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Why hasn’t Microsoft already bought BlackBerry?

blackberryBlackBerry made some waves Monday by announcing that it is officially looking at strategic options, including a sale of the company. You know they're serious because director Prem Watsa, head of insurance company Fairfax Financial and one of BlackBerry's biggest shareholders, excused himself from the board in order to avoid a potential conflict of interest. In other words, Fairfax may also be invested in a potential BlackBerry buyer.The question everyone is asking now is who might buy the beleaguered, Waterloo, Ont.-based smartphone maker. The more intriguing mystery, in my books at least, is why one of those potential suitors - Microsoft - hasn't bought BlackBerry yet?The logic is pretty solid. Android and Apple have run away with the smartphone market, with the Canadian company clutching at a distant and declining third-place slice. The latest numbers say the company has indeed lost that spot to Microsoft and its Windows Phone.

That’s not cause for any excitement – these are low, single-digit scraps we’re talking about. Android and Apple have about 80 and 13 per cent of the market, respectively. (As an aside, it’s funny how those numbers are starting to look like the historical division between Windows and Mac computers, huh?)

So what’s the fastest and easiest way for a company to make its anemic market share bigger? It doesn’t take a mathematician to figure out the answer: combine it with somebody else’s equally anemic share into something with a little more meat on its bones. Putting BlackBerry and Microsoft’s Windows phones together would amount to almost seven-per-cent share. That’s still small, but it’s almost within striking distance of Apple.

More importantly, Microsoft – through an acquisition – would eliminate its biggest obstacle. In some countries, especially Canada. BlackBerry still enjoys decent success as the de facto third brand that buyers gravitate to because they’re loyal and/or hate Android and Apple. By most accounts, Windows Phone sales are extra anemic to non-existent in these markets as a result.

Take the recently announced Nokia Lumia 1020 as an example – it’s coming to the United States and United Kingdom, but there’s no word on when or if it’ll even see store shelves in Canada.

There’s also a lot of potential synergy for Microsoft with BlackBerry. Tablets, smartphones and even Macintosh computers are eating away at PC sales, with the primary buyers of Windows-based computers being businesses. You know, the same client base that BlackBerry caters to.

The catch is that Microsoft seems adamant on pushing Windows on users, but it’s becoming increasingly clear the company needs to rethink that approach. BlackBerry could represent a new route into the future and out of the past for Microsoft, but still a relatively safe one since it would be starting out with the same sort of customers.

Lastly, there’s also the tremendous value of BlackBerry’s intellectual property and patents. Having those would give Microsoft an even stronger base from which to defend against any potential legal actions from competitors.

Sure, there would be some issues with the acquisition. Other than figuring out how to integrate BlackBerry within the Windows ecosystem (my vote is obviously to start replacing Windows entirely), there’s also the question of what would become of Microsoft’s partnership with Nokia.

Still, the reasons for seem to outweigh the reasons against.

6 Comments on Why hasn’t Microsoft already bought BlackBerry?

  1. While an enticing option for both beleaguered companies, a Microsoft acquisition of BlackBerry would almost surely be botched at the strategic level under the aimless leadership of one Steve Ballmer. Anything that guy touches turns to a brick — and not the kind you use to build things.

    If BlackBerry is to continue going it alone, they have to stop being late to every party. That’s how Microsoft got into the mess it’s in right now. I had said from the beginning that Ballmer and co. had a chance to rebrand Windows Mobile into something that could be called anything but “Windows”, but instead chose to go with Windows Phone. Synergy with the company’s software business may have sounded good, but Windows, as a whole, doesn’t conjure up images of efficiency and innovation. A fresher start might have helped make a difference.

    Unfortunately, BlackBerry failed to seize an opportunity Microsoft had let slip only a couple years prior when Ballmer arrogantly wrote off the iPhone, suggesting the market couldn’t bear a “$500 phone”. He’s still trying to pull his foot out of his mouth, so that he can say the word “developers” 50 times over.

    So, while an acquisition might make sense now, there’s no guarantee that it will change anything if the leadership and vision at the top is lacking, or downright incompetent. Look at the HP-Palm attempt from 2011.

    Hopefully, whatever BlackBerry does proves to be a solid step in the right direction for a company that can still make things happen as a leaner and more focused entity.

  2. The only possible reason Microsoft should even consider buying Blackberry is to put them out of their misery. Other than eliminating what little competition they still pose to Microsoft in the Enterprise space, buying RIM has no other value to Microsoft. They don’t need their patents since MS already has a stack of them that they license to nearly every Android OEM for a pretty penny, and they certainly have no need for a new mobile OS that has even less developer support than the already pretty poorly supported Windows Phone. The latest IDC numbers show that thanks to Nokia, Windows Phone is rapidly gaining in share, so it would be completely illogical to kill that momentum.

  3. (As an aside, it’s funny how those numbers are starting to look like the historical division between Windows and Mac computers, huh?) It’s not funny. History DOES repeat itself. Closed silos always fail in the long-run vs open ecosystems for two reasons.

    First, the silo can’t contain all the users and when those in the silo realize that they break out. This is clearly happening with Google Glass and iPhone fanpeople who can’t get the total experience. These are THE TOP iPhone users and they are switching to Android! There are thousands of these examples over the past 30 years with any OS/standard.

    Second, technology is changing rapidly. Supply (capex/opex) is depreciating in hours/days/weeks, not months/quarters/years. At the same time, demand is growing, morphing, and bifurcating. Everyone is on a unique demand curve, with x devices, across y applications across z contexts. No silo can contain or manage that complexity and generate/sustain ROI. No vertical service provider can clear supply and demand efficiently. That’s why we are looking at the biggest arbitrage between retail price per bit and underlying cost per bit since 1983! The only business model that can survive is horizontal scaling that leads to vertically complete solutions.

    MSFT and Blackberry’s only hope is to figure out (quickly) an open, horizontal and disruptive approach. I think that starts with the access layers (the above arbitrage), as both Apple and Google have vested interest with the vertical service provider monopolies. Blackberry actually still brings enterprise scale that together with MSFT’s assets could effectively bypass the big carriers via software, corporate VPNs, and select investments in layer 1-2 competitive service providers.

    In fact, MSFT should do that and aggressively start down that path and then call OS truce with the other 2 and collectively the 3 of them (using the mobile handset and device vendors) disrupt a $2-5 trillion communications infrastructure market which is vital to their and every economy’s long-term health. What are the chances of any of this happening?

  4. BlackBerrys best asset at the moment is QNX, and that’s regardless of whether they build their current devices with it or not. They need to stop kidding themselves, spin out the phone division and wait for Oracle to buy the other half out.

    Merging Microsoft and BlackBerry as they are today is just a great way to make a bigger fireball as they crash and burn. Both companies suffer from the same issues and neither seem likely to do better in the future.

  5. Jean-François Mezei // August 13, 2013 at 10:22 am // Reply

    Microsoft has a history of not having stamina when it comes to mobile. WinCE loked promising, then MS let go. Then It was reborn under a new name to power a new class of devices such as the iPaq, and then MS stopped developping/pushing. Now, there is a new incarnation under Windows Mobile and MSFT is pushing a bit harder by having suckered Nokia into betting its farm on Windows Mobile.

    If Microsoft doesn’t have the stamina to keep stay the course and give its ecosystem time and money to grow, then it will have lost credibility completely in the market.

    The media and Wall Street Casino analsyst all expect instant results these days. In the case of Blackberry, they weren’t even patient enough to wait for end of a quarter before speculating on sales and even that quarter wasn’t a full roll out quarter yet. For many things, it still takes a while to get your foot into an existing market.

    I am no fan of Balmer or Microsoft. But MSFT needs to stay the course and prove it has stamina if it want any credibility. It should kill Blackberry by stealing its customers instead of buying it.

    • Definitely. It’s too bad because Windows CE and Pocket PC could have actually done well if iterated on some more.

      I don’t quite see Microsoft facilitating development for mobile devices and they have too many abandoned APIs and developer pushes that turn into ghost towns shortly after the initial fanfare. They’re good at starting hype, but terrible and following through.

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