Most valuable pieces: global wireless network and patents portfolio.
 

RIM Continues Death March

I have not published anything on RIM in over a month. Abysmal $½B operating loss quarterly report and annual angry shareholders meeting is a good time to blog. The CEO has asked shareholders for patience, tough request when the company has lost 95% market value since 2008. The CEO still thinks next product will save the company in 6 months. This direction failed before and will fail again.

I consider BB10 (new OS) chances to be RIM’s savior close to zero. When it will become available early 2013, RIM market share will be in low single digits. The fundamental problem management has to realize is that today’s mobile operating systems market cannot sustain more than 3 players. Earlier in the days the market was ruled by RIM Blackberry and Nokia Symbian with 2 other smaller players: Palm and Windows Mobile - last three has vanished. Today we have iOS and Android with Windows Phone distant third. There is no place for the 4^th player.

RIM is trying to save $1 billion in operating expenses. This is only temporary measure before RIM will need to shed more jobs and cut more costs. RIM has lost developers mid share and consumers appeal. Staying the course will sustain destruction of shareholders value. RIM should discontinue its phones and operating system like Nokia did with Symbian. Sell patents and BlackBerry Messenger global network. Just that will exceed its current market value.

Last Months of Research in comMotion

Lack of market listening and poor product management have let RIM to the edge of abyss. The company has hired bankers to ‘to help evaluate its strategies’ and but in reality will be looking to sell. Unfortunately for RIM shareholders WSJ writes "There are a bunch of people [within RIM] that still don't understand how dire the situation is". I have written back in January 2012 that sale was the only option. RIM since has lost billions in market capitalization.

What RIM is really worth today?

·         Its hardware business worth nothing

·         Its BlackBerry OS worth nothing

·         Services business of servers global network is the best value and estimates vary between $2.75 and $4.5 billion

·         Patents may worth between $2 and $3 billion and is most liquid asset due to huge demand for intellectual properties in the mobile technology

Its market cap of $5.5B is around the value of those assets. An acquirer pays on average 35% premium and the price of between $7-9 billion would be reasonable. I expect next two month RIM to be sold

RIM is on the shopping block

I am somewhat tired of writing about RIM’s demise as it is simply obvious and inevitable. What has been strange was the denial of RIM’s leadership about the situation. Today, after brutal earnings announcements newly appointed RIM CEO Thirsten Heins admitted “it is now very clear to me that substantial change is what RIM needs".

I have written before that the only remaining option for the struggling company is an acquisition. RIM did not consider that option, at least publically, until today. When asked directly about the sale, Heins said: "if there is any element that we detected during that strategic review that would lead us into this direction, we would consider it. But it is not the main direction we're pursuing right now."

Now who will buy RIM?

Why buy three BlackBerry Playbooks for the price of two?

This is really dumb. Buy two Playbooks and get 3rd free? Who is working there in BlackBerry marketing? Do people buy computers or phones in bulk? I can see this type of promotion being effective if you're selling socks or cookies. I can understand RIM is trying to clear huge backlog of inventory of needless Playbooks but this is not going to work. Nobody needs BlackBerry Playbook when there are cooler iPads and cheaper Kindle Fires. Customers do not need 1 or 3 of those useless things.

Android continues gaining market share

comScore recently reports that since January to April 2011 Android has picked up in the USA 5.2% market share and Apple 1.3. Android continues to gobble up the market and RIM continues to lose market share (minus 4.7). I expect that trend to continue with Android reaching 40% and growth decelerating. RIM loss of market share will continue and Microsoft platform will start taking the share from RIM in the year 2012. Expectations for Windows Phone, 6 month young operating system to compete for market share today is unrealistic.

RIM's demise

This quarterly report is the beginning of the end for the Research in Motion, which is in motion to exit the mobile business by the year 2015. Year 2010 has ended two platforms future: Symbian and webOS. The RIM leadership will deny the company is on the rim of sliding, but the facts picture a telling story: sliding world wide market share, declining sales, low interest in new products (Playbook), stagnant apps count, deep vertical integration tying business units together in the tight grip.

this FT.com article describes the state of RIM well.

My prediction is that Microsoft will be taking over RIM market share because of the primary BlackBerry target segment is enterprise customer, segment where Microsoft is the most comfortable and has track record or success, when iPhone and Android are more consumer products.