What Does Fairfax Taking BlackBerry Private Mean For Consumers?

Prem Watsa

After the absolutely brutal announcements this Friday and debacle of a cross platform BBM launch this weekend we now have BlackBerry pulling another rabbit out of the hat. A consortium lead by Fairfax Financial has put in a letter of intent to acquire all of BlackBerry for $4.7 billion or about $9 per share of the battered BlackBerry stock. The deal still has another 6 weeks to get finalized during due diligence with other suitors possibly making a bid but this seems the most likely route. This huge piece of news has many wondering what direction Fairfax Financial and Prem Watsa have in mind for BlackBerry in the future. The only idea we currently have is a cryptic message in the press release by Fairfax CEO Prem Watsa:

“We believe this transaction will open an exciting new private chapter for BlackBerry, its customers, carriers and employees. We can deliver immediate value to shareholders, while we continue the execution of a long-term strategy in a private company with a focus on delivering superior and secure enterprise solutions to BlackBerry customers around the world.”

That seems to be a strong hint that BlackBerry’s consumer focused days are coming to an end with a heavy focus on enterprise solutions. This means BES 10 and its cross platform MDM along with the enterprise BlackBerry 10 users. What will be very interesting is what Fairfax does with the other parts of BlackBerry. Most of BlackBerry’s customers currently are consumers according to the last count I saw. On top of that BlackBerry is in the middle of some very consumer focused initiatives including cross platform BBM and new BlackBerry 10 devices like the consumer media friendly Z30. Will Fairfax possibly spin off the hardware and BBM platform pieces into separate entities?

Another interesting angle is what BlackBerry will do with their QNX acquisition and their heavy focus into car entertainment systems. QNX is the basis for BlackBerry 10 and that tight integration is the only reason we have BlackBerry 10 where it is today. If Fairfax spins off that piece then BlackBerry 10 as a platform may suffer even if they continue to license QNX. This really has me wondering what Prem Watsa has as a long term strategy for BlackBerry. Now that the company has chopped yet another 40% off their headcount they are contracting into what could be a laser focused company. The problem is that BlackBerry learned in the past that the consumer market is slowly taking over the enterprise market in a grassroots effort.

I think that Fairfax should double down on BlackBerry 10 and the combination of corporate and consumer market that appreciated the rock solid communication platform it offered. This means an end to the “me too” additions of features to BlackBerry 10 and instead appealing to the market that made BlackBerry take off. Right now the holes in the BlackBerry 10 platform are something that any hardcore BlackBerry user could point out to you within a few minutes. Going private may finally give BlackBerry that ability to refocus on its core values and actually deliver the product they should have delivered three years ago.

Let me know what you think Fairfax has in mind for BlackBerry if this deal goes through. It should be interesting to see if BlackBerry gets other offers.

PS: The conspiracy theorists are having a field day with the fact that BlackBerry announced their terrible preliminary results on Triple Witching Friday and then the fiasco of this weekend leading into a bid by insider Prem Watsa today.

14 total comments on this postSubmit your comment!
  1. for consumers, this is bad news. If they rebrand themselves as a corporate IT/mobility solutions company, what kind of developer would spend time on such platform? Not netflix, not angry birds, but corporate application developers. Basically, pre-2008 RIM.

    Not good news for consumers, people hate the BB name and what it stands for. Self inflicted suicide. But Corporate might be the only sustainable option, since they were asleep at the wheel for so long.

  2. Unless they take drastic measures with marketing, software development and sponsorship, I don’t see much difference in where BB is going (nowhere, down or up) with this acquisition.

    Non of the BB users complained about the devices, yet BB keeps posting new devices like the existing ones were missing something (yes, a proper OS with good 3rd party support). Devices mean nothing, what counts is the software. Look at Apple, one phone, billion users.

  3. What are we supposed to do now ?

    • This latest change will not make a big difference in the current state until someone takes the helm and decides to stop rewarding incompetence. Watch as nobody takes responsibility for the BBM cross platform fiasco. Notice the complete lack of damage control. From what I hear Prem is a sharp investor so he obviously has a plan for BlackBerry from the get go. My guess is that it will be a change for the consumer market. Could be anything from putting Android on BlackBerry hardware to virtualizing the whole communications piece and dropping BlackBerry 10 altogether for the secure workspace on Android and iOS.

      As I said its all up in the air now… Just expect changes and drastic ones at that. For now that does not mean much of a difference for current users.

      • What “me too” features do you mean?? I understand that some of the BBOS features were missing like customizable profiles etc. But what “me too” features” exactly? You have to remember that BB10 had to appeal to users that are on iOS and Android as well. If they had just the same thing, people might point to them saying that it is the same BB but with different hardware. Maybe that’s why they have certain “me too” features? Really curious though.. What are you referring to?

      • Dropping BB10 won’t make sense at all. QNX is the best and brightest light inside BlackBerry. It’s a platform unlike any other with immense scalability and performance that can carry BlackBerry into the next decade ahead of the competition. Android is a rushed job that will never compete with BB10 – not in performance, not in productivity, not in scalability or flexibility, not in security. Even iOS has some major flaws. While BB10 is built up from QNX, these two competing OSs were scaled down from existing OSs – MacOS and Linux. Those previous OSs had their own flaws and shortcomings.

        The problem is not with the BB10 platform but how BlackBerry chose to sell and market it. The folks doing the selling did not fully understand the product, the changing marketplace, the technology. Some say it is the lack of apps, but while that is a factor, there is no one is selling the benefits of a BlackBerry to anyone. It was always a “Me-Too” approach – that “Johnny come lately” strategy never works. The only folks who know anything about BlackBerry are folks who frequent blog sites like this one and Crackberry.com. Those limited number of BlackBerry fans cannot carry the company.

        BlackBerry has to look for NEW users, so let’s explore who those folks are:
        1. Music lovers – they need a kick@ss player app with equalizer and flexible playlists including ability to playback in karaoke mode (no singing) – they need to find ways to explore music and play back music in interesting new ways – talk to some DJs and music aficionados.
        2. Photo lovers – best in case native editing software, stitching, panoramic, and fast 500 fps camera modes.
        3. Video lovers – StoryMaker app is really nice and can get much better – talk to folks in Hollywood creating some powerful video effects.
        4. Document lovers – best in class Word-compatible editor, spreadsheet with macros, presentation tool that can integrate StoryMaker videos.
        5. Business users – integrate tools like BBM to create storyboards, whiteboards, multi-user conferences, corporate applications, deep integration with MDM software, etc.

        The truth is that BB10 can do it all. It is that strong an OS. It just needs the horsepower that BlackBerry can give it – wings to fly! I’m glad to see the Z30 but without an enhanced camera functionality, same-old music apps, no GPS extensions like geofencing, I think they again missed another opportunity to reveal the true power of BB10.

        Apple focused the iPhone on music lovers and camera lovers — look where they took the smartphone. It wasn’t just the touchscreen that sold those users on Apple, it was how the iPhone fit into their daily lives. They wanted their music and to take quality phones of family and friends – and to share both of those with the world! The touchscreen just made it all so easy to use but it wasn’t the driving force – so many people are misguided by that!

        In stepping forward, BlackBerry needs to go one step beyond the model that Apple created. Forget the “toy” apps that are on other platforms. Who needs thousands of farting apps anyway? Who needs dozens of browsers? BlackBerry needs to get serious about the apps they want on a BlackBerry — create a premium platform that offers quadcore CPUs & GPUs, 4 GB RAM & 32 GB storage, and integration like HDMI, USB, WiFi 102.11a/b/g/n/ac. Offering a physical network connection via USB would also be very valuable to users when going into a corporate environment.

        Dedicated fans like us will buy such a device even if it costs a bit more, and developers will jump all over it to create more powerful, more dynamic, more connected apps that can deliver more functionality than other platforms can.

        Remember, BlackBerry is a niche product. It will never compete with Android at the low end, but it doesn’t mean it cannot benefit from an Android player to run some hardware-accelerated Android apps.

        Even so, if BlackBerry sells premium superphones to businesses and prosumers, they can still sell some lower tier devices as an entry level doorway into the premium BB10 platform. Make it very disposable and ensure it offers enough class and incentive to get folks to buy the premium devices. This will demonstrate the true value of the premium platform.

        It is time to take advantage of the fact that Apple is slow to innovate and do something smart with the technologies that are available today. Apple is already facing a lack of innovation, but no one is stepping up to blaze a new trail – no, not even Samsung. Geofencing would have been such a sweet step forward in 10.2 but BlackBerry may have missed the boat on that as well.

        • bbfanboi, I am sure many bb fans might share your enthusiasm, but the truth is, even if all these great features, specs and hardware improvements come to the platform, it still needs to be sold to the masses, and in some markets especially, that support just isn’t there. And I’m talking support from the networks as well as marketing. Thing is, the average consumer who is not spending their life online reading these tech blogs, are likely not even aware that Blackberry makes a touch screen phone ! They go for what is visible and being constantly marketed, and then what their friends have and show them.
          BB10 is a great OS with potential that launched with more complete features than iOS did at its launch ! Yet, BB management still seemed to think that this was 2008 and people valued BB as THE phone to have, and set out to as delusional, ridiculous prices for the new phones which other than a superior OS experience, offered nothing in specs to really compete against the market leaders ! If there are two ways Blackberry was doomed to lost money, there are two ways it could be done, and one is better in the long run:
          It could either continue ignore the HUGE growing lower end market and instead built high end (yet one year late tech) phones and price themselves out of the market as currently doing, OR,
          They could sacrifice and accept slimmer device profit margins by producing cheaper but compelling devices and launch them into the low end where much growth is likely to be.
          How do you think Samsung got where it is ? It plastered devices on every segment of the market for everyone’s pocket, and honestly, their lower end phones like the Galaxy Y are absolute rubbish, but sold well in emerging markets that are highly price sensitive. Ironically, it is these markets that Blackberry still has some remnant of reputation left ! And ironically, it is markets like this (India for one) where they launched the Z10 at a HIGHER price than sold in North America ! Absolute folly !
          Many people wanted to try BB10, but were deterred by the pricing ! If not for this, there would likely have been better adoption.
          I spent a year working in the birth city of Mr. Watsa, and always was observing peoples’ phone use and choices. Many people still use BB7 devices, and even people in managerial positions using them said BB10 was much too expensive. Then the Q5 launches and here we go again…. still costing much more than the lower end Sony Xperias which have better cameras and arguable the best UI version of the Android manufactures.
          I’d like to see a change happen, Good low, mid and high end BB10 devices at prices that would drive adoption and encourage developers, a decent Playbook X tablet running BB10 and so on. But who’s gonna make that happen since they keep putting the cart before the horse ?
          If this deal goes through and Mr. Watsa and company don’t dismantle the hardware division, they’ll need to shake up management and bring in some folk who actually study and know the various markets they’re operating in.
          For now, they’ve done just like Nokia… forsaken their key markets just to improve their cred in the US, and fallen everywhere in the process.

          • Sorry about the horrible amount of errors.. am typing with a splint on one hand and missed quite a few incorrectly autocorrected words !

          • I agree with almost everything you’ve said. You’re essentially saying the same thing I am: management failed to sell the BB10 platform to users. They assumed folks would just go out and buy it without telling them what it can do. The marketing for BB10 just said, “Here, we finally built an iPhone clone.” That’s not what folks wanted to hear so they just tuned out.

            Did they even say what the phone could do? No! Instead, the Superbowl ad showed us what it cannot do. Even the few carrier ads tried to show BBM video and screen share, but that was too little too late.

            It certainly didn’t help that Verizon kept their users on a very old version of 10.0 for 4 months! Users were experiencing bugs and random reboots because of the very old OS but they made no effort to fix it. As the biggest carrier in the US, I blame Verizon for sabotaging the Z10 and BB10. There is no reason why they launched one month later with a much older OS version than in the UK and Canada. It wasn’t till July when they offered upgrades to their users – those who didn’t already return their Z10s.

            Yes, we need a low end device like the Kopi device being leaked as an entry into the BB10 eco, but they also need very good premium devices for the business and prosumer clientele – they need to show what BB10 is capable of, because the competition will certainly struggle to compete if they push the limits on the BB10 OS. When you’ve got a Ferrari, you can’t just drive it at 60 mph.

      • Secure Android is a conflict in words. It’s like saying “fast putt-putt”. Certainly it is a more secure version of Android, but it has such limited functionality when you take away all that makes Android what it is. In the end, you arrive at a unique version of Android that looks like Android but isn’t Android.

  4. I will be voting no to Mr. Watsa and hope others do as well. The body of work of Stymiest and Heins delivered to shareholders this past 1.75 years borders on negligence.

    • Do you at least agree that going private is best for BlackBerry? Without any changes, this company will be split up and sold off in pieces. This is the only hope BlackBerry has to survive as a company.
      I can’t argue that management has failed to deliver on many promises, and they’ve done a hopeless job of selling BB10 – probably because they themselves do not understand its potential. This is why you need techies running tech companies. Bringing in folks who don’t understand what they’re selling to manage the business – you’re fighting a battle that cannot be won. As Apple demonstrated years ago, what works in the world of pop soda (i.e., Pepsi) doesn’t necessarily work in the tech world. Jobs had to return to rescue the business.

      • I agree in one major point. BlackBerry missed to explain the advantages of their new OS. I’ve been trying out many shops but did not find one competent salesperson. In 3 different countries. Opposite to this 7 of my friends changed from iPhone and Samsung to Z and Q10 after having seen it in action.

        How comes?

        Sad to see a superior technology losing.

        Do I have a solution?
        No!

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