SALE OF BLACKBERRY TO FACEBOOK OR AMAZON IS EMINENT, RIM LOSES MOUNT, LOOSES A THIRD OF MARKET SHARE IN ONE YEAR

Research in Motion CEO Thorsten Heims announces hiring of investment bankers to sell all or parts of the BlackBerry platform.  Possible suitors include Facebook and Amazon. (Click Image To Enlarge)

Facebook Inc (FB) and its future e-commerce rival, Amazon are gearing up to talk with Canadian telecom giant, Research in Motion (RIM), to discuss the purchase of its BlackBerry phone manufacturing division in an effort to expand their influence in the ever growing cellular market .

RIM is also considering dividing its interests and the sale of its handset production to either Amazon or Facebook. If that happens, the company is likely to retain its troubled but still popular e-mail processing services. RIM had previously confirmed that it is taking keen measures to develop a strategy for the company’s fortune to run, which could be selling or renting its assets.

Blackberry, the world’s largest mobile email company, which has long been in deep water,  is believed to be seriously considering selling part of their business to a rival as the last attempt to resuscitate the platform which is hitting brick walls, despite changing the management and laying off several thousand employees.

One of BlackBerry’s biggest challenges, apart from financial troubles, is innovation.  With the presence of Apple iPhone, Samsung Galaxy and Google’s Android phones, it is very hard for RIM to penetrate in the market which is loaded with designer phones. This is the reason why Blackberry and Nokia are not being able to compete in this market and the upcoming releases of Apple’s iPhone 5, Samsung Galaxy S3 and Google Nexus 7 will only add injury to BlackBerry plight.

Last month, RIM admittedly said in a press release that it had involved financial consultants  JPMorgan Chase and RBC Capital Markets to assist the company in evaluating various financial strategies and options, one of which they are particularly keen about is sharing the BlackBerry platform with other companies through a licensing agreement.

Facebook has long been rumored to launch its own mobile phone device and the acquisition of the BlackBerry’s manufacturing skills could help it overcome the difficulties pertaining to hardware services. Amazon will also have the similar advantage, primarily in the form of technology which it can use to improve its Kindle eBook reader.  Amazon will also have some advantage in getting into the smartphone market.

COMMENTARY:    In May 29, 2012, Reuters reported that Research in Motion announced it it was hiring some investment bankers to conduct a "strategic review" of its options due to huge losses of market share in the smartphone market, mounting operating losses and loss of confidence from shareholders due to a huge drop in the value of RIM shares.  It now appears that those bankers told RIM management SELL, SELL!!

I have been extremely critical of Research in Motion for quite some time now, especially for its lack of technology innovation and late entry in the touchscreen smartphone and tablet market, and slowness in making the necessary changes to turnaround the company.  

In a blog post dated January 23, 2012, I reported that co-CEO's Jim Balsillie and Mike Lazaridis, were relinquishing their posts, and that Thorsten Heins, RIM operating officer for software, hardware and sales , was appointed as the new chief executive officer.   

New RIM chief executive Thorsten Heins faces the challenge of keeping existing customers happy while moving into the touchscreen era. Photograph: Geoff Robins/Reuters

Mike Lazaridis, who co- founded RIM with a childhood friend in 1985, becomes vice chairman and will lead an “innovation committee,” Ian Austen reports. Jim Balsillie, who invested $250,000 in the company in 1992, remains a director and will maintain his stake in the company.

Research In Motion co-CEOs Jim Balsillie, right, and Mike Lazaridis resigned under pressure to turnaround the troubled maker of BlackBerry cell phones

It's absolutely scary just how drastically and quickly RIM's smartphone marketshare has dwindled between Q1 2011 and Q1 2012.  Between these two quarters, RIM's market share declined by 29.7%.  That's nearly a one-third of its market share!!

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The handwriting has been on the wall for well over a year now.    On a quarter-to-quarter basis,  between Q4 2012 and Q4 2011, RIM's worldwide smartphone market share declined from 14.6% to 8.8%.   That's a drop of 24.9% in just one quarter!!  Most of that share went to Android and Apple iOS smartphones.  

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The bad news doesn't stop here.  RIM's worldwide market share of total mobile devices began to drastically decline during 2011 when both Android and iOS devices began to pickup steam. Although RIM's worldwide market share of total mobile devices declined slightly from 3.1% to 2.9% year-to-year between 2011 and 2010, the damage had already been done.  Not apparent from the following chart, RIM began to lose a huge chunk of its worldwide market share of total mobile devices in the U.S., its largest market, while international sales of of mobile devices remained relatively unchanged.

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When you look at a quarter-to-quarter comparison between Q4 2011 and Q4 2010, you can see that RIM's market share of total worldwide mobile devices declined by 6.6% (2.8% in Q4 2011 versus 3.3% in Q4 2010).  During this period, Apple took the lions share of RIMS market share when its market share more than doubled between Q4 2011 and Q4 2010.

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In spite of the huge layoffs that RIM recently announced, this DOG is DEAD!!   It's a shame too. BlackBerry was the mobile phone of choice for SMB's and corporate enterprise users for nearly ten years, but the mobile device market has changed dramatically within the last two years, and RIM failed to adapt and innovate.  Personally, I don't care who acquires the BlackBerry platform.  The mobile phone market is very crowded and industry consolidation is the order of the day.  I hope that Facebook and Amazon thoroughly think through any plans of acquiring BlackBerry.   Whoever acquires BlackBerry will have their hands full.  Are you listening Zuck?  Jeff?   

Courtesy of an article dated July 9, 2012 appearing in Potential Traders News and an article dated February 15, 2012 appearing in Gartner

Comments

[uk disco]

Interesting! I have been looking for this info for the last few hours

[bay area disc jockey]

It is amazing how the once undisputed champion of Corporate America has fallen so deep.
I remember the whining about Apple's touch screen, how bad it was for

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[Tommy]

Solar Robot,

Yes, it is true. RIM aka BlackBerry, was too slow in entering the touchscreen smartphone and tablet markets. When they did enter, they had lost many customers to Apple and Android. This trend continues, to the point where RIM is now experiencing financial problems, and is looking for a white knight to acquire them. I doubt that Facebook or Microsoft will acquire them. Microsoft just recently announced plans to launch their own Microsoft Windows 8 phone, so this puts an end to that rumor. It's my feeling that BlackBerry phones will go the way of the dinosaur. Thanks for visiting my blog and your comments about this post. Tommy

[Solar Robot]

It is amazing how the once undisputed champion of Corporate America has fallen so deep.
I remember the whining about Apple's touch screen, how bad it was for emailing, people need to have keys to type and so on.
I guess when you are on top companies tend to get lazy and fall asleep at the wheel.

[Solar Lights]

Great article, good insights in to the smartphone wars! Thanx

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