RIM … What’s In It For Microsoft?
But What About Nokia?
Sometimes people expect you to hit nothing but home runs (like Apple) and surpass their wildest expectations (like Google). Then there are times when folks don’t expect a helluva lot from a company and yet they consistently manage to deliver under the wire. That pretty much sums up RIM’s (Research in Motion) track record the past few years:
- Consistently lower sales projections quarter after quarter with lower actual sales quarter after quarter
- Roll-out a tablet that has to shine above the iPad in at least one or two (if not a number of) key areas leaving people to wonder if anyone in Waterloo, Ontario had bothered to buy/reverse engineer an iPad
- Sneak the introduction of an AppleTV competitor even as Jobs said it was a hobby idea (he tends to do that when the product doesn’t fly off the shelves) and there are a hundred or so similar products that have been finding anemic acceptance over the past two years
Based on stock market value RIM was the shining jewel in Canada’s crown just a few years ago valued at $80 billion. On a good day right now the company is worth maybe $14.5 billion…maybe. Tough to believe that their Blackberry which was a sure sign you were a mobile executive is now found in the “others” bin at the store.
Okay it’s not quite that bad but it’s time for:
- the shareholders/Canadian government carve the company up and sell the parts
- some company leader with foresight and a need to step up and buy the assets, IP (intellectual property) and customer base
Lots of companies would be interested in buying portions of RIM. They’d be easy to afford, easy to absorb.
Selling the whole package thins out the prospects and the names that have been tossed around include HP (Hewlett Packard, Nokia, Cisco, Oracle, Microsoft). HP is having enough trouble getting its WebOS spread across their systems and their tablet is still a work in progress. Last thing Leo probably wants is to buy another problem on top of the one he inherited. Nokia isn’t well enough to take on another load. Cisco dumped its consumer products, shed people and is in the midst of reorganizing to leverage the business/technology they have. Oracle could but why unless Larry did it for his buddy Steve. He’s got bigger fish to fry messing over HP’s Leo. Oh sure Google could with a few days click revenues but they’re already under governmental scrutiny and trying to get their Chrome net – oopps note – books considered favorably. In addition there’s the challenge of getting cloud notebook, tablet, phone platforms working seamlessly.
The MS Fit
Ballmer and MS have the most to gain and so does the marketplace:
- the RIM user base parallel’s MS strength – government, enterprise
- a seamless Win 8 PC, tablet, phone platform plus RIM’s strong, proven, secure communications IP would appeal to users
- A strong third mobile platform (Win/RIM) would be a desirable platform for business app PC/smartphone/tablet developers. A singular platform you could sell solutions for with any of the mobile devices is a strong financial incentive.
- RIM’s Cyclone TV would be thrown aside because the PlayStation provides most of the streaming video/audio, TV capabilities people want in a box so why add a third device to the shelf when you can add features/capabilities for an active/loyal customer base? Nope!
- RIM’s IP would fit well into MS patent portfolio and add to the revenue stream with little/no work
What about the Nokia relationship MS has already sunk a few billion into?
Ballmer has four choices:
- Transfer the hardware portion – phones/tablets – to Nokia in return for a sizeable chunk of the stock and help it return to a respectable number four device position – behind Samsung, Apple, HTC.
- Buy Nokia as well and have two really big captive customers
- Focus on strengthening his cloud solutions and strengthening his cross-device platform and meet the needs of two hardware partners that individually have good – not great but good – sales and potential
- Walk away from his pump-priming investment
Ballmer should probably sit on the sideline for a few quarters as RIM’s results continue their downward spiral making it less costly for him to look like the knight in shining armor to the shareholders and Canadian government. Then he can swoop in to save the day and save his stockholders a big chunk of change while giving them a strong foothold in the mobile device arena. But by 2012 RIM will be either a part of MS or cut up and sold at auction If that happens, it won’t be a pretty sight.