Xiaomi is going to acquire BlackBerry?

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Rumors about Microsoft acquiring BlackBerry, a mobile phone manufacturer, have been circulating since 2013. Recently, there is news that Microsoft may acquire BlackBerry for $7 billion. Although neither party has commented on this, given BlackBerry's current situation, it is probably only a matter of time before it is sold. The key question is who is the most suitable or most valuable (for the acquirer) to take over BlackBerry? After all, in addition to Microsoft, there are other acquirers that have appeared in the rumors, such as Samsung, Huawei, Lenovo, ZTE and even Xiaomi.

First, let's take a look at the actual value of BlackBerry now, and then analyze what some of the rumored manufacturers still lack and their own development strategies. We can then relatively objectively conclude which acquisition would be more valuable to BlackBerry if it really seeks to be sold in the future.

From the perspective of shipments, according to statistics, BlackBerry sold a total of 8.5 million mobile phones last year, and from its last quarter's financial report, it sold 1.3 million mobile phones, with an ASP (average selling price) of $211. According to this calculation, BlackBerry's shipments this year are estimated to be around 5 million units, at least lower than in 2014. Such shipments are basically of no value to the acquirer who hopes to significantly increase the sales of smartphones through mergers and acquisitions. From this point of view, the manufacturers rumored to want to acquire BlackBerry have shipments that far exceed BlackBerry. Samsung is not to be mentioned. Huawei, Lenovo, and Xiaomi have set their ideal shipment targets of 80-100 million units this year. The shipments of a few million BlackBerrys will not have any impact on the competitive landscape of each other. ZTE, which has a slightly lower sales volume, is also striving to ship 60 million units this year. As for Microsoft, its current single-quarter mobile phone shipments are also between millions and tens of millions, and it seems that there is no value in mergers and acquisitions. The key is to combine the ASP of BlackBerry phones, which is the same as sales volume in terms of revenue, and will not bring any substantial impact to the above-mentioned manufacturers, so its value is not great.

Next, let's look at the so-called BlackBerry patents. As we all know, BlackBerry has a fairly strong patent reserve in the mobile market, which is also considered the most valuable and valuable part in the merger and acquisition (we have reservations about this), but as we said before, patents are more often a defensive measure. Although they are necessary, they have no direct impact on the growth of their own performance. BlackBerry's own fall has actually provided evidence for this. Then look at the acquirers, Samsung, Huawei, ZTE, and Microsoft also have strong patent reserves, and patents have even become one of the main revenue methods in the mobile market. For example, Microsoft previously earned billions of dollars in revenue each year by collecting licensing fees from Android manufacturers, even exceeding the profit from selling mobile phones itself. Although Lenovo's patent reserve was weak before, its shortcomings in patents have been partially compensated by acquiring Motorola Mobility. Then the only thing left is Xiaomi, and patents are considered to be the biggest obstacle for Xiaomi to enter the overseas market. Speaking of overseas markets, it should be noted that although BlackBerry's mobile phone sales are not good, its previously established relationship with overseas operators still exists, which seems to be more meaningful for Chinese manufacturers who are heading towards and taking overseas markets as new markets. However, given that Huawei and ZTE have long established relationships with overseas operators through telecommunications equipment and network construction, and Lenovo has obtained operator channels (through the acquisition of Motorola Mobility), this does not seem to have much impact on them, so the only one left is Xiaomi.

The third is the value of BlackBerry security. The industry knows that BlackBerry has spent about 10 years to build and establish its advantage in mobile phone security. For example, Sony Pictures, which caused a sensation before, was attacked by hackers due to the film "The Interview", which caused a large-scale serious paralysis of its own network. Although more than 3/4 of its own servers were down, there were still a large number of old BlackBerry phones that maintained normal email communications within the company after switching to BlackBerry's external server. This incident is undoubtedly the best proof of BlackBerry's security. In addition, with the popularization of smart phones and the continuous expansion of applications in the enterprise market in the future, mobile phone security will be a problem that the market and users, especially enterprise market users, have to face. From this point of view, it seems that this has certain value for the rumored acquisition parties. However, considering the current strategies of Chinese manufacturers, security, especially the enterprise market that cares about security, does not seem to be their main appeal (mainly to expand market share for ordinary users), so the remaining ones are Samsung and Microsoft. Because they all have businesses for the enterprise market, for example, Microsoft is mainly focused on enterprise-level business, and Samsung has also hoped to consolidate and expand the market in the mobile market through its own efforts in the past two years with security as a differentiation, but with little success. Therefore, the acquisition of BlackBerry should help Microsoft strengthen its enterprise market strength and Samsung to have enterprise-level market competitiveness. It is just a matter of the degree of help.

Finally, BlackBerry's value lies in the future Internet of Vehicles (Internet of Things). In this market, BlackBerry's QNX has taken the lead and occupied nearly 50% of the market share. It has 50 partners including Acura, Audi, BMW, Chrysler, Ford, GM, Honda, Hyundai, Jaguar, Mercedes, Land Rover, Porsche, Toyota and Volkswagen. There are even previous analyses that Apple's CarPlay and Google's Android Auto in-car entertainment systems must rely on BlackBerry's QNX platform to run well. We don't know whether this analysis is exaggerated, but at least it shows the position and technical foundation of BlackBerry's QNX in the automotive platform. Therefore, for mobile phones or related manufacturers based on the next industrial opportunity in the future, BlackBerry's commercial value in the Internet of Vehicles cannot be ignored. This value point seems to be the reason for the above manufacturers to acquire BlackBerry. Especially Microsoft, which already has its own in-car system, but its performance has always been tepid. After acquiring BlackBerry, it will undoubtedly become a leader in this market. Especially when the smartphone market is hopeless, it is very important to seize the opportunity when the next industrial opportunity comes. As for other manufacturers, we have not found that they have a strong desire to develop in this market, but one thing needs to be clarified is that due to Xiaomi's future strategy of focusing on the ecosystem, it should also have a demand for this value.

In summary, combined with the existing value of BlackBerry, the companies that have gained the most value through the acquisition of BlackBerry should be Microsoft and Xiaomi, especially Xiaomi, which will clear the barriers to its mobile phones entering overseas markets (such as patents and channels) after the acquisition of BlackBerry, and at the same time add the important Internet of Vehicles to its own ecosystem, and directly compete with Apple and Google in this field, which will greatly help enhance Xiaomi's influence. As for Microsoft, from a strategic perspective, after missing the opportunity in the smartphone market, it is precious to seize the next industry opportunity through acquisitions.