IBM’s Rumored RIM Takeover: The End of BlackBerry?

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AnalysisThere are surprising plot twists, cunning moves by key players and even secret formulas and ingredients. No, it is not the best (or worst!) of reality television, but the drama and angst that has plagued Research in Motion and its BlackBerry platform for well over a year.

Now comes the rumor of a possible acquisition by the mighty IBM no less, but would this provide salvation and redemption, or a quick end to the highly-recognized BlackBerry brand?

Once the high-flying darling of Wall Street and the smartphone standard, BlackBerry now seems to be in a tailspin with the rugged ground fast approaching. The worldwide market share for the BlackBerry platform dropped from 13.6% of the world’s smartphones in the first quarter of 2011 to roughly 6.4% of the world’s smartphones in the first quarter of this year, according to International Data Corp. (IDC). Meanwhile, Google and its Android platform just seem to be getting stronger every day, with a 59.0% worldwide share and 89.9 million units shipped just during the first quarter this year.

A Slow Connection

Critics blame RIM for being too slow to expand its line with fancy new phones as a wealth of competing devices flood the market. They also blame RIM for keeping too tight a rein on its BlackBerry Messenger service, one of the most secure and closed systems in the world.

The real turning point for RIM came last year when the service was hit with major outages that restricted services worldwide. It was at this point that users began to question the value of the service and heed the siren’s call of the competition.RIM

The fact is that BlackBerry still has a lot of life and potential in its technology platform, and a dedicated cadre of users — especially in the government market where there is still some incremental growth. However, even RIM execs admit government users are starting to take a serious look at Android devices as BYOD activities continue to spread.

An IBM acquisition of RIM would definitely change the dynamics of the company and the technology platform. IBM is clearly only interested in the BlackBerry Messenger service and RIM’s network of highly-secure servers worldwide. This plays in well with IBM’s own mobile device management (MDM) strategies and has a significant potential for revenues since IBM would likely open up the platform to its third-party developers.

RIM, the company, has very little to gain from the acquisition except for a quick influx of cash. Once IBM cuts out the pieces it wants, all that’s left are the most unprofitable parts including the smartphone development and sales division. Bottom line: It is the end of BlackBerry as we know it.

BYOD Brings on an Early RIP

There are a number of questions surrounding such an acquisition and fate, so we asked our own resident expert and editor of Brighthand.com, Ed Hardy.

1. Would/Does the RIM service, separate from the BlackBerry phones, work with other devices?

Right now, BlackBerry services like BlackBerry Messenger (BBM) are currently not available for rivals like the iPhone and Android. There are licensing restrictions, as well as technical roadblocks. Palm Computer… a pioneer in the development of personal digital assistants or PDAs took the same course initially, but later spun off its software operations and tried the third-party route. However, by that point, had pretty much missed the boat as devices became more communications-centric and smarter cell phones began emerging.

Some experts have suggested that RIM give up hardware and operating systems and just offer BBM on a variety of platforms, like iOS and Android. This theoretical company might still be profitable, but it would be much smaller.

2. Have security capabilities of third-party software vendors made the need for the RIM service obsolete?

This is a bit like asking “in a price-conscious world filled with cars from Kia and Hyundai, is there a point in having a Lexus?” Answer is “yes”, since this represents a new level of quality and user experience. RIM’s enterprise security systems are the best. They are the ones that third-party developers wish they could be, and that many companies prefer. The BlackBerry Messenger encryption technology is still the elite platform in the market in terms of security — so far, anyway.

3. How might an IBM acquisition impact the BYOD part of the market, given IBM’s other capabilities?

Surely, it would open this instant messaging service up to rival platforms, like iPhone and Android. So those companies that use BBM and give BlackBerrys to all its employees wouldn’t have a problem with those who prefer to bring their Droid from home, as these employees could still access BBM.

The basic success of BYOD (or consumerization) in the enterprise or government markets hinges on breaking down the barriers between devices, improving user interfaces, and making it easier for IT to service and support these varied devices.

In the end, the fate of BlackBerry really hinges on the demands of users, who right now are increasingly hooked on flashier and more full-featured smartphones. If the BlackBerry messenger technology and security are cut loose from the RIM anchor, then the personal sentiment related to the BlackBerry quickly begins to fade.

For more on the IBM-RIM rumors, check out Tim Scannell’s recent commentary on Washington D.C.’s Federal News Radio where he was interviewed about the possibility that IBM will acquire some, or all, of RIM. This interview is available on the radio station’s website.

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