Why Would Samsung Buy BlackBerry?

Steve McCaskill is editor of TechWeekEurope and ChannelBiz. He joined as a reporter in 2011 and covers all areas of IT, with a particular interest in telecommunications, mobile and networking, along with sports technology.

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BLOG: Samsung takeover of BlackBerry might make more sense than you think

Samsung continues to deny it has any intention of purchasing BlackBerry, but speculation about a possible takeover refuses to go away.

The Korean manufacturer is the world’s largest smartphone maker but its growth is slowing in developed markets.

So why would it want to take over a company whose share of the market is evaporating and whose long-held stranglehold of providing mobile management services to regulated and government organisations is being challenged like never before – including by Samsung itself?

Enterprise ambitions

BlackBerry Assistant PassportSamsung is terrified of any potential consumer market slowdown and believes the enterprise mobility space can help offset any decline. Acquiring BlackBerry would give this business push a sense of legitimacy and its other assets could be useful as well.

Unlike a number of other potential suitors, Samsung not only has the money, but the resources to cope with the challenge of continuing the restructuring process that BlackBerry is currently undergoing.

Samsung’s Knox Enterprise Mobility Management (EMM) platform is being positioned as a chip to OS management and security service, but the addition of BlackBerry Enterprise Service (BES) and BlackBerry Messenger (BBM) would give this push real momentum.

BlackBerry’s vast patent catalogue, its QNX embedded platform and ability to create keyboard devices like the Passport and Classic which are still valued by the company’s hardcore supports would increase the appeal. Samsung would also gain an alternative operating system to Android as it seeks to reduce its dependency on the Google platform, as evidenced by its Tizen efforts.

Why now?

But if BlackBerry was such an attractive proposition, why has no one bought it yet?

A year ago, a takeover looked like a remote prospect as BlackBerry was haemorrhaging cash and the costs associated with a deal would have been high – even if a buyer was to shut down parts of the business immediately. Under the restructuring programme undertaken by CEO John Chen over the past year, the company has reduced its workforce from 17,500 to 7,000 and has even turned a profit.

A company of Samsung’s size would be able to absorb the cost of streamlining further, such as shutting down BlackBerry’s handset manufacturing operations and using facilities elsewhere.

At a regulatory level, Samsung is also likely to be a more acceptable suitor to the Canadian government, which it is claimed quashed Lenovo’s attempt at a takeover in 2013 on the basis such a deal would represent a threat to the country’s security.

Throw in the fact that BlackBerry and Samsung have a recent history of working together and the deal starts to make sense. It wouldn’t be cheap, but for a company that makes billions in profit, even if growth is slowing, and has just committed almost £10 billion to a new chip facility in Seoul, the reported £4.9 billion asking price might not be out of the question.

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