"The rate of innovation is so high in our industry that if you don’t innovate at that speed you can be replaced pretty quickly." That was BlackBerry CEO Thorsten Heins back in March. Heins was discussing the iPhone, but also unknowingly provided a pretty good epitaph for his company.
With the prospect of a possible $4.7 billion buyout by Fairfax Financial Holdings, BlackBerry appears to be finished; but it's possible that the Waterloo, Canada-based company could reinvent itself as a B2B-focused services firm.
Is such a comeback possible? A sale for parts appears just as likely. Consider that BlackBerry's patents are said to be worth $2 billion to $3 billion, and the company has $2.8 billion in cash. There doesn't seem to be much value left in the BlackBerry name.
As Recon Analytics' Roger Entner notes, to make BlackBerry viable again, Fairfax would have to pour billions of dollars into the brand. "If they want to throw good money after bad, then they're welcome to it," Entner said.
But that seems unlikely. Fairfax is seeking finance for the deal. The company's previous investments — most insurers and at least one funeral parlor chain — don't suggest a bold turnaround.
Comebacks in telecom are rare. Even Motorola, which was pulled back from the brink by Google in a $13 billion deal last year, was largely viewed as an expensive patent insurance policy for the search giant. Despite Google's backing, Motorola is a "shadow of its former self," Entner said.
Former smartphone manufacturer Palm provides a more cautionary tale. An innovator in handheld computing, Palm was worth $9 billion in 2001, but similarly fell behind on innovation. In 2010, HP bought Palm for $1.2 billion, and applied its technology to its webOS-based mobile products. A year later, HP abandoned webOS, and Palm is history.
Iain Gillott, president of market-strategy consultancy IGR, doesn't think that things are so dire for BlackBerry.
"BlackBerry as we know it today is done," he said. "But BlackBerry as we used to know it — something's going to live in that form." Gillott likens BlackBerry to the late 1980s IBM, which fell behind in the PC race, but transformed itself into a services company.
"The thing with BlackBerry is they have two sides to this business," he said. "They have 18 million customers using their software — Palm never had that."
Palm also lacked a strong association with its country of origin, he added: "This is Canadian pride. With Palm, there was no California pride at stake."
Image: Getty/Yoshikazu Tsuno