What About the Samsung RIM Takeover Buzz?

Panic stations today as CFOs and company technology chiefs try to come to grips with rumors (denied by Samsung) that beleaguered corporate stalwart Research In Motion may be looking to sell itself to an Asian firm.

Faced with rapidly declining market share and amid trouble at the very top of its leadership chain, news that RIM may be looking to sell itself to an Asian firm makes sense. Outside of Google, it’s unlikely Apple or Microsoft has any intentions to buy it. Apple is riding high with its own iOS, while Microsoft (the chatterers claim) seems more set on extending its alliance with Nokia. Some even claim a takeover may take place.

Outside the U.S., manufacturers are looking to deliver their very own unique selling point (USP). Samsung, HTC, LG and others are highly competitive in the smartphone space, so any one of these firms may be pondering such a purchase. The absence of a market-accepted version of Windows for mobile, means they all offer Android devices.

This means every vendor is offering more or less identical experiences, albeit in differently-configured devices. This fragmentation drives Android makers to compete on price, as the OS and most device features in any price band are inevitably more or less the same. This intensifies competition and reduces margins.

A move to purchase RIM would immediately give the Asian purchaser a unique position, an existing user base and a market share hike. The war between Apple and Samsung has led some to speculate the latter may be the hand in the ring to acquire the Canadian company, which had a dreadful year in 2011. But the Asian firm has since denied such claims.

“We haven’t considered acquiring the firm and are not interested in (buying RIM),” said Samsung spokesman James Chung, as reported by FP Tech Desk.

Is there smoke without fire? Maybe, maybe not, but CFO’s and technology decision makers must already be wringing their hands on these takeover rumors. Senior executives from any major firm usually have some first-hand experience of just how complex mergers and acquisitions can be to implement. They’ll be concerned at what might happen if RIM is sold to another company. They’ll be worried about:

• Tech support, specifically for older RIM/BlackBerry devices.
• Help lines.
• The future product development road map.
• How this may impact app development and support.
• Any potential impact on build quality.
• The long-term plan of the acquiring company. Will it continue to focus on enterprise users, or will it instead target the consumer market?

Security will also be a concern. Will disaffected RIM employees cause any damage to the company as they head to the out door? Will there be any leaking of any important information? Will black hat hackers make use of the inevitable confusion as RIM is re-organized to launch attacks on RIM’s systems?

Analyst Craig Cartier at Frost & Sullivan told me, in a statement: “RIM, formerly an undisputed leader in the smartphone market, has had in the software-dominated smartphone ecosystem of the present –2011 saw a precipitous fall in RIM’s global smartphone market share.”

I’m sorry I can’t tell you if there’s any truth in these rumors, but they aren’t going to boost confidence among any company technology chiefs, particularly those enterprises already focused around RIM’s solutions.

I think consolidation and takeovers in the mobile industry are inevitable as the smartphone wars intensify. Too many players are in the ring, and within such a competitive price-dependent market, they are forced to battle on price. This hurts revenues, damages shareholder trust and will inevitably spawn new alliances and take overs.

“If Samsung (or any other Android partner) were to integrate RIM’s enterprise services like Blackberry Messenger into their offering, they would achieve instant differentiation in the increasingly-monochrome Android space,” notes Frost & Sullivan’s Cartier. “Not to mention gaining a brand which, despite its recent misfortune, still enjoys a loyal following and has seen recent gains in developing markets globally.”

When it comes to those dependent on RIM for their corporate mobile systems, CFO’s will be wondering if they should jump before they are pushed. They’ll be looking at Nielsen’s latest marketshare numbers, which show RIM BlackBerry falling from 7.7% to 4.5% between October 2011-December 2011, asking themselves if they should continue to maintain their existing infrastructure (if they use RIM), or if they should consider alternatives.

When it comes to alternatives, Apple, not Android, is the likely choice. Decision-makers can see both operating systems making market gains. However, with Apple being the more secure of the two systems, they’ll be interested in that OS — a decision which is likely to put the company firmly into the enterprise, further eroding Microsoft’s control of that space.

There’s another alternative. Fighting for survival, RIM may instead license its OS to others. “We see RIM licensing BlackBerry 10 and charging $10 per device,” Jefferies analyst Peter Misek said in a note, referring to RIM’s operating system. The company has recently rejected takeover overtures from Amazon (which itself has Kindle-shaped designs on the mobile market), a report claims.

Summary: With RIM now the target of takeover speculation, CFOs will be seriously considering how much faith they should put into the former market leader when it comes to their future mobile business technology plans. This could drive the company’s recent market share losses over the edge among enterprise users.