Rumors have been making the rounds that South Korean conglomerate and mobile device manufacturing powerhouse Samsung is looking to buy Blackberry (NASDAQ:BBRY) . Before you laugh out loud and compare this supposed plan to consciously contracting pneumonia, lean back and let the idea simmer. If you think about it hard enough, a Blackberry buyout might make a lot of sense. It solves Samsung’s strategic problems while building on its structural strengths.
Samsung’s Android problem
The problem with running Google’s Android is that you’re running Android. Seriously. Android is free and open source. This means any Tom Dick and Harry manufacturer can slap Android on their their mass produced cheap units after paying a minimal fee. Worse, your brand might look bad because another Android-based manufacturer dropped the ball when it comes to the quality of its product. You suffer from guilt by association.
Worst of all, when your products run an OS that’s free, you are essentially competing with all other products running that OS. Why is this bad news? Well, you can easily find yourself in a race to the bottom. In fact, this is precisely what is happening with Samsung in China. Samsung?s focus in that giant market is the high-end. This is the end of the market that’s eroding. The only stable or even growing part of the vast Chinese market is the low-end of the market. Can Samsung really afford to run a race to the bottom of hardware prices?
By buying out Blackberry, Samsung can have its own separate environment and solid brand. By decreasing prices while making sure Blackberry units have great features, Samsung can carve out a more sustainable business. At the very least, it gets a solid and distinct mobile brand. Think of it this way, at one point, Blackberry was thinking of switching to Android but chose not to. At least, Blackberry execs are bright enough to understand that Android is not a sustainable long-term path to profits.