BlackBerry plans to sell itself

CNC report from Toronto
Added On August 24, 2013

The Canadian mobile giant BlackBerry will consider selling itself after the long-awaited debut of its new phones failed to turn around the struggling smartphone maker.

The company says that its board has formed a special committee to explore "strategic alternatives" in hopes of enhancing the company's value and boosting adoption of its BlackBerry 10 platform.

Its options could also include joint ventures, partnerships, or other moves. 

The BlackBerry, pioneered in 1999, had been the dominant smartphone for on-the-go business people and other consumers before Apple debuted the iPhone in 2007.

In the years since, BlackBerry has since been hammered by competition from the iPhone as well as Android-based rivals. 

Anindya Ghose from NYU Stern School of Business says that BlackBerry's advantages have been diminishing.

And more and more people start to use apps on smartphones.
"No surprises there, mostly for the following two reasons: First is, people used to use Blackberry for the security of email, that email messages are encrypted and that typing was very convenient because it had that chord keyboard which is the same you have on computers. As those two benefits started to receding away, the immediate gains from using a Blackberry started to diminish. Then we entered a world where people started using apps on smartphones. This really started to take off a couple of years back and then it since has exploded. By any measure, people now spend more time on mobile apps than any other part of the mobile ecosystem."

In January, the company unveiled new phones running a revamped operating system called BlackBerry 10 designed to better compete.

But its market share continues to lag.

Analysts say that the company and shareholders have to go to the next step to survive long term.

Anindya says that it remains to be seen that who will buy the company.

"What Blackberry has going for it is this captive enterprise market, in other words, there are many companies who still sustain and support Blackberry devices for their employees. Many Fortune 400 and 500 companies still have the Blackberry enterprise system. So you still have that captive market and so chances are that anyone who wants to buy Blackberry is going to try to do something about that market. It remains to be seen if that’s going to be enough for any new trend but that’s about the only thing one has going in when they are trying to buy something like Blackberry."

Anindya also says that BlackBerry is going to lose their install base very quickly. And it is likely to go bankruptcy.

Q:How likely is bankruptcy?
"The dropout rate, the switching rate of people from Blackberry to Apple and Android is very high and as early adopters of Blackberry start ditching those phones for the smarter ones, they are going to lose their install base very quickly. They already lost a lot. At some point when the install base comes down to single digits, that’s as good as bankrupt."

BlackBerry says that there can be no assurance that the exploration process will result in any transaction.

And they declined further comment unless its board approves a specific sale.