The news that BlackBerry has entered into a letter of intent with a consortium led by Fairfax Financial is only surprising in its speed. BlackBerry shareholders would receive $9 per share in cash, making the transaction worth approximately $4.7 billion. The Consortium is permitted 6 weeks to conduct due diligence and BlackBerry entitled to go-shop during due diligence period, subject to payment of a termination fee in the event an alternative offer is accepted.
The potential BlackBerry deal, and Nokia’s before it, represents the final stages of the market shift from mobile telecoms handset manufacturers, to mobile computing handset manufacturers. The shift began when Apple launched its iPhone and the on device processing began to shift from the RF chip to the CPU. Initially it was defined as the convergence of telecoms and computing, but it has really been a takeover by the computing/internet players; Apple and Google. Microsoft’s role is tbc.
BlackBerry has stated that it will “remain focused on serving our customers and executing our strategy, which includes, driving adoption of BlackBerry 10 smartphones, BES 10 deployment, the cross-platform BBM social messaging service plan, and pursuing mobile computing opportunities by leveraging the secure and reliable BlackBerry Global Data Network.” Given some of the other statements and their impact on the business, this seems a necessary, but superficial statement, for example;
- BlackBerry has made a number of statements about a retrenchment back to their enterprise heritage. The enterprise mobile device market is small compared to the consumer market, and with the prevalence of BYOD, neither market can be viewed in isolation, beyond a small high security niche. A vibrant OS ecosystem sits astride consumer and enterprise in the main.
- With all of the uncertainty over the company, how many consumers will be purchasing a BlackBerry 10 device on a two year contract and how many developers will be launching new applications on BlackBerry 10?
- With 40% of the employee base at risk of redundancy and probably more involved in the process, employee productivity has already taken a hit.
ABI expects BlackBerry’s future to be one of B2B enterprise software and services, possibly as a separate entities where appropriate, including;
- The QNX Automotive platform
- BES 10 Mobile Device Management and Security
- Internet Security Solutions
- BBM – the B2C exception and a potential spin off which needs to go cross-platform quickly to prevent further irrevocable subscriber losses.
Prem Watsa, Chairman and CEO of Fairfax, and former BlackBerry board member up until August 2013, said as much in the press release, “we continue the execution of a long-term strategy in a private company with a focus on delivering superior and secure enterprise solutions to BlackBerry customers around the world.” A far smaller company looks likely, even if another buyer takes the opportunity left open by Fairfax and the BlackBerry board.
