High hopes remain (including from the editor of this magazine!) that the rescue strategy for Research In Motion would be for someone to simply buy the company. There has been, at various times, idle speculation about a wide-range of intriguing potential suitors – Facebook, Apple, Google, Amazon!
But nothing ever comes of these rumors, and for certain parties, they believe there is a very good reason: There’s little reason to buy what is effectively a dying mobile phone platform.
Wedge Partners analyst Brian Blair this morning weighed in with a grim evaluation of what the future holds for the BlackBerry smartphone maker.
“We don’t see an M&A opportunity near term, mainly because we don’t believe RIM has much to offer,” he writes bluntly. “If there was value in the Network Operating Center back in the day, it seems to have faded. If we have learned one thing from the iPhone, it’s that the device’s security is ‘good enough’ for the government and ‘good enough’ for the enterprise. We have seen every type of company replace BlackBerry with the iPhone over the last 3 years. If there is value in RIM’s Blackberry servers placed around the world in large numbers, that value is in decline, as those same servers continue to get ripped out on what seems like a monthly basis.”
Blair concedes that the company has some valuable know-how…but not enough.
“Yes, the company has real IP around email delivery, and they still do some things that companies like Apple can’t (ever try to delete an email on an iPhone when not connected to the network?) but overall, their manufacturing capability isn’t worth much in our view,” he writes “Their distribution is great but it’s hard to assign a value to it, and we don’t think anyone would consider buying the OS at a premium price. Even Amazon, who we could make an argument for, seems to be standardizing on Android. We also don’t think Samsung has any interest, as their Bada platform is more advanced than BlacBberry.”
Meanwhile, he cautions that fundamentals can still worsen from here.
”What we know from watching Nokia and Palm over the years is that fundamentals that are bad can always get worse, particularly if there is no meaningful catalyst for stabilization on the horizon, or if that catalyst isn’t able to stem the fundamental bleeding,” he writes. “RIM finds itself in such a situation with an aging product line and nothing that appears able to change its fate in the pipeline. We see a steep drop off in revenues and units near term, punctuated by a drop in subscriber adds, and an OS refresh that is largely ignored by carriers and consumers alike, driving RIM into a forced sale in 2013. ”
The great hope for RIM is BlackBerry 10. But Blair thinks it will be DOA.
“We don’t see any scenario where BB10 can compete meaningfully against the three major smartphone operating systems,” he writes. “The potential for RIMM to offer a more appealing, completely new and different OS, without a keyboard (initial devices won’t have it), and with no apps and no ecosystem to enterprise/ consumers is incredibly slim. RIM is not a software company at its heart, and it’s been knocked out of the ring by three players that ARE software companies. Now it’s hoping to reinvent itself with new hardware and a re-worked BB10 OS that the company hopes will be good enough to be considered competitive.”
Not least, Blair offers some simple advice on what to do with the weak-selling PlayBook tablet: Kill it off an move on.
As for SBM – we remain resolutely long going into tomorrows figures.