RIM is hiring a bank to evaluate "strategic options", but then what?
Those options reportedly include selling RIM off to another company, although the source specified that RIM “isn’t looking to sell itself” as the primary option. Their preferred solution would be to license their upcoming BB10 operating system to other vendors, and their second choice would be to solicit a strategic investment from another company.
Both of their preferred solutions may be fatally flawed; we’ve reported on rumors for months that RIM was looking to license BB10 to other handset manufacturers, which suggests that RIM has already been exploring this option and hasn't found much interest. Nor would we expect any, as BB10 isn’t even a shippable product yet, and RIM’s track record on developing consumer-friendly operating systems is, shall we say,…suspect. RIM would probably have to demonstrate consumer appeal for BB10 with a shipped product before signing up major hardware partners, and that won't be for several more months.
A strategic investment makes even less sense – RIM has $1.77 billion in cash and short-term investments, so it’s not clear what would be gained by such a move. RIM isn’t suffering from a lack of cash, they’re suffering from a lack of execution. Samsung has repeatedly denied interest in buying or investing in RIM, and Bloomberg reports that Microsoft is not interested in a strategic investment either. The latter should finally lay to rest a rumor we skeptically reported on last week, that Microsoft was looking to drop more than $3 billion into RIM.
If RIM can’t license BB10 any time soon and aren’t likely to find someone to strategically invest in them, what's left? RIM may consider selling some of its patents, which are probably their most valuable resource at this point. Bloomberg reports that management is exploring how they can leverage BBM (by putting it on other platforms) and their expertise in enterprise services to increase revenue – a plan not terribly different from the one concocted by Jim Balsillie before he resigned.
And if all else fails…RIM can try to sell itself off. Hopefully. Unless BB10 is a hit, it’s not clear how valuable RIM’s assets would be outside of their patents. But they won’t need our advice on how to value themselves; they are already in the market for financial advisers at large banking firms.
To be clear: we hope this turns out for the best, and that BB10 handsets are a success. More and better platforms to choose from is always good for consumers. But RIM has a very deep hole to climb out of, and it’s getting deeper with each passing quarter.