The emergence of a consortium intent on buying and taking BlackBerry Ltd. private may have put the brakes on the possible breakup of the company for now, but the future of the Canadian phone maker remains uncertain, according to analysts.
If the US$4.7 billion deal with a consortium led by Toronto’s Fairfax Financial Holdings Ltd. does close, its new status as a private firm would allow BlackBerry to “act unimpeded” but its restructuring could also mean the jettisoning of its smart phone business, according to Carmi Levy, Toronto-based independent technology analyst.
“It’s too early to tell, but given who’s doing the buying and the language of the letter of intent, I believe a breakup is the most distant scenario at this point,” he said “However, the handset division is the albatross around the rest of the company’s neck.”
Levy said the division is “simply not sustainable.”
“If the new owners don’t divest the unit outright – something some observers suggest could cost upwards of $2 billion – then they might consider retaining it in a much smaller form, simply to serve its enterprise customers,” he said. “But even then, it may prove to be an expensive way to maintain a unique hardware value proposition in a commoditized market.”
He also noted that BlackBerry has been making moves to “winnow down its hardware capacity” and that at some point it might more sense “contract out any requisite hardware development and manufacturing.”
On the other hand, BlackBerry’s software, services, secure global network and related encryption technology along with other intellectual properties remain highly desirable assets.
“They could be worth more than the sum of their parts as long as they are retained as a cohesive unit,” according to Levy. “BBM (BlackBerry Messenger), for example, derives differential value by being deployed over BlackBerry’s global secure network.”
What is transpiring at the moment is merely the “first part of the process” that will determine BlackBerry’s future, according to Bill Menezes, principal research analyst at analyst firm Garner Inc.
He said it’s hard to tell what the future holds for the company. Entire divisions could be spun off, sold or moved around, he said.
Whatever happens, it will not likely affect BlackBerry’s business customers much for some time, he said in an interview with technology publication Computerworld.com
For instance, BlackBerry enterprise servers will continue to work but the questions is “how long are they going to be supported and sustained,” he said.
Business users will continue using BlackBerry services but “will rely less on BlackBerry every year,” according to Ted Schadler, vice-president and principal analyst for Forrester Research.
The mobile device management market is seeing the rise of many new players such as Mobile Iron, AirWatch and Good Technology whose products can manage and provide security to Apple and Android devices, he said.
BlackBerry competes in the MDM market because it can also manage Apple and Android devices as well as BlackBerry devices. “But that’s a crowded market of vendors and it’s changing very rapidly,” Schadler said.
“Most of our CIO clients still buy services and sometimes devices from BlackBerry, but most also buy services and devices from Apple, Samsung and Mobile Iron, etc.,” he said. “So they will continue to keep their BlackBerry service and relationship going, but will actively support their company’s move to other mobile devices.”
BlackBerry’s future may still be a bit cloudy but for some many of its employees, the future has already been decided.
There is likely little hope in saving much of the jobs 4, 500 which BlackBerry announced last week will be axed.
“Whoever ultimately signs the check and takes over will be a much smaller employee base to justify the purchase price,” according to Levy. “A smaller leaner, more efficient organization will give potential buyers more runway to turn things around.”