BlackBerry No Longer Entertaining Buyers

BlackBerry No Longer Entertaining BuyersBlackBerry is off the market. But that doesn’t mean it’s been purchased.

The Canadian smartphone-maker says it would receive a $1 billion investment from Fairfax Financial and other investors, representing the conclusion of its process of seeking strategic alternatives for taking the company forward.

Fairfax had wanted to acquire BlackBerry outright, but with the deadline looming today it looks like it fell short of raising the necessary funds, so this represents “plan B.”

Shortly after the news emerged, Ovum’s Chief Telecoms analyst, Jan Dawson, shared a helpful helping of insight and feedback to the news.

“The appointment of enterprise software veteran John Chen, former CEO of Sybase, as chairman and interim CEO of BlackBerry suggests that Fairfax and others see the company’s future in software rather than devices,” Dawson tells MMW. “This makes sense in light of BlackBerry’s sputtering device shipments over the past few months, but it’s still not clear where that growth will come from.”

“BlackBerry’s new investors seem to see its future in software, which means using BlackBerry servers as the core of a broader enterprise device management platform, but this generates very little revenue for the company today,” Dawson continues. “Though it’s achieved some traction with enterprises upgrading their BlackBerry servers, it has failed to sell many BlackBerry 10 devices, and this looks unlikely to change. This ultimately harms the unique selling point of BlackBerry server products leaving the door open to replacement by rivals that are better able to support the more popular Apple and Android devices.”

Dawson says it’s also too much to expect BlackBerry’s other software investments to ramp up fast enough to secure its long-term survival and return to growth.

“QNX,” Dawson explains, “whose main value was providing an OS for its devices, currently generates less than $100 million a year. Equally, BlackBerry Messenger has had a good couple of weeks of downloads as a cross-platform messaging option, but continues to trail other similar messaging apps significantly.”

All told, Fairfax’s investment will buy the company some time, which it badly needs, “but the company needs a new strategy more than ever,” Dawson concludes. “If Fairfax had taken the company private, it could have kept that strategy to itself. But with BlackBerry remaining a public company, Chen and Fairfax Chairman and CEO Prem Watsa need to start communicating that new strategy very soon to inspire confidence in a turnaround.”