CNBC and Reuters are reporting today that Samsung is in talks to buy BlackBerry, the struggling smartphone pioneer, for its patents and technologies. If true, Samsung may get less than it bargains for. (Update: After this story was posted, BlackBerry denied any buyout talks had occurred.)
Samsung and BlackBerry began a vague collaboration last year after Google rebuffed Samsung's faltering Knox security platform, essentially freezing it out of Android in favor of technology it acquired from Divide. Knox gained Defense Department approval in 2013, but the technology did not work as promised, according to reports later that year.
Samsung has had a bad year in mobile, with its Galaxy S5 underperforming the previous year's Galaxy S4 and no hits to speak of. The mobile division saw revenues plummet by about 64 percent. Google's tightening of the screws on hardware makers in Android Lollipop make Samsung's Android-plus strategy harder to execute, and Samsung's Tizen efforts have largely failed as well.
You can see why it wants to try something different. BlackBerry, despite handing the smartphone business to Apple and now Google through years of bone-headed moves, has some appeal:
- Its BES (BlackBerry Enterprise Service) has about half the mobile device management market, and recent editions support iOS and Android, which most companies still don't manage.
- Governments and high-security industries like aerospace and defense trust BlackBerry's end-to-end security, which doesn't exist in iOS and certainly not in Android. Presidents, chancellors, prime ministers, and spy chiefs all use BlackBerrys for good reason.
- Its QNX platform is widely used in car infotainment systems and other Internet of things devices.
- It has a following in some quarters for its cross-platform BBM (BlackBerry Messenger) app; meanwhile, Samsung has killed its unsuccessful ChatOn app.
But those strengths have big Achilles' heels that could make a BlackBerry purchase a difficult one to evaluate, especially for Samsung, whose mobile strategy changes almost yearly:
- BES is used mainly to manage BlackBerrys, which hardly anyone is buying any more. BES customers typically use an MDM server from Citrix, Good Technology, MobileIron, or VMware for the (mainly) iPhones and iPads that form companies' mobile core.
- Samsung's failure with Knox should give government agencies and enterprises pause about entrusting it to continue to provide that high a level of security -- as should Samsung's history of corrupt business practices.
- QNX is a solid, widely liked technology. But it doesn't make much money for BlackBerry. Embedded operating systems, which is what QNX is, can't create the kind of value that a user-facing OS can, such as iOS, OS X, Android, or Windows. That's no insult to QNX, but a reality of the market.
- BBM is inferior to many popular chat apps, and it has awkward limitations, such as working on only one of your devices at a time.
The biggest hurdle, I think, that Samsung would face if it bought BlackBerry would be regulatory approval from squeamish governments. I believe they'd rather prop up a stand-alone if small BlackBerry than trust their security to Samsung. Without that approval, all Samsung gets of value are QNX and BBM, which together are worth maybe a few hundred million dollars and won't move any needles at Samsung.