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Print 24 comment(s) - last by Azethoth.. on Aug 13 at 8:08 PM

No potential buyers have expressed interest in the phone unit

Waterloo, Ontario-based RIM is facing a daunting task by trying to make its next generation BlackBerry – which is running the new QNX-derived BlackBerry 10 operating system -- a success.  Due out next year, RIM must somehow trying to jump over a series of high hurdles including impotent managementweakening brand image, a crowded market, and a significantly shrinking engineering department.  

To be successful, RIM must beat rivals like Google Inc. (GOOG), Samsung Electronic Comp., Ltd. (KSC:005930) and Apple, Inc. (AAPL) who have proven success in consumer smartphone sales, as well as struggling, but deeper-pocket players like Microsoft Corp. (MSFT).

If the much-hyped and much-delayed BB10 platform is unable to beat the rest of the field in features and revive sales -- an outcome expected by many -- RIM's leadership will likely be forced into the option they have resisted the most -- a break-up and sale.

In a new report by Bloomberg, two sources close to RIM and the independent bank review panel -- the Royal Bank of Canada (TSE:RY) and JPMorgan Chase & Comp. (JPM) -- it hired to assess its options say that International Business Machines, Inc. (IBM) has approached RIM with serious interest to purchase its enterprise division.  IBM is one of the enterprise technology sphere's greatest powers and it arguably has the experience to repurpose the unit, hence this seems like a reasonable fit.

IBM servers
IBM is a top enterprise service and hardware provider. [Image Source: IBM]

But analysts say the potential sale will likely be put on hold while RIM waits to see whether BB10 finds fortune or failure.  Adnaan Ahmad, an analyst at Berenberg with a sell rating on RIM’s shares, comments, "If they were to offload this, they are offloading their jewel.  They want to give BlackBerry 10 a go, so I don’t think this would happen until next year."

That could actually benefit IBM, as failure of BB10 may lead to greater desperation at RIM and a fire-sale price for this prized unit.  The unit, which made $4.1B USD in service fees charged to mobile carriers in 2011, is currently valued at $1.5-2.5B USD.  But that value could dip lower depending on the fortune (or more aptly, lack thereof) of BB10.

RIMdenberg
IBM is reportedly considering gutting the Rimdenberg. [Image Source: Jason Mick/DailyTech LLC]

If the sale happens, the big question is who -- if anyone -- will want the phone unit.  No parties, according to the Bloomberg sources, have expressed interest in buying all of RIM since the review.  Likewise, interest in buying the struggling phone unit has been non-existent.

While waiting to sell may ultimately burn shareholders by devaluing the phone and enterprise service units, in a way, long-term shareholders don't have much more to lose.  A share of RIM stock is today worth about 1/20th of what it was traded for back when the company was popular and profitable in 2008.

Source: Bloomberg



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Even if...
By Marlin1975 on 8/10/2012 12:36:49 PM , Rating: 2
Even if BB10 is better than iPhone, Android, or Windows mobile no one will want to give up the apps and familiarity with what they have. One of the hardest parts of competing is getting people to give up something they are use to and knows works fine now and try out your new item/system.

I say sell now while there is some value left. I don’t think Rim has the money to keep BB10 going to get enough market share to compete, and that’s only if its as good or better than what is out there. If it even has the smallest issue it will sink hard as people run from it.




RE: Even if...
By retrospooty on 8/10/2012 12:43:55 PM , Rating: 3
Yup... Even though QNX is a great OS, RIM just doesnt have the talent to make it work as it needs to in todays competitive market. They partnered up with QNX 3 years ago and STILL dont have a smartphone on the market. The last 2 delays (early 2012 was delayed to mid 2012, now mid 2012 delayed until early 2013) shows that they just cant adapt fast enough.


RE: Even if...
By JasonMick (blog) on 8/10/2012 12:44:04 PM , Rating: 3
quote:
Even if BB10 is better than iPhone, Android, or Windows mobile no one will want to give up the apps and familiarity with what they have. One of the hardest parts of competing is getting people to give up something they are use to and knows works fine now and try out your new item/system.

I say sell now while there is some value left. I don’t think Rim has the money to keep BB10 going to get enough market share to compete, and that’s only if its as good or better than what is out there. If it even has the smallest issue it will sink hard as people run from it.
Agreed. But RIM will not sell until BB10 fails (which it likely will). Recognizing cold hard reality is one of the hardest things to do -- just ask any alcoholic, or, more pertinently, Palm Inc.

I just hope whoever buys the remains makes good use of them rather than further destroying what is left, as HP did to Palm.


RE: Even if...
By bigboxes on 8/10/2012 6:23:48 PM , Rating: 2
I was just going to say, "Whatever you do, don't sell to HP."


RE: Even if...
By wind79 on 8/12/2012 8:31:54 PM , Rating: 2
quote:
I was just going to say, "Whatever you do, don't sell to HP."


I would love to see RIM bring HP down with it...


RE: Even if...
By dark matter on 8/12/2012 3:23:40 PM , Rating: 2
(which it most likely will)

Quite uncalled for really. Just goes to show the whole ethos behind this article.

I wonder...

If you actually want BB10 to fail because you have put so much emotional energy behind it. (Plus, you'll look like a bit of a twat if it doesn't).

I believe it's acceptable to have an opinion; when it's called for. Snide digs like that show an unprofessionalism.

Let's be platform agnostic, and keep an open mind.

You'd never make a good poker player. You give too much away on how your thinking.


RE: Even if...
By LTGJAMAICA on 8/12/2012 11:28:40 PM , Rating: 2
QNX is a great OS but an OS is a platform while apps are the driver and unfortunately no innovative apps really exists on the BB at present.

http://ltgjamaica.wordpress.com/2012/08/06/nexus-7...


RE: Even if...
By NellyFromMA on 8/13/2012 9:25:26 AM , Rating: 2
They said this about Windows, and yet supposedly it is no longer true. The reality of the day is this arguement can be true sometimes, but for average consumers, they frankly are fine throwing aaway their penny apps to switch to the latest and greatest upgrade every two years.

The proof is all over the industry. App retention isn't very high on ANYONE's list as long as it has internet gps a fun and interactive UI and a perception of quality.

Everyone totes app numbers, but really, its not a useful gauge.


IIt would be cool if...
By retrospooty on 8/10/2012 12:32:52 PM , Rating: 1
MS bought RIM's enterprise email service. This would give MS an easy push to gain momentum in the smartphone world.

Apple or Google would work well too. Just someone with a good product already in the smartphone arena... Not IBM.

One thing I am pretty sure of, regardless of what happens, RIM will be sold off. They just cant execute anymore and hte smartphone industry is too full of companies that can, and are executing.




RE: IIt would be cool if...
By JasonMick (blog) on 8/10/2012 12:40:39 PM , Rating: 3
quote:
MS bought RIM's enterprise email service. This would give MS an easy push to gain momentum in the smartphone world.
That would be a decent pairing too. Microsoft might be a bit skittish, though, after Nokia of taking on more dead weight.
quote:
Apple or Google would work well too. Just someone with a good product already in the smartphone arena... Not IBM.
Derp.

Usually I agree with your retro', but IBM is in fact very much in the "smartphone arena". It provides a great deal of services and hardware to carriers like Verizon, AT&T, and T-Mobile.

To be fair, IBM isn't visible that's probably why you don't automatically realize how deep in the mobile space it is. RIM would be the same way if it wasn't for its BlackBerries which make it a consumer product-maker.
quote:
One thing I am pretty sure of, regardless of what happens, RIM will be sold off. They just cant execute anymore and hte smartphone industry is too full of companies that can, and are executing.
True. Honestly, I would LOVE for BB10 to succeed, but against Jelly Bean's successor, Windows Phone 8, and the brand strength of Apple, I just don't see BB10 as being something many consumers would want, even if it is much better than BB7,

A sale is a safe bet in my estimation.


RE: IIt would be cool if...
By retrospooty on 8/10/2012 12:56:03 PM , Rating: 2
Agreed... I didnt mean that IBM wasnt at all involved, I meant that I hope someone with an actual purchasable product on the market. MS obviously because they already own the enterprise market from an IT/Server perspective, so mobile makes an easy and trusted addition. Apple or Google, simply because they are both huge players that would quickly benefit from having a foothold in enterprise.

Picture this Apple, Google or MS buys RIM and announces that Blackberry mail service will be available on only their platform. It would be huge. The software is already developed. RIM has been toying with licensing BES to other makers for years. There is even a working version on the Palm OS. That's Palm OS5, not WebOS to give you an idea how long it's been toyed with. RIM just always wanted too much money so no-one bought into it.


RE: IIt would be cool if...
By Lord 666 on 8/10/2012 6:30:39 PM , Rating: 2
Cisco would be a more logical fit than IBM.


RE: IIt would be cool if...
By TakinYourPoints on 8/11/2012 12:16:19 AM , Rating: 1
quote:
Usually I agree with your retro', but IBM is in fact very much in the "smartphone arena". It provides a great deal of services and hardware to carriers like Verizon, AT&T, and T-Mobile.


Right, companies that know near nothing about ease of use in their own products or custom UIs.

Apple or Google would be much better suited.


RE: IIt would be cool if...
By millerm277 on 8/12/2012 2:04:22 AM , Rating: 2
That's not what IBM does, or would ever think of being involved in.

They do back-end stuff. The systems, servers, infrastructure that supports things like Cellular networks, company IT departments, etc.

IBM does not do anything consumer-oriented, and doesn't want to be involved in it.


RE: IIt would be cool if...
By dark matter on 8/12/2012 3:20:20 PM , Rating: 2
IBM are not buying the phone unit dude. Just the infrastructure, which, most likely they will offer to the carriers, whom in turn will offer it to the likes of Apple and Google.


RE: IIt would be cool if...
By retrospooty on 8/13/2012 8:44:48 AM , Rating: 2
Yup... that's what I meant by "enterprise email service". Nothing else is really worth anything.


BB10 can be successful
By tayb on 8/10/2012 1:18:18 PM , Rating: 2
Despite all of the claims and bad press RIM actually isn't in that bad of shape. In Q3 2012 they shipped 14.1 million phones, had revenues of $5.2 billion, and earned a net income of $285 million. The global subscriber base grew to 75 million customers in the quarter and they ended the quarter with $1.5 billion in cash.

The numbers actually look better when you factor in the $485 million write-off for the failed Playbook.

The smartphone market is still very much evolving, they are still shipping plenty of phones, and they aren't bleeding cash anymore. BB10 looks impressive and given the existing market for BB phones I really don't understand all of the dire warnings about RIM. The only thing I would be worried about is their ability to actually ship BB10 in a reasonable time frame. They've been working on the OS for a really long time and it seems like it keeps getting delayed and delayed. If they can get BB10 out in Q1 '13, it's not buggy, and they have some good hardware behind it, RIM will be fine.




RE: BB10 can be successful
By retrospooty on 8/10/2012 1:32:15 PM , Rating: 5
Not sure where you are getting those #'s.

http://www.digitaltrends.com/mobile/how-grim-is-ri...

"RIM lost $518 million — and it’s the second straight quarter in which RIM has lost money, following a $125 million loss last quarter.

RIM does have cash to continue, and if they were "firing on all pistons" so to speak, they could make it, but they arent. Not even close... I would worry more about the fact that they just cant execute anything right anymore. It's taken 3 years to get a QNX phone out. They just cant compete against Apple and Google. They have only 5% marketshare last quarter, and 2 more quarters to go before they have a phone out. Basically starting from scratch.

good luck.


RE: BB10 can be successful
By WalksTheWalk on 8/10/2012 5:28:23 PM , Rating: 3
RIM is coasting on pure inertia at this point, keeping their BlackBerry fans happy with the type of devices they are used to. As their users want more they will start to lose them to Apple and Google. BB10 has to be something incredible since they are playing catch up to Apple and Google who are several generations into their mobile OSes, plus have great features and services.

I just don't see it happening for RIM. I think the gap is too large for them to bridge at this point. Added to that, they will need to have a bunch of cash on hand to withstand the onslaught of patent lawsuits if they start to regain market share.


Proofread, please
By bug77 on 8/10/2012 12:45:17 PM , Rating: 3
quote:
IBM Wants to Buy RIM's Enterprise Service Unit when BB10 Flops


FTFY




RE: Proofread, please
By Azethoth on 8/13/2012 8:08:04 PM , Rating: 2
Alos, shouldn't the title be "when BB10 Flops"


Everyone but IBM
By dilidolo on 8/10/2012 1:39:38 PM , Rating: 3
IBM is really good at making simple things complex, and selling you consulting service. Even their own consultants don't know how to deal with their products a lot of the times.




RE: Everyone but IBM
By WalksTheWalk on 8/10/2012 5:31:58 PM , Rating: 2
Too true. IBM competes with Oracle for making a hugely complex and expensive product stack that require vast amounts of resources to implement and support.


IBM... Really?
By Cannyone on 8/10/2012 5:35:57 PM , Rating: 2
IBM is no longer in the hardware business. So the only way I can see this working is if they do something to improve the IP then license it to some other company... And that seems risky.




“So far we have not seen a single Android device that does not infringe on our patents." -- Microsoft General Counsel Brad Smith














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