What The Microsoft-Nokia Deal Means For Blackberry

by Thea Neuman 227 views0

The hot topic trending almost everywhere currently is Microsoft’s Nokia buyout. Nokia has been a premier hardware provider for many years now. The Microsoft smartphone platform still perspires to catch up with iOS and Android. This deal is the first step by Microsoft to try and control the hardware side of their business as well. Apple has already led the market by providing software and hardware. Google too has Motorola in its kitty. BlackBerry has always controlled the entire platform.

What this deal has done is, it has managed to raise concerns over BlackBerry’s position in the smartphone market. The central issue here is that the price at which Nokia was acquired seems to be undervaluing BlackBerry. Nokia’s hardware business was acquired for a whooping $5 Billion and an additional $2 Billion to cover their licenses and patents. The cumulative amount being paid is a cool $7 Billion, whereas BlackBerry’s current market capitalization is just $5.3 Billion. Contrary to what some market pundits believe, this does not undervalue BlackBerry in any way.

Anything’s value is directly related to the interest of the buyer. Nokia’s value too shot up because of Microsoft’s interest and need for hardware. Microsoft has emerged as the #3 smartphone platform in the current market. It makes obvious sense for BlackBerry to want to control the hardware side of their business as well. The BlackBerry stock is still in its growth phase and this valuation of Nokia doesn’t prove anything whatsoever. The market is just coming to terms with the potential of the BlackBerry devices. The global M2M market is also yet to see the BlackBerry operate on all aspects like enterprise data management and security.

BlackBerry definitely cannot feel undervalued just because of the Nokia-Microsoft deal. However, the deal does alter the landscape considerably. The playing field dynamics are now a lot more level and competitive. All the major players control both software and hardware aspects of their business. BlackBerry analyzing their value against this deal cannot be a positive thing at all. However, this does put their stock into perspective. BlackBerry can take this as a wake up call to push forward full steam from here on. BlackBerry’s aspirations being a smartphone vendor can only be best served by getting even more competitive than before.

MS Buys Nokia

Also, to quell the rumors of a possible buyout, the blackberry will not be sold. BlackBerry is on a renaissance mission. That doesn’t mean they are going to duck out. The focus has been more in developing the software aspects of the business for the enterprise customers. This cannot be taken as confirmation of selling intent. BlackBerry needs to majorly step up their game from here onwards. With all the major players looking to capitalize as much of the market as possible, BlackBerry has been placed in a do or die situation now. The timing is not opportune but the best thing out of this situation is that BlackBerry has to try and hit the ground running. It’s either step up their marketing game or step down and find other ways to sustain.

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