During its latest quarterly earnings announcement, BlackBerry-maker RIM announced it is refocusing on its core competence of the enterprise market (but not fully exiting the consumer segment, according to our Wireless Smartphone Strategies (WSS) service). New CEO Thorsten Heins also revealed he is in the process of a major review of strategic opportunities for RIM and was careful to take nothing -- even the sale of the company -- off the table. Investors who have seen RIM’s share price decline by around 75% over the past year may be grateful for the opportunity to sell at any kind of premium, but it’s not at all clear who might buy or merge if that becomes an option.
Established mobile device players, such as Apple, Samsung and HTC, are unlikely to perceive sufficient benefit to their business to justify an outlay of, say, US$10 billion for RIM. There is a precedent for the acquisition of a handset-maker by an ecosystem-player in the form of Google and Motorola. The other major player in this area is Microsoft, but it already has a very close handset partner in the form of Nokia. Nascent platform players in the form of Amazon and Facebook might also be interested, but acquiring RIM would represent a massive and risky lurch in a direction away from their core competencies.
A third category of business that may consider buying or merging with RIM would be PC players. Again, there is a precedent in the form of HP’s acquisition of Palm and, while HP failed to make it work, the underlying rationale behind the move remains sound. The focus for consumer technology is moving from the PC to the mobile device and if you’re not a mobile player you risk slow growth in a mature market. Having been burnt once, HP will be reluctant to try such a move again, and not many others have the size to pull off such a move. Lenovo is sensibly looking to establish itself as a mobile player in China before expanding internationally, while Acer bought E-Ten four years ago.
Therefore, one front-runner arguably has to be Dell. Not only has it consistently tried, but struggled, to make an impact in the smartphone market, but it has recently undergone a strategic refocus on enterprise, not wholly dissimilar to that announced by Heins. We identify at least 3 potential benefits for a “DellBerry” merger. First, Dell would get access to RIM’s global distribution networks and established mobile operator relationships. Dell’s limited mobile operator distribution has long been a weak point. Second, the combined companies could provide an enterprise device and infrastructure package that provides a leading solution for organisations alarmed by the growth of BYOD (Bring Your Own Device) and looking for a more secure alternative. And third, RIM could help pave the way for Dell into the emerging LTE 4G smartphone boom, representing a timely inflexion point for growth. But, of course, all that is easier said than done -- just ask HP. Combining RIM and Dell culturally and technically would be challenging, but it could be done if the appetite for it exists among top executives.