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IBM May Be Interested in RIM's Enterprise Business

Both Reuters and Bloomberg report that IBM is considering a bid for the enterprise division of Research in Motion (RIM). Is it true?

RIM's Enterprise Business

According to Bloomberg, citing two unnamed sources, IBM has made an informal approach to RIM to buy out the enterprise business that currently runs the servers RIM uses to support BlackBerrry email and messaging services.

While the Bloomberg report adds that no formal talks are underway at the moment, it does say that a review of operations instigated by the new CEO Thorsten Heins, and to be carried out by a bunch of bankers, could see it selling parts of it technology portfolio, or entering into technology partnerships where beneficial.

Also of note is that Bloomberg has also said that the same sources say that so far on one has come forward to buy the phone business, or the company, for that matter.

RIM's Steep Downturn

Incredible though it may seem, it wasn’t Apple, or even Google with Android that invented mobile email; it was RIM with BlackBerrry.

However, it is struggling as both Android and iOS now dominate the market.

RIM's share of the global smartphone market fell to 4.8 percent in the second quarter of this year from 12 percent a year earlier as Android climbed to 68 percent and Apple slipped to 17 percent, according to research firm IDC.

The result, Bloomberg says, is that  that over the last year, RIM has lost 70% of its market capitalization.

RIM Sells NewBay

Also a possibility in this review could be the sale of NewBay, the Irish-based company that RIM paid US$ 100 million for in 2011.

The move was seen at the time as a late, but timely, move by RIM into cloud services. NewBay should have fit in nicely with RIM, providing video and social networking tools for smartphones (and computers) and was seen as a key to shoring up RIM’s failing fortunes.

When RIM bought it in October of that year NewBay had over 80 million subscribers and could deliver any media stored on its services to any mobile device.

The thinking was that with NewBay, RIM would create a new business segment and boost its offerings, not to mention revenues.The proposed sale would also fit in with the sale earlier in the year of Alt-N Technologies the email services provider, which it acquired in 2009.

Instead, it seems now that Heins is focusing on delivering new range of devices that will run on RIM’s BB10 operating system, in the first quarter of 2013.

IBM Plus RIM Services?

As to what IBM might get out of it, it is hard to gauge at the moment and can’t be gauged until such a point as a deal is reached and the terms have been released.

However, the enterprise business would enable IBM to add mobile services to its already extensive service offerings to large enterprises. It could also add a substantial boost to its Global Services group that pulls in half of the company’s total revenue.

And then IBM is also one of the few companies that could actually afford the price tag, which has been estimated to be worth between US$ 1.5 billion and US$ 2.5 billion, depending on who you talk to.

In addition to this, IBM is still buying all around it; since the beginning of this year it has already closed five acquisitions and still has a very deep war chest for other acquisitions.

It is not clear when a decision, if any, on this deal will be announced, or confirmed, and both companies have denied there's anything going on at all.

But as soon as something happens, we’ll let you know.

 


 

 
 
 
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