The Most Dangerous Kind of Takeover Bait

Pierre Ferragu of Bernstein Research thinks RIM is a possible takeover target for two reasons. First, RIM makes pretty good money off its subscriber fees and second RIM apparently makes excellent fertilizer for growing market share:

...a Microsoft could consider such an acquisition and invest another few hundreds of dollars per user in offering replacement phones based on Mango... This would potentially quintuple Windows 7′s current user base. Similarly, an HTC could see an opportunity to beef-up significantly their scale, leapfrogging the current market share race with a similar ‘buy and upgrade’ strategy.

But, while RIM stock isn't exactly expensive - even at a 50% premium - buying a controlling share of RIM seems like a super risky and needlessly expensive way to expand market share. Plus, I'm not exactly sure why you need to buy RIM if your strategy boils down to giving Blackberry users free phones.

That said, I can understand where Ferragu is coming from. RIM is vulnerable but still big enough and profitable enough to make it an enticing target. However, the only thing RIM has that its competitors want is market share... and they're already doing a good job at taking it.

RIM's only hope is to retreat, regroup and concentrate on the race that its still winning.

Right now RIM has 70% of the South African market. Thousands lined up in Indonesia to buy the Blackberry Bold 9790. It turns out that Blackberry is built to grow in developing markets.

Abisola Fatokun offers an explanation:

The attraction of the Blackberry service in this region is due to the fact that their customers pay a flat monthly rate for unmetered Internet connectivity which is delivered via the Blackberry infrastructure, thereby bypassing the mobile operators almost completely. At the moment, no other smartphone can compete with this. Android, iOS, WebOS, Windows Phone, etc all have the same weakness: dependency on data plans, and this is a big stumbling block for penetration of this market.

RIM seems to have a significant but tenuous technical advantage in emerging markets with BIS. Africa alone is home to a billion people. There's more than enough room for growth. If RIM concentrates on expanding its lead in here then they may regain the relevance they've lost since Apple and Google reshaped the industry in the West.

Plus, its a great story. RIM - a company that made its name connecting suits - finds its identity in connecting the masses.