Do BlackBerry Users Have a Plan B?
Even Nokia has a Plan B. What about all those enterprises out there that have long-relied on Research In Motion (NAS: RIMM) for their corporate mobile needs, arming personnel with BlackBerrys? Do they have a backup plan?
They should if they don't already
With RIM's dire situation, which CEO Thorsten Heins won't even outright acknowledge, many companies that have long relied on corporate IT services are thinking about broadening their horizons. It's been a long time coming, since those massive service outages in recent times also fail to inspire confidence. The service network infrastructure that the Canadian company has built up is one of its larger assets, and even if hardware sales continue to plunge this service isn't in immediate danger.
In a worst-case scenario, RIM would be broken up and restructured, with its networking operations probably being sold and maintained.
As the consumer market continues to snap up Apple (NAS: AAPL) iPhones and Google (NAS: GOOG) Androids, combined with expanding bring-your-own-device IT policies, RIM is seeing one of its last remaining fortresses under siege. Wireless carriers are also pressuring RIM to let up on its lucrative service fees.
Many companies are now at least preparing for an eventual shift away from BlackBerry services, to mitigate the risk of to their own operations. For example, web hosting company GoDaddy said it could transition its employees from BlackBerrys to iPhones or Androids "within hours," according to its chief infrastructure officer. It already has a contingency plan in case RIM suffers another major service blackout.
Insurance company Nationwide started migrating its workers last year. A year ago, the company had about 8,500 BlackBerrys in its ranks. That figure is now down to 7,000. Over the same time, the number of competing devices has skyrocketed from nil to almost 4,500.
Getting a third opinion
Third-party consultants and enterprise software vendors also give a good read on the sector, as they work with thousands of companies. Mobile sector consultant Maribel Lopez recently told Bloomberg, "In the past three months there's been a lot of concern that the BlackBerry platform won't be around in the future."
Mobile-device management, or MDM, is a booming sector within the enterprise, with plenty of companies stepping up to the challenge.
Good Technology, which helps secure corporate data on iOS and Android devices, says its customer base of 4,000 companies is increasingly concerned with RIM's future. Good Technology sales exec Brian Carr said that half of the Fortune 100 companies are all worried and inking contingency plans, and those concerns are only accelerating the migration away from BlackBerrys.
MobileIron also plays in the space, and CEO Bob Tinker adds, "Large enterprises don't want to be locked in with a single vendor anymore." Instead, customers are looking to keep up with the rapid rate of innovation in mobile computing, an area where RIM is falling behind considering its numerous BlackBerry 10 delays. RIM just announced that its new platform that everything is riding on wouldn't be ready until early next year. Companies are now wondering what to do if RIM gets bought or restructured, according to Tinker.
An all-out service shutdown isn't likely to happen, because someone would step up to buy RIM's network assets. Microsoft (NAS: MSFT) is a clear candidate, thanks to its own presence in the enterprise software space and its Exchange email services. Although it might be a little gun-shy with acquisitions after it was just attacked by one from the past, eating a hefty $6.2 billion goodwill impairment related to trying to build its ad business five years ago.
Break it up in here
There's undoubtedly some value in its network assets if RIM needs to spin it off or sell it. It wouldn't be the first company to be worth less than the sum of its parts. Shares now trade for less than half of book value, and roughly 0.7 tangible book value. That includes $2.7 billion in property, plant, and equipment, the bulk of which is for BlackBerry operations and information technology. RIM is also carrying $3.4 billion in net intangible assets, mainly its IP holdings.
RIM will be worth more in pieces, and many are now expecting the company to be chopped up and sold to the highest bidder. Last month ahead of earnings, Canaccord Genuity analyst Mike Walkley said it was time to sell the networking side, which he values at around $2.75 billion.
In May, the company said it had hired financial advisors in a "strategic review" of its alternatives, which is generally a precursor for a restructuring or sale. During earnings, RIM simply said that it's "aggressively working with our advisors on our strategic review and are actively evaluating ways to better leverage our assets and build on our strengths."
Hurry up, RIM. Your time is running out.
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