Research notes from UBS analysts are again kicking up the idea that it could make sense for Cisco to buy RIM and its BlackBerry smartphone business, though it won't happen soon.
Cisco Systems buying BlackBerry maker Research In Motion would make sense,
given Cisco's unified communications ambitions and RIM's smartphone
capabilities, according to analysts at UBS.
Research notes from analysts Maynard Um and Phillip Huang Oct.
20 talking about the possibility have touched off the latest around of
speculation about the future of RIM, which has been seen as an acquisition
target on and off for the past couple of years.
Microsoft, Hewlett-Packard and IBM-as
well as Cisco-have been talked about as potential suitors in the past. However,
while noting that Cisco would make the most sense, Huang said in his research
note that it isn't anything that will happen anytime soon, unless there's a
sharp drop in the smartphone maker's value.
"Though we see RIM facing many challenges, we see timing
of [the] impact of some as overstated and believe material share devaluation
from current levels makes RIM a potential M & A [merger and acquisition]
target," Huang wrote, according to The Toronto Star. "However, we see
the likelihood as very low in the near-to-medium term barring share
devaluation."
RIM has had a dominant position in the enterprise with its
BlackBerry devices for years, but many analysts expect that newer phones,
including Apple's iPhone and Android-based devices from various manufacturers,
will continue to erode RIM's positions. Throw in Microsoft's resurged push into
the hyper-competitive space with Windows Phone 7, and RIM has some significant
challenges.
One market research firm already sees the iPhone overtaking the
BlackBerry. In a statement Oct. 21, Strategic Analytics said that in the third
quarter, Apple shipped 14.1 million iPhones, driving its market share to 18
percent. Meanwhile, RIM shipped 12.4 million-more than the 8.5 million in the
same period last year-and saw its market share drop to 16 percent. In first was
Nokia, with 34 percent.
Having RIM in the fold would help Cisco push along its UC and
video efforts, according the analysts. There are strong synergies between the
BlackBerry and Cisco's Flip video camera, for example, and having a smartphone
strategy in place would help Cisco as it competes with the likes of HP.
Cisco could leverage RIM's MVS (mobile voice system), according
to the UBS analysts, which enables users to
seamlessly move between their BlackBerrys and corporate desk phones.
Cisco is aggressively expanding between its roots as a supplier
of network routers and switches, with officials looking to leverage the company's
strength in networks to create the central platform for all communications. The
BlackBerry smartphones would integrate nicely with other Cisco communications
products and with its larger UC strategy, according to the analysts.
Cisco already offers IP phones, as well as devices such as its Cius
business tablet PC. The BlackBerry business also would be a way for Cisco
engineers to grow the Flip technology away from singe-use video cameras. Cisco
officials believe video rapidly will grow into the primary form of Internet
traffic, and the company plans on being the
central player in that space.
Some commentators, including the folks at The
Motley Fool, said it would cost a lot of money to get RIM, and questioned
whether it would make sense for Cisco to spend more money to bolster "what
is shaping up to be a bad initial acquisition of Flip's parent company [Pure
Digital]."
But Cisco has the money-a reported $33 billion in offshore
accounts-and using that cash to buy RIM-a Canadian-based company-would not kick
in any kind of tax repatriation process for Cisco, according to The Motley Fool.
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