BlackBerry’s a Bad Buy : Fairfax Could Start Patent War

It’s been a long time coming.  BlackBerry’s finally heeded the advice of pundits, investors and board members, settling the purchase of its assets to one of its shareholders, Fairfax Equity Holdings, at $4.7 billion.  The buyer wasn’t among the top projected organizations to take in BlackBerry, and there’s questions regarding Fairfax’s intentions with the smartphone maker.

A hasty acquisition? Pressure for BlackBerry to seek an exit seemed only to increase after Microsoft cemented its very close relationship with Nokia, announcing its plans to acquire the Finnish phone maker for over $7 billion just this month.  Microsoft, Samsung and IBM have all been rumored inquisitors of a BlackBerry buy, but it was Fairfax, already owning about 10 percent of the company’s common shares, that landed the deal. What could a shareholder possibly want with BlackBerry, when an organization like Microsoft could better leverage BlackBerry’s portfolio of assets?

Like every other transitioning tech firm, the struggle to survive boils down to Services. BlackBerry’s vault holds software and hardware patents, IT and cloud services, consumer insight and products. BlackBerry couldn’t pull it off on its own, forced to ask themselves, “what’s it all worth?”  For BlackBerry, the true price of failure could be devastatingly high.

Read More: From RIM to RIP : 4 Potential Buyers to Put BlackBerry Out of Its Misery

What’s in it for Fairfax?


Money.  The ring of vultures circling a dying BlackBerry has been widening for weeks, leaving the Canadian phone-maker with fewer desirable options to sell.  BlackBerry has a broad product portfolio rich in assets,  all but served up to the chopping block, to be split amongst bidders.  BlackBerry’s line up was valued around $11 billion, as Reuters noted just last week:

“According to analysts, BlackBerry’s assets include a shrinking, yet well-regarded services business that powers its security-focused messaging system, worth $3 billion to $4.5 billion; a collection of patents that could be worth $2 billion to $3 billion; and $3.1 billion in cash and investments.”

As an investment firm, Fairfax is certain to seek returns on its acquisition of BlackBerry’s assets, a strategy that could involve a string of patent lawsuits.   Wikibon analyst Scott Lowe says that would be bad business for a market still reeling from the same trends that hurt BlackBerry in the end — increased choice within the effects of IT consumerization, and a software-driven shakeup to IT infrastructure.

“What the market doesn’t need is a company to simply buy the patent portfolio and then start suing everyone in the market,” Lowe writes.  “The market does need a company that can reasonably leverage the full range of assets.”

Lowe stands by Microsoft as the right buyer, despite BlackBerry’s intended purchaser and the fact that the Redmond software maker has already taken in Nokia as its mobile partner.  BlackBerry, Lowe says, still has something to offer Microsoft – a chance to complete its own portfolio.

BlackBerry could complete Microsoft’s enterprise efforts


Just like BlackBerry, Microsoft has had to shift to a demanding market that’s data-driven, mobile and living in the cloud.  The device, or hardware, matters less and less in both consumer sectors and the enterprise, forcing the industry into a gang of Service providers.

“Thinking back to the days when having a BlackBerry was a symbol of status, organizations purchased these devices not for their “shininess”, but the services that they provided, which included secure messaging and complete control of what a user was and was not allowed to do with the device,” Lowe reminisces.  “BlackBerry devices and services were considered among the most secure in the market and even today, the US government still relies on the company as their top choice for smartphones.

In the end, it’s the services that matter.  The device is simply the delivery mechanism.”

BlackBerry’s standing in the enterprise market could help Microsoft’s efforts in the enterprise, where mobile and security are increasingly important for software development, application management and compliance regarding access to data.

“BlackBerry has assets that could give Microsoft a huge boost in the mobile game and which may indirectly benefit Windows Phone,” Lowe explains.  “BlackBerry’s messaging platform – BBM – is still considered among the most secure available.  A Microsoft buy a BlackBerry would give the company BBM.  Microsoft can scale this service using Azure and make it available to users of all device types – Windows Phone, iOS, and Android.  In addition, Microsoft could add its own BBM offering to Office 365 as a premium option.  For many companies, this would significantly address the BYOD issue.  In fact, BlackBerry already has such a project underway, but it was, surprise, delayed.”

Lowe goes on to point out BlackBerry’s built-in controls for IT administrators, better managing mobile and security concerns within the enterprise. This market’s been building in recent years, incorporating updates from traditional storage vendors like NetApp, SaaS providers like Citrix, and even consumer cloud services like Dropbox now entering the enterprise.  It’s a market that will only continue to grow, presenting consistent opportunities.

In a recent interview with Appcelerator head of enterprise strategy Michael King, he concluded with a prediction: he expects mobile will continue to drive new capabilities and business processes in the coming years. He estimates that the unprecedented rate of innovation and the rise of connected devices in emerging markets will propel this trend.