Reuters is reporting that Samsung wants to pay $7.5 billion to buy the surprisingly resurgent BlackBerry, which has had a turnaround under CEO John Chen, if you call "not going out of business when everyone said they would" a turnaround.
This hearkens back to October 2013, when BlackBerry was publicly shopping itself around and various pundits, including myself, were proclaiming the company to be toast. Chen's vigorous leadership has really upped the price; while Fairfax Financial wanted to pay $4.7 billion for BlackBerry in 2013, now Samsung may have to pony up nearly twice that.
Why Samsung Wants BlackBerryBack in the last round, I had Samsung pegged as a prime buyer for BlackBerry because the two companies have complimentary strengths and desires.
Ultimately, Samsung is a hardware company that's been trying to get into enterprise software and services, and BlackBerry is an enterprise software and services company that's been struggling to sell hardware.
Samsung desperately wants to get into government and regulated industries, and has been been trying to get its Samsung Knox security solution taken up as an industry standard. At Samsung's U.S. headquarters a few weeks ago, execs took me on a tour of all of the scenarios they want to fill with Samsung tech: doctors' offices, banks, schools. When I was at Samsung's headquarters in Korea last year, execs pointed out the healthcare industry as a prime target for Samsung's growth over the next few years, and BlackBerry has all of the regulatory compliance issues in health care down pat. It's no coincidence that the major solution BlackBerry wanted to show off at CES was a potential cure for cancer.
BlackBerry's library of patents also probably looks quite appealing to a company locked in perpetual patent lawsuits.
Oh, and what of BlackBerry 10? Samsung needs a backstop OS to prevent it from being totally dependent on Google, and it has been only mildly enthusiastic about its own Tizen OS. The first retail Tizen phone just came out this week, after three years of software development.
BlackBerry not only gives Samsung a fully Android-compatible smartphone and tablet OS using its own intellectual property, it gives the company a strong position in automotive, as BlackBerry's QNX is the dominant car OS. At CES, Samsung said it wants to be in cars, but couldn't show a lot of deals to build its technology into vehicles. QNX puts it at the heart of the driving experience.
Why BlackBerry Wants SamsungSamsung offers BlackBerry a full product lineup, a sales team, a financial lifeline, and components.
It's very difficult to be a mid-sized, quality-focused player in the smartphone world. HTC is struggling. Motorola got snapped up by Lenovo, and Microsoft bought Nokia's handset business. The industry's new up-and-comers are all either gigantic conglomerates (ZTE, TCL, Lenovo) or value-focused local players (Xiaomi, Meizu, Micromax, Spice.)
Part of what makes it hard to be a mid-sized player is that some of the big guys get amazing deals on components. Samsung and LG make a lot of their own components, and Apple is big enough to buy the entire output of factories. Joining with Samsung gives BlackBerry preferred access to one of the highest-quality component suppliers in the world.
It means that BlackBerry can offer true end-to-end enterprise solutions, coming into businesses with laptops, desktops, mobile devices and tablets that would all be supported by the same team.
BlackBerry also hasn't quite shaken off its near-collapse in 2013, and Samsung's massive marketing budget means a massive sales force. If Samsung's weight is put behind BlackBerry's enterprise solutions, those solutions start looking like an inevitable conclusion rather than a risky bet.
BlackBerry CEO Chen has said several times that he wants to keep the company independent. But this Samsung deal might be an offer he can't refuse.
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