China’s Lenovo is believed to have rekindled its interest in buying the struggling smartphone maker BlackBerry, which despite the earlier Fairfax Financial deal, is still actively looking for buyers. However it’s not clear just what the Chinese firm might want out of BlackBerry, with the Wall Street Journal reporting that its bidding to take over the entire company, while Reuters said that it only wants a part of it owing to regulatory concerns that would prevent a complete takeover.
BlackBerry is something of a laughing stock in the smartphone world these days, having failed to transition from its legacy mobile platform and QWERTY keypads to a touchscreen-orientated world that can rival the experience of Android and Apple.
While the WSJ believes that Lenovo wants to buy up the entire company lock, stock and barrel, Reuters suggests that this is most unlikely. The biggest problem for Lenovo is that its Chinese – and that means that security concerns would likely prevent it from taking control of BlackBerry’s secure network, which is used to transfer thousands of confidential government and corporate communications every day.
Reuters cites the example of Huawei, China’s biggest mobile maker and networking firm, which has also struggled to gain a foothold in North America. You can read all about it here, but in a nutshell it comes down to the fact that certain people in the US government/big businesses just don’t trust the Chinese enough to look after and keep their data secure. Meanwhile in Canada, Lenovo would also have to satisfy the government there by passing a review to determine if the acquisition would be an economic benefit or prevent too much of a security risk. With these two obstacles to surmount, Reuters claims that a full Lenovo takeover of BlackBerry is an unlikely prospect.
But there could definitely be some kind of deal in the pipeline, and if so both BlackBerry and Lenovo would benefit. BlackBerry’s problems are well documented, and have forced the company to shift from fighting talk, to sounding out possible buyers, to eventually signing a letter of intent with Fairfax Financial that would see it go private. Unfortunately, that deal no longer seems to be the saving grace that people had first hoped for, with BlackBerry said to be skeptical of the deal’s valuation and desperate to finding an alternative.
As for Lenovo, its made its interest in acquiring (at least part of) the Canadian smartphone maker before. Earlier this year, Lenovo’s CFO told Bloomberg it was considering BlackBerry as a potential acquisition target or strategic alliance partner – only to later downplay these comments.
Lenovo has had a lot more success than BlackBerry in the mobile stakes recently. The Chinese firm officially became the world’s fifth biggest smartphone maker back in Q4 of 2012, while in Q2 Gartner put its global smartphone share at 4.7%, the fourth-highest ranking in the world. Mobile’s importance to Lenovo was underscored by its Q1 earnings report last August, when the company revealed that its smartphone and tablet sales pulled in more revenue than PCs for the first time.
But Lenovo also faces some problems. It’s leading position is solely down to its strength in China, but the firm has struggled to carry this momentum abroad – its phones are hardly known outside of a select few markets, though its been working hard to change this. Meanwhile at home, rival mobile makers like Xiaomi are fast catching up, threatening Lenovo’s position there.
With competition hotting up at home, a BlackBerry acquisition could assist Lenovo’s bid to expand into other markets. Even so, it’s unclear exactly what it wants out of the deal. With BlackBerry having lost the hearts and minds of consumers it’s unlikely a BlackBerry-branded device would add much to Lenovo’s appeal.