Why Samsung would benefit from acquiring Blackberry

Samsung loves to launch new phones. They have always stuck to the ” Throw and lets see what sticks” policy. Rumors of a new Samsung Galaxy S6 Edge Plus are rife. Imagine creating an entirely new phone just to go from 5.1″ 2560X1440 resolution screen to 5.5″ 2560X1440 resolution screen. Taking into account that the launch of Galaxy Note 5 will surely be in August-September. It just doesn’t seem logical unless the note line is in fact the edge plus from now on ? It sounds far-fetched but with the amount of phones Samsung has released in the past nothing should come as a surprise. There is also the mid-ranged Galaxy E series, A series and so on.

There is no analysis needed for their strategy. The answer is simple. The company is obsessed with capturing niche markets. They would not have spent money to research and develop the A series, or all the ones before it if they did not want to keep or capture more market share in developing markets very much unlike the markets in America and the European countries where still plenty of people buy their phones on contract and choose the best (iPhone 6, S6, G4, M9 etc.) or have enough money to splurge $800 on phones yearly.

Blackberry still represents the richest of niches. None of the companies in the market have ever been able to match their physical QWERTY keyboards and while in the times of touch sensitive screens it seems like old tech, it is doubtful that the need for physical, tangible hard keys would ever completely disappear. Think about your laptop. Would you ever trade the keyboard on that for a touch based one ? Most people would be skeptical of that. There are many people in millions who despise the transition to touch screen especially the one’s who regularly recall their exotic vocabulary in lengthy articles, stories & blog posts gathered through years of extensive reading.

If Samsung were to acquire Blackberry, financing the deal would be the easiest task at hand. In fact with $17.1bn in Cash and cash equivalents shown in their publicly released financial statements, they might require the equivalent of 35.08% about $6bn to make the transaction happen. Everyone knows that Blackberry is struggling and their hardware business has not been profitable for the past 4 or 5 years. They would definitely be inclined to sell, especially if an offer from a big company comes their way.

How Samsung would Benefit ?

Patents

Samsung & Apple have been consistently fighting court battles on patent infringements. That has previously affected their ability to sell devices in America. Through this acquisition Samsung immediately gets access to 44,000 patents. BlackBerry typically ranks in the top 75 annual patent recipients, obtaining 500 to 1,000 patents every year on improvements to its mobile devices, according to U.S. Patent and Trademark Office figures.

Hardware

Samsung also gets access to best hardware keyboards ever put on mobile devices. With launch of Blackberry Passport, Blackberry also introduced touch sensitive keyboard technology, which could be used to scroll through pages seamlessly without poking a finger on the phone display and blocking some of that screen real estate we are addicted to.

Samsung makes displays that have been rated as best in the world by many trusted tech reviewers. The combination of their display technology, their own 14nm Exynos Processors, the hardware keyboard from Blackberry can be a winning niche. There is still a decently high demand for such a device to merit a good design, flagship internals & materials and production in a few millions.

Slide2

Software

This is where things get the most interesting. Blackberry after their acquisition of QNX have built their own new modern OS 10 operating system on QNX platform but many developers have been reluctant to support the platform particularly when Android and iOS already gives them access to billions of customers around the world. They have also failed miserably in trying to integrate android run time player into their operating system and performance of android apps has been buggy and slow.

Samsung is one of the companies that have benefited the most with the move to Android many years ago when there was little innovation in mobile software and it’s capabilities. Samsung in fact reinvigorated their mobile business and became the market leader by shifting to Android but historically and even currently their version of android with their own tweaks and visual design has been viewed as a failure by many people despite the phones selling in millions. The overwhelming number of features which are more like gimmicks are disliked by most people even the ones who end up buying the phone for other reasons.

This is Samsung’s chance to start a new. Use the good Blackberry OS 10 features, use the platform of Android and combine them to create a new Operating System which essentially becomes a forked out version of Android which will provide high security to all users, high quality of communication and an extreme focus on simplicity & minimalism. Although the Google Play Store might have to be cut out of this due to security, an app store only providing very high quality android apps something like what Amazon have done with their own app store should be very desirable by these “niche” consumers.

Think of it like a list – Does it give me a keyboard? – hell yeah, Is the Phone Operating System secure? – awesome, all my calls and messages are also secure? – great, Is it simple, fast and makes me efficient? – I am a company – I want to sign up for my employees. I am also one of the masses and I’d like to buy this product.

That’s probably what Blackberry wanted to succeed at and they have failed. iPhones and Android devices will continue to dominate the market despite their best efforts.

 

Slide1

 

Another basic mock up of what the devices could look like.

 



Additional Sources:
1.) Samsung Financial report of last quarter.
2.) http://www.bloomberg.com/news/articles/2015-01-14/blackberrys-patent-portfolio-is-wireless-trove-for-acquirer

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