With the news the other day that BlackBerry has been sold for 4.7 billion dollars, we wondered what's behind all the sales of smartphone companies right now? Nokia sold recently to Microsoft and the rumors persist that HTC's Robert Downey Jr-led ''Here's To Change'' campaign is a last ditch effort to avoid hitting the auction block too. Let's take a look at what's going on, and why.
BlackBerry staves off the wolves
BlackBerry, after lackluster sales of its newest devices, the Z10 and Q10, and slow uptake of its 10 OS has ''agreed in principle'' to be bought out by its largest shareholder, Fairfax Financial Holdings Limited for $4.7 billion. The consortium is led by the ''Canadian Warren Buffet,'' Prem Watsa, who is also the chancellor of the university in BlackBerry's home town of Waterloo, a position BlackBerry's founder, Mike Lazaridis, also held previously.
Born in the Indian cyber-centre of Hyderabad, Watsa has grown up recognizing good business opportunities. He worked his way through the stock market, life insurance and asset management worlds before founding his own investment council which was eventually snapped up by Fairfax, of which he became the Chairman and Chief Executive. He successfully predicted the sub-prime mortgage blow-out back in 2007 and made billions for Fairfax. Now he'll be in charge of turning BlackBerry into a profitable entity, but it won't be quick, and it won't be with the same business model either.
Watsa knows BlackBerry, having sat on the board until Fairfax started sniffing around, and remaining close friends with BlackBerry's founder. Keeping BlackBerry Canadian, and in the hands of such a polished profiteer could be BlackBerry's saving grace. Although it is not yet known what will happen to BlackBerry if the sale goes ahead, there's not much hope for the 40% of the workforce currently being laid off in the face of a $1 billion loss for the quarter. In any case, BlackBerry will retreat from the consumer market, currently dominated by Samsung and Apple, and instead focus on its core business of providing enterprise business solutions to its corporate partners. If it's not dismembered and sold off as scrap, that is.
Nokia becomes Microsoft's problem
You'll also remember that just last month Nokia announced its sale to Microsoft for $7.18 billion, in the face of less-than-amazing sales of its flagship Lumia devices and the limited reach of Windows phones. Funnily enough, the markets Nokia lost ground in were those dominated by BlackBerry, who has suffered the same fate regardless. As Forbes recently noted, the same thing happened back in 2000-2001, when Siemens, Panasonic and Philips all performed poorly compared to market leaders and ended up pulling out of the consumer mass market arms race. The dominance of Apple and Samsung along with iOS and Android, a weakening market for high-end smartphones generally and a minor slip-up are all it seems to take to topple once-mighty companies these days.
Is HTC next?
Which brings us to HTC. Facing the same stiff competition as BlackBerry and Nokia, HTC put up a relatively poor showing with the HTC One series, and are certainly not enjoying the smartphone market slump and increase in cheaper Chinese manufacturers either. Sure, they might finally be working on a beefier version of the HTC One, a move I thought they should have made back at the beginning of their ''Here's To Change'' campaign, but it may be too little too late. Speaking of which, have you heard anything much lately from HTC's record-breaking campaign? No, neither have we.
HTC denies they're looking at selling out, but a merger or sale might be the only way to keep their head above water too, especially if their $12 million gamble doesn't start paying off soon. Perhaps the only reason they're still going is because they're on Android for starters, and are also looking at other ways to expand their appeal, like making a custom ROM for the Chinese market. Where there's a will, there could just be a way, and change is the way to get there.
So it seems this autumn may just be the best time to snap up a new smartphone...company. What other reasons do you think are behind these spectacular failures?