BlackBerry, once the darling of the smartphone generation, could be up for sale. Although nothing has changed since the previous times we wrote about the company's ailing fortunes, the rumblings from Waterloo suggest the final options are being more closely considered now.
Nothing fuels the rumour mill like a possible acquisition, so here is a short-list of some candidates to inherit the BlackBerry legacy. Many thanks to Arthur Goldstuck, MD of World Wide Worx, for his assistance in assembling the list.
What's for sale
BlackBerry has several distinct assets; its product portfolio, for a start, including its enterprise messaging platform, smartphone line-up and data network.
Then there's the patent portfolio, with over 5 000 active patents and nearly 4 000 outstanding applications, valued between $2 million and $3 billion.
And the company has $3 billion cash in hand. All told, a purchase would probably be in the (very rough) $10 billion ballpark for the company as a whole, or as parts sold separately.
Looking East
There are several Chinese firms that would doubtlessly love to add BlackBerry to their portfolio. Lenovo, for starters, has already hinted that it could be interested in making an offer for BlackBerry, since it wants a stronger mobile play and hasn't made tablet inroads against Samsung or Apple. There could be interesting strategic possibilities to explore here, if it weren't for the fact that Lenovo is Chinese, and that could be a problem.
ZTE likewise - a manufacturer struggling to establish its products internationally, might be interested, though the strategic fit is much shakier - BlackBerry would be unlikely to flourish under ZTE. But again, ZTE is Chinese, and that would be enough of a hurdle that the firm may not even bother.
And the same applies to Huawei, a telecoms giant with reach throughout the world, and a much more likely suitor for BlackBerry. Huawei is big particularly in emerging markets where BBM is still hugely popular, but it has reach in all territories. Adding BlackBerry technology to the network layer has great potential for Huawei, never mind adding globally competitive smartphones to a device line-up which hasn't made much impact outside its home territory.
But of all Chinese suitors, Huawei is the least likely - the firm has been openly accused of providing the Chinese government with backdoor access to world telecoms. Huawei denies this, of course, and the Chinese are in turn investigating US tech companies - US-China relations are at an all-time low in cyberspace, and acquisitions are going to be subject to very close scrutiny.
BlackBerry's IP is attractive, and it has a strong enterprise messaging portfolio which could be folded into Microsoft's own line.
In the US, foreign acquisitions are subject to approval by the Committee on Foreign Investment in the United States, or CFIUS, and while BlackBerry is Canadian, Canada has its own regulators with similar remits, and is also likely to come under strong US pressure since BlackBerry is a high-value asset with security links throughout telecoms networks, government agencies, and global business.
CFIUS is particularly stringent about acquisitions with security implications. In 2005, Israel-based Check Point tried to acquire SourceFire, only to have the deal firmly nixed by US regulators. (Cisco made an offer for SourceFire this year, for more than 10 times the Check Point offer, so that turned out well in the end.) Similarly, Huawei has seen several US deals blocked by CFIUS, and has now basically given up, according to execs.
HTC is more likely. It's Taiwanese, which might play better with the regulators, and it could stand to gain from BlackBerry's reputation, key technologies, messaging and IP. The firm has a reputation for high-quality manufacturing but has failed to gain commensurate market share. But the strategic benefits of a tie-up may not be strong enough to warrant an acquisition that size - it would be a mammoth bite for HTC to chew.
Over in Korea, things get more interesting. Could LG and Samsung be contenders to take over BlackBerry? Korea is an ally of the west, and regulators would likely be much more comfortable with that prospect. Two contenders stand out: LG and Samsung.
Both LG and Samsung are huge corporations with multitudinous lines of business, but the two are worlds apart in mobile telephony. Samsung bestrides the mobile world like a colossus, while Goldstuck describes LG, aptly and bluntly, as "the BlackBerry of Android". While an LG acquisition isn't impossible, it would be one failing brand taking over another. As such, it's unlikely to thrill existing shareholders.
Samsung, meanwhile, does not need a leg up in smartphones. The firm is dominating the market, growing market share and revenue steadily. But there are a couple of missing pieces, and Samsung execs might see an opportunity to take pre-emptive action. Samsung's messaging platform, ChatOn, hasn't been much of a success, so adding BBM would really strengthen their relationship with mobile networks. And with Samsung facing a steady stream of legal threats from Cupertino, BlackBerry's patent portfolio would also be a welcome addition. Samsung is also busily building out its KNOX and SAFE security features as fast as it can, so adding BlackBerry's established and well-regarded technology to the mix could offer powerful leverage in the enterprise. Lastly, while Samsung dominates with Android, the firm has demonstrated its willingness to explore alternative OS options. So Samsung is a definite possibility.
Europe and US... slim pickings
Nokia, the only European option, is not a contender at all. The firm's dramatic plunge from grace (mirroring BlackBerry's, but for different reasons), the close tie-in with Microsoft (CEO Stephen Elop is an ex-Microsoftie, and highly unlikely to consider deviating from the Redmond relationship), and the tentative steps the company is walking to regain its market position are all factors against any BlackBerry option.
CEO Larry Page might counter-bid Microsoft, though, if only to annoy Steve Ballmer.
But if Nokia's off the table, its ally-in-chief, Microsoft, might not be. BlackBerry's IP is attractive, and it has a strong enterprise messaging portfolio which could be folded into Microsoft's own line. It would be an unlikely marriage, but not an impossible one, and Redmond has ample cash to put on the table.
Google, Microsoft's bitter rival, on the other hand, is unlikely. Google paid a fortune for Motorola, largely for its IP, and is still digesting that deal. CEO Larry Page might counter-bid Microsoft, though, if only to annoy Steve Ballmer, the way Google bid up spectrum prices a few years ago to score points against the telecom giants.
Hardware vendors Dell and HP are also unlikely candidates. Dell is embroiled in its efforts to go public anyway, and HP still carries the scars of Palm and webOS - neither is likely to have the appetite for salvaging another failing OS.
Online options
Online, things get more interesting. Amazon, although it's pursuing a mobile media play with the Kindle range, is not a likely buyer - enterprise messaging isn't an obvious fit alongside any of the Amazon portfolio.
Yahoo, meanwhile, does have an appetite for acquisition, a new CEO, and shareholder pressure to come up with a new strategy, so a BlackBerry purchase could be a Hail Mary pass for the former Web giant. Unfortunately, it would likely be a complete disaster for everyone concerned.
While an LG acquisition isn't impossible, it would be one failing brand taking over another.
Goldstuck has been keeping a trump card up his sleeve: "What about Facebook?" he asks. The firm is cash-rich in the wake of its IPO and has shown an appetite for large-scale acquisitions after dropping a billion dollars for Instagram. Facebook is desperate to dominate (and monetise) the mobile space and users' mobile experience, but Facebook Home failed to gain traction. Snapping up BlackBerry, folding Facebook's own instant messaging platform into BBM, leveraging the security technology, strengthening Facebook's enterprise appeal, and producing a Facebook-owned mobile platform is a combination of possibilities highly likely to appeal to Mark Zuckerberg.
Private equity
Another possibility is for private equity investors to swoop in. BlackBerry's parts may be worth more than the whole. BBM could be sold to Yahoo or Facebook, the communications infrastructure to an industrial concern, the patent portfolio to Microsoft or Samsung, and so on. Fans would be sad to see BlackBerry's carcass dismembered by investor vultures, but if it comes to that, the decision will be based on what offers the best return to existing shareholders, not what makes fans happy.
A last possibility is for the firm to go private - buy back its outstanding stock and remove itself from the exchanges in a manner similar to Dell. There are definite advantages to doing so - a private firm is relieved of the quarterly clamouring of shareholders demanding immediate results, and can instead focus on long term strategy, keeping its inner workings to itself. BlackBerry is healthy enough right now, but it could surely use some breathing space, and it definitely needs to focus on long-term strategy.
All this is pure speculation. BlackBerry is only at the start of Thorsten Heins's long term strategy, and it's in no financial difficulty just yet. But if its market value continues to drop, shareholder pressure will grow, and drastic measures may be the only option left.
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