Blackberry for sale?
Blackberry 10 was launched to great fanfare just six months ago. The company spent $500 million on promoting the launch but it proved to be the last hurrah for the one pioneering smartphone seller. On Monday they raised the white flag and all but declared the end of Blackberry as we know it.
Of course, this being the City, it is never quite that straightforward. They have gathered a Special Committee to explore strategic alternatives that specifically does not exclude the possibility of a sale. Which, to all ends, means they are selling themselves.
For at least the past two years anyone with an iPhone or an Android who cared to has been doing a straw poll of one and concluded that this was inevitable. Should they have started this process months or even years ago before wasting such a huge amount of money on a me-too flop that no-one was asking for?
They clearly felt third place in the mobile world was worth fighting for, even though Windows has emerged the winner. When new CEO Thorstein Heins arrived in March 2012 he was declared that Blackberry had to stop trying to be all things to all people. However, I’m not sure he thinking that third place would only be worth 6-7% of the market. It was the wrong approach.
I rather think more prosaic reasons prevented what should have been a much earlier strategic examination. Inertia is a powerful force. If you have made mobile phones for over fifteen years and employ 17,000 people, the path of least resistance is to keep making phones. Just look at Nokia.
A legacy of hubris did not help either.
Mike Lazaridis, the founding CEO, was finally moved on to make way for Heins. He is a colourful character, and certainly it would be hasty to dismiss a man who founded the Perimeter Institute for Theoretical Physics. However in his role at Blackberry I never found that he properly acknowledged their loss of ascendency.
With less than 3% share of handset sales, it begs the question as to what a buyer of Blackberry might get.
There will be no shortage of answers now that the banks have been alerted to the fact. It is lipstick on the pig time, and bankers have a range of shades.
For me, the real value of Blackberry has always been its corporate accounts, of which they still have 30 million.
Their major coup in the early years was installing the Blackberry Enterprise Server at all these clients, charging $5-$10 per user per month to serve push email quickly and reliably. It gave corporates complete control over device management and remains the gold standard in so-called MDM (mobile device management).
A buyer may feel there is still time to refocus on this core competency, and open up the BES to alternative operating systems. The annual fee stream from this business alone is around $4 billion, whilst the whole company is only worth $3 billion in the market today. That is the route Blackberry should have taken when they first ran into problems.
Ignoring the core
Ultimately, then, it has all come too late. Whilst Blackberry has focused on its own devices, start-ups like Good Technologies and Airwatch have solved the problem that was really vexing corporates – how to manage iPhones and Androids on their networks.
Despite having the technology in place, corporates were ignored when they asked Blackberry for this and may not feel like giving them a second chance.
Yet again it shows how small companies can make such a big impact when incumbents make strategic errors, and another tech vanguard goes from first to last within five years.
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