The future of Blackberry

May 31st, 2012

Is Blackberry on its way out? Research in Motion, maker of Blackberry, appears to be running out of options and has hired JPMorgan and RBC Capital to help the company figure out its future. Guest blogger N. Venkat Venkatraman, a professor in the Information Systems Department at BU’s School of Management, offers his view of the current situation and asks “who should think seriously about buying the Blackberry maker?”

There have been widespread speculations about Blackberry’s future. The company is now valued at around $5.5 billion (down from a valuation four times higher just a few quarters back). The reasons are many and varied but that is prologue. Now, the new CEO is looking at ‘strategic’ alternatives and has hired two investment bankers to explore alternatives. Assuming that the Canadian government will not put any restrictions or conditions, who should think seriously about buying the Blackberry maker?

My number one choice is a Microsoft-Nokia-Blackberry consortium. My reasoning is simple. Microsoft is positioning to be the third viable, credible alternative platform in the mobile space (Apple and Android are the other two). It cannot do so simply on the back of its next generation Windows Phone and its preferred relationship with Nokia. Microsoft is still strong in enterprises and Blackberry is still deeply entrenched in enterprises. Microsoft with Nokia could do well with consumers at the low end but Microsoft with Blackberry could be a decent play with enterprises and governments. For Steve Ballmer at Microsoft and Steven Elop at Nokia, the price is now (finally) right.

My number two choice is IBM. I recognize that IBM is getting out of the low-value hardware business (e.g., Point of Sale Terminals) but mobile is high-growth and can be a key part of integrating IBM’s suite of hardware, software and services for enterprises not in the short-term but in the longer term. Smarter healthcare without mobile apps? Smarter commerce without mobile apps? It is true that the business-to-consumer apps space is crowded with Apple and Android. But, the business-to-business apps space is still in its infancy. IBM could take a long-horizon view and take a bet on this – especially given the company’s intent to deliver results based on smarter planet and growth markets (read: India and China). Imagine Watson-like functionality on next-generation phones to compete against Siri-driven iPhone.

It will be interesting to see what happens to the once-mighty one-app (Blackberry Messenger) wonder called Blackberry. It is indeed a shame that it could not evolve its business model to the multi-app world unleashed by Apple and Google.

Contact Venkatraman at 617-353-7117; venkat@bu.edu; Twitter: @nvenkatraman

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